Vacation rental giants look to temper Council bills

Representatives for two of the world’s largest operators of web platforms that broker vacation rentals voiced disappointment at a Honolulu City Council committee’s decision Friday to advance two bills they said will cause thousands of job cuts in Hawaii and severely hurt the visitor industry.

Bill 89 (2018) allows for up to 1,715 newly permitted hosted vacation rentals, also known as bed-and-breakfast operations, but allows no new whole-home vacations rentals, or what the Department of Planning and Permitting refers to as transient vacation units. The bill also heaps a bunch of regulations on operators and makes it tougher for the estimated thousands of illegal rentals to stay open.

Bill 85 (2018) provides stronger enforcement tools for DPP but no newly permitted vacation rentals of any kind.

Both bills passed the Council Zoning, Planning and Housing Committee 4-0, paving the way for the full Council to approve one of them in the coming weeks.

Matt Middlebrook, head of public policy for AirBnB, said Friday he wasn’t surprised by the votes. “But I’m surprised, overall, that the Council is taking these steps which will hurt local Oahu residents who earn extra income sharing their own home,” he said. “The complete ban on vacation rentals has a significant negative impact on the economy.”

Middebrook pointed to a report Friday by New York-based Wolfe Research on the airline industry that said passage of one of the Council bills would ban 7,000 short-term rentals and could result in an economic hit for Hawaiian Airlines.

Additionally, Middlebrook said, the number of new B&Bs allowed in the latest draft is too low and the 1,000-foot separation between permitted ones amounts to “a de facto ban on homesharing, in our view.”

“We’ve always believed there’s a middle path here,” he said. “We’ve supported reasonable limits on both TVUs and B&Bs.”

The current draft of Bill 89 calls for allowing up to one-half of 1 percent of all dwellings in each of the city’s designated development districts to be permitted as hosted vacation rentals, which is how the 1,715 number was derived. Middlebrook noted Mayor Kirk Caldwell’s original draft called for up to 1 percent of all dwellings to be set aside and would allow permitting of both hosted and whole-home vacation rentals.

While AirBnB has some issues with Caldwell’s plan, it represents a good starting point for discussion, Middlebrook said.

Max Sword, Hawaii policy adviser for the Expedia Group, also is concerned about the potential impact the bills may have on local families, small businesses and the Oahu economy. “We firmly believe, like the hotel industry, that there needs to be regulations but we disagree on an effective ban of whole-home transient vacation units,” said Sword, a recently retired Outrigger hotels executive.

“We believe that there still remains a path forward that ensures the city’s ability to enforce a responsible limit on a healthy number of TVUs outside of the resort areas,” he said. “We hope to at least have an opportunity to discuss the issue further before a final vote before the next full Council meeting.”

Friday’s Council action was cause for cautious optimism among opponents of vacation rentals that the city might finally get something done to address the issue. A string of mayors and Councils have tried unsuccessfully to impose new rules on vacation rentals. No new city permits have been issued since 1989. DPP said there are 816 legally permitted vacation rentals on Oahu and up to 8,000 illegal ones.

Larry Bartley, longtime head of Save Oahu’s Neighborhoods, said his group was encouraged to hear several Council members say their top priority is preserving housing for locals.

“After 14 years of trying, we finally see the first effective enforcement bills heading for third reading with solid support and the possibility of becoming law,” Bartley said.

“But they still face third reading and if passed there (they) face a possible veto by Mayor Caldwell,” he said. “Then there is the question of the necessary political willpower to make things happen. No predictions; the road is still lined with possible potholes and detours but we are more hopeful than ever.”