City and Kokua Coalition trying to allow 30-day rentals

The city and the Kokua Coalition agreed Thursday to work together on a plan to allow so-called 30-day vacation rental operators to continue.

The Kokua Coalition, also known as the Hawaii Vacation Rental Owners Association, had requested a temporary restraining order to stop the city from enforcing its new vacation rental ordinance that went into effect Aug. 1. The new ordinance is intended to crack down on thousands of illegal short-term vacation rental owners who have been operating for years without penalty.

U.S. District Judge Derrick Watson said he would hold off on making a decision on the TRO since the two sides agreed to meet.

Gregory Kugle, attorney for the Kokua Coalition, said he believes filings by the city, as well as changes made to the Department of Planning and Permitting’s website in recent days, suggest that the group’s members will be allowed to continue operating 30-day rentals.

Rentals of less than 30 days are prohibited on Oahu outside of hotel-resort zones unless specifically allowed by the city. But the Kokua Coalition pointed out that they have had a settlement agreement with the city since last year that allows operators to rent to a single tenant during a 30-day period, even if the tenant stays less than 30 days, so long as no one else occupies the unit during the 30 days.

Deputy Corporation Counsel Brad Saito told reporters outside the courthouse that such an arrangement is OK provided they are actual 30-day rentals.

Saito said the city will proceed with enforcement of Ordinance 19-18, formerly Bill 89 (2018) for multiple rentals in any 30-day period. The ordinance prohibits the advertising of a vacation rental of less than 30 days that isn’t specifically permitted to operate. The new law also increased the fines for advertising or renting an unpermitted vacation rental to a maximum of $10,000 a day from $1,000 daily.

The Kokua Coalition cited the settlement agreement reached with the city last year — which was signed by a judge — that allowed its property owners to continue operating. That agreement was reached following an earlier lawsuit filed by the group.

Watson urged both parties to come up with a similar agreement.

Kugle said the city is acknowledging that the new ordinance does not require renters to physically occupy their rentals for 30 consecutive days.

“Based on what (city officials) have written and what they’ve said in court, it is my opinion that what was perfectly legal in the past is perfectly legal today, and that is very important,” Kugle said.

Saito said, “The city intends to enforce the new ordinance, so to the extent that there are violations by anyone, there will be enforcement activities.”

He added, “However, the plaintiffs in this case maintain that they conduct lawful, 30-day rentals. So to the extent that that’s true, I don’t think there’s going to be any dispute about that.”

Saito stressed that “the city will evaluate each contract on a case-by-case basis based on whatever facts or information is available that the time. So I wouldn’t say that just because a contract says 30 days, it’s ironclad. There might be indications of some different understanding or an agreement that is different from the written contract. So the city would always give consideration to those facts.”

Kugle said both sides also agree that people cited for an illegal rental will be able to appeal their citations with the city Zoning Board of Appeals before any fine is levied, and that the advertising of daily rates is not prohibited.

Larry Bartley, director of the group Save O‘ahu’s Neighborhoods which opposes short-term vacation rentals in residential neighborhoods, called the Kokua Coalition’s lawsuit frivolous.

“It appears the sole purpose of the lawsuit is to delay the enforcement actions by the city against illegal vacation rental owners and the Realtors who manage them,” Bartlett said in a news release.

A second lawsuit challenging the vacation rental ordinance has been filed by the Waikiki Banyan Association of Apartment Owners.