Editorial: Action needed now on vacation rentals

Amid the City Council Planning Committee’s uncertainty on how to move forward on seven bills establishing long-overdue rules for short-term vacation rentals, there are two points of certainty: Further inaction shortchanges Oahu. And no matter the vote on this issue, not everyone will be pleased.

The rentals problem dates back to the late 1980s, when the City Council banned new bed-and-breakfast (B&B) operations and limited additional unhosted transient vacation units (TVUs) to hotel-resort zones.

In subsequent decades, illegal rentals proliferated as weak city law and enforcement were outmatched by strong demand for short-term vacation rentals. In recent years — spurred by online advertising platforms that are not currently required to vet the legality of a Hawaii home-sharing operation — the inventory of outlaw operations has exploded.

Competing with the growing call to crack down on this thriving underground business are compelling stories about longtime residents opting to operate illegal rentals as they grapple to make financial ends meet in high-cost-of-living Hawaii. Further, there are visitor industry warnings that dismantling illegals could disrupt the flow of tourists here.

Yes, many more visitors are now opting for residential rather than traditional hotel lodging as it’s often less expensive and presents opportunity to see everyday local life. And, yes, short-term rentals are often cash cows compared to long-term rentals. But outweighing such matters are looming big- picture concerns for Oahu.

The illegal count is now gauged at between 8,000 and 10,000 units. The City Council must take action to capture tax revenue it’s now missing out on and respond to valid complaints about home-sharing that range from illegal parking headaches and strained residential infrastructure, to a shortage of housing inventory available for long-term renting locals.

Further, as spotlighted in a recent report by Star-Advertiser Waikiki Bureau Chief Allison Schaefers, home-sharing platform Airbnb is also advertising vacation rentals on wheels. Given Oahu’s already tight inventory of parking spaces and the absence of RV parks, this sort of lodging is an obvious poor fit for the island.

The city bans sleeping in vehicles on public roads or in parks without a special permit. In the case of the “Hippie Bus Hawaii,” a former rental car shuttle retrofitted to sleep up to a half-dozen guests, the rental’s owner has been slapped with trespassing fines for staying in closed parks overnight.

Among the bills before the Council attracting the most attention, is an omnibus proposal that would allow permits to be issued for possibly up to 4,000 B&Bs and TVUs islandwide by capping the number at no more than 1 percent of all dwelling units in each of eight districts.

Also, Bill 89 would establish new property tax classifications rather than allowing units to remain in the residential class. The rates would likely be higher, closer to those paid by resort properties, which seems fair, given the hybrid makeup of the vacation-rental business.

A few more reasons to like this proposal: It hits illegal operators with a stepped-up penalty starting at $25,000 per day, and technology would be key to enforcement. Rentals would need a registration number on all advertising, including online platforms. In the absence of one, a notice of violation would be issued. This approach is making strides in other cities dealing with enforcement challenges.

The Planning Committee’s move on Tuesday to postpone action, following emotionally-tinged testimony, is disappointing. But not entirely unexpected. In years past, Council resolve to address the vacation rental problem has wilted under supporter-opponent clamor.

No more. The Council must now do the right thing: Move forward with careful examination of the proposals and take sensible, forceful action. Further delay is a disservice to constituents and Oahu’s future.