Waikiki condo seeks to ban short-term rentals

Waikiki is the latest residential neighborhood to join Oahu’s fierce vacation rental debate, which has been heavily concentrated in neighborhoods like Kailua and the North Shore.

The popular tourist spot typically is seen as a resort district where the presence of hotels has led to a greater tolerance for short-term vacation rentals than other neighborhoods. However, the district has one of Oahu’s most densely populated residential areas, and some of the homeowners living there say that they don’t like the spread of short-term rentals into their neighborhood, either.

A fierce battle is brewing at Waikiki Lanais over whether the condominium board has the right to ban short-term vacation rentals at the 160-unit building where the practice has been going on for decades. On Thursday, Waikiki Lanais’ current Association of Apartment Owners board faces being deposed by a group of short-term rental owners who oppose the board’s recent crackdown on short-term rentals.

This feud comes in the wake of a report issued last week by the Hawaii Appleseed Center for Law and Economic Justice estimating that 1 in every 24 housing units in Hawaii is being used as a vacation rental. The timing also coincides with the Honolulu City Council’s plans to hear a bill that would allow for a limited number of new bed-and-breakfast permits to be issued on Oahu while establishing stiffer fines for unlawful vacation rentals.

The Waikiki Lanais condominium fight came to a head after the building’s AOAO board issued a directive to prohibit short-term rentals, defined as less than 30 days. Soon after, the board posted signs reflecting the building’s short-term rental policy in the common areas and elevators, and is looking into other enforcement steps like banning lock boxes, stricter control over fobs and requiring guest registrations.

Scott Robertson, Waikiki Lanais AOAO president, said the board’s decision was in response to a November opinion from the city Department of Planning and Permitting saying that “short-term rentals were not allowed in the apartment precinct without an active NUC (nonconforming use certificate), and there are no active NUCs at Waikiki Lanais.”

Short-term rental opportunities on Oahu are limited by a 1989 city moratorium that restricted vacation rentals and bed-and-breakfast homes to those in a resort district or having a nonconforming use certificate. Those who break city rules face penalties starting with an initial fine of $1,000 and up to $1,000 a day for continued violations.

The city’s recent opinion at the Waikiki Lanais shows that just because a property is in Waikiki doesn’t mean that it’s in a resort district, Robertson said.

“When we found out that it was illegal in our building, the advice of our counsel was that we had to enforce it,” he said.

But not everyone feels that way. Ainslie Ports, who bought a unit in the building last year to use as a short-term rental, said she and about 100 building owners oppose the board’s stance, which she says is simplistic and punitive.

Ports, who hails from Australia, said Waikiki Lanais’ governing documents state that “owners have a right to lease their units out for ‘hotel use.’” Ports said she had stayed in about a half-dozen Waikiki Lanais units while visiting the building as a tourist prior to deciding to buy an investment unit there.

Ports said she and a well-organized group of short-term rental landlords have been unfairly affected by the board’s response. They are now trying to unseat enough board members to stop the current board’s juggernaut, she said.

“Waikiki has always been a tourist area. The city isn’t cracking down on the building. It’s just a few disgruntled board members,” Ports said. “People have worked out a way to actually pay their bills and get ahead for once. I don’t see how we can be treated as criminals when we are just trying to purchase property in Hawaii and have help paying for it.”

Robertson said the matter isn’t punitive, as some members of the board previously were renting their units for short-term use and have now agreed to abide by city law. Robertson said the board sought the city’s opinion because it had received complaints about short-term vacation rentals in the building. Robertson said some owners in the building said it was starting to feel more like a hotel than a residential condominium. Concerns that short-term rentals sometimes lead to excessive partying and increased wear and tear also were raised, he said.

Robertson said the worst complaint occurred after a vacation renter had a party and threw paint cans from a high floor, which required expensive repairs. Fifteen Waikiki Lanais floors had to be repainted, and a neighboring building had to be re-roofed.

“Most members of the opposition group, including Ports, do not live here. They have purchased their properties for the sole purpose of conducting an illegal business in the building,” Robertson said in a March 16 letter to Waikiki Lanais owners asking for their proxy or their vote at Thursday’s meeting.”I am quite sure that if they take over the board and flaunt the law, legal challenges will follow and they will spend a lot of our money defending their illegal practice.”