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Battle lines take shape as 2 Oahu vacation rental bills advance

When it comes to the thorny issue of vacation rental homes on Oahu, it seems the clearer the issue gets, the more complex the answers appear to be.

After 40-plus people offered testimony on the issue for more than three hours Wednesday, the Honolulu City Council advanced two bills aimed at providing regulations on short-term vacation rentals.

Now Bill 85 (2018) and Bill 89 (2018) will go back to the Council Planning Committee on Tuesday morning for more tinkering, with interim Council Chairwoman Ann Kobayashi proposing a new plan that would throw a few new wrinkles into the mix.

What’s clear after Wednesday’s marathon session is that most people fall within three groups:

>> Those who don’t want any new vacation rentals legalized. They favor Bill 85 (2018), which calls for no new vacation rentals to be permitted but allows a neighbor to seek legal action against a bed-and-breakfast or transient vacation unit operator who is violating city laws. It also would make hosting platforms liable for illegal transactions.

Kailua resident Stu Simmons testified that the bill is “an enforcement bill that will bring, hopefully, measures that can bring some control back to our neighborhoods and communities.”

Illegal vacation rentals are wrecking Oahu neighborhoods and taking much-needed housing options for locals at a time when there’s a need for 22,000 new units here. The one-bedroom studio that he and his wife rented for $1,000 a month when they first moved to Kailua years ago is now an illegal vacation rental that rents for $1,100 a day, what amounts to $33,000 a month.

>> Those who are OK with legalizing small-scale vacation rentals where the operator has to be both the owner and full-time occupant of a house where vacationers will stay. They support Bill 89 (2018), which would permit up to 4,000 bed-and-breakfast operations — those run by owner-occupants — across Oahu but no new “whole home” vacation rentals, also known as TVUs, where there is no owner-occupant present.

North Shore resident Cedar Kehoe said she rents out part of her five-bedroom home as a vacation rental but will rent only to those who agree to stay a minimum of 30 days as is allowed by law.

Kehoe said she pays taxes on the money earned and wants to be able to rent for less than 30 days. She said she thinks only those who do, and don’t have any violations, should be eligible for B&B permits through a lottery.

She vehemently opposes allowing whole-home vacation rentals. “Two homes on my block, right next door to me, were just bought in the last two years, and they’re both now illegal vacation rentals and they have large houses and they’ve got huge parties going on,” Kehoe said. “People think they can do this, and they need to stop.”

Bill 89 is also supported by hotel-resort industry representatives who think it’s a fair compromise.

>> Those who want both owner-occupant and whole-home vacation rentals to be permitted. They don’t support either of the bills as they’re currently written and want for the rules to allow more vacation units to be permitted.

Peggy Taylor said that before her mother died last year, she made she and her siblings promise not to sell the Lanikai house that she and their dad bought more 60 years ago and raised their family in. “My siblings and I just inherited the house, and we would love to keep it in the family,” Taylor said. “A TVU license would allow us to rent the house occasionally. … I’m a kamaaina, I’m not an offshore investor and all the money I would make would stay in Hawaii.”

If the family were to rent to long-term occupants, they would have to charge $6,000 because the property is in the Residential A tax category, which is assessed higher than homes that are owner-occupied or valued at less than $1 million. “The property taxes this year … is over $32,000 a year,” Taylor said. “If you want to ensure decreased rents for local residents, get rid of the Residential A property classification for local people who live on the island.”

Kobayashi is proposing a new draft of Bill 89 that would allow for some whole-home vacation rentals, so long as the operators can prove they live in another Oahu residence they own by providing a homeowner exemption. The draft also calls for these operators to pay at the same rate of taxes as owners of hotels and resorts instead of a new vacation rental rate for B&Bs, and wants the operator to submit a telephone number for neighbors to voice their concerns 24 hours a day.

Kobayashi said she’s not a fan of whole-home TVUs, but wants Council members to at least address concerns raised by local residents who said they want to be able to hold onto their family home. “Many people were unhappy, especially local people,” she said.

Council members, who’ve been holding lengthy hearings on the vacation rental issue for years, are as frustrated as the people testifying, Kobayashi said, and want to get some kind of legislation in place by the end of the year. “We have to have something come out, and if it doesn’t work, we can always change the law, but we have to put something on the books.”

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