Mayor Caldwell warns of crackdown on illegal vacation rentals

The city has sent out approximately 5,000 “courtesy” letters to owners and operators of illegal vacation rentals, warning them to cease advertising or risk paying hefty fines starting Aug. 1.

Violating the new ban on advertising short-term rentals could result in fines of up to $10,000 per day.

“We want to make sure that everyone on the island of Oahu who may be operating an illegal vacation rental, whether it be hosted or unhosted, is aware of this law and is coming under compliance so that it makes the job of the Department of Planning and Permitting easier because they are the ones who are going to be taking action to enforce against those who may not be in compliance with this new law,” Honolulu Mayor Kirk Caldwell said Thursday at a news conference to call attention to the new law.

The letter sent to owners states, “Our preliminary investigation revealed that the above property or ones close to it may be involved in short-term renting and advertising. You may not be directly involved in this commercial activity, perhaps it is a tenant. In any event, the law says the fee owner is ultimately accountable, including advertising the home as available as a short-term rental.”

The city sent the letters after “looking on hosting platforms (for) the addresses and names of people who may be operating illegal rentals,” Caldwell said.

Acting Planning Director Kathy Sokugawa said DPP also compared photos of ads with actual addresses, “cross-tabbed it with our real property data information” or relied simply on an inspector’s familiarity of a questionable property.

The department has also been receiving complaints from the community, she said.

Ordinance 19-18 — a wide-ranging set of regulations for vacation rentals approved 9-0 by the City Council and then signed by Caldwell in June — makes it illegal to advertise a short-term rental that’s not permitted.

Vacation rentals are defined by the city as those dwellings rented or leased for less than 30 days. They are currently illegal except in resort zones or if the operator is permitted through one of 770 pre-1989 nonconforming use certificates.

No new permits have been issued in more than three decades, but the ordinance calls for the city to issue permits, starting in October 2020, for up to 1,699 new bed-and-breakfast operations, vacation rentals that are “hosted” by an owner who stays on-site during the rental period. The ordinance does not allow any new permits for whole-home rentals, also known as transient vacation units, or TVUs.

An illegal operator could be issued a notice of violation requiring the ad to be removed within seven days. If still in noncompliance, a notice of order would be issued that could include a fine of $1,000-$10,000 for the initial offense and then $1,000-$10,000 for each subsequent day of noncompliance.

Sokugawa said violation notices will be issued “once we confirm enough evidence that there is a violation. Certainly, the amount of advertising activity will play a big role in establishing that level of evidence.”

Vacation rental operators and their supporters, along with giant online hosting platform companies Expedia and Airbnb, objected strongly to the bill, arguing that a majority of their businesses would be wiped out along with those enterprises that are tied to them. They also warned that it would harm the overall visitor industry.

Opponents of illegal vacation rentals, including major hoteliers and the Unite Here Local 5 union, which represents hotel workers, said they disrupt neighborhoods, violate long-established zoning laws and contribute to the island’s affordable-housing crunch by taking away from the inventory of available units for long-term renters. They also argued that vacation rentals take away visitors from traditional hotel accommodations.

Another section of the bill that kicks in in October 2020 is the requirement that platform companies file monthly reports with DPP that are to be shared with the Council.

For more information, go to the DPP’s site for vacation rentals at honolulu.gov/dppstr.