City issues first 5 illegal vacation rental citations on Oahu

The city has issued five citations for illegal vacation rental ads culled from online hosting platforms — the first of many expected under a new law that took effect Aug. 1.

Notice of Violation letters went out Thursday via certified mail to the owners of five Oahu properties who the city alleges were advertising illegal short-term vacation rentals, a city Department of Planning and Permitting official said Monday.

The five citations are the first to be issued under the new vacation rental ordinance. The new law makes it illegal to advertise a vacation rental that is not properly permitted or not located inside a hotel-resort zone. It also upped the maximum recurring fine for such a violation to $10,000 daily.

Owners have seven days to correct the violation — essentially requiring them to remove the ad — or risk an initial fine of $1,000 and subsequent daily fines of up to $10,000.

DPP spokesman Curtis Lum said three of the letters were sent to the owners of three units in the same Waikiki high-rise tower, while two were issued to property owners in Kailua.

“There are others in the works,” Lum said.

He declined to disclose the names and addresses of those cited because he had not yet verified that the letters were received by the owners.

The highly contentious Ordinance 19-18, formerly Bill 89 (2018), was passed unanimously by the City Council on June 17 and then signed into law by Mayor Kirk Caldwell on June 25. A succession of mayors and Councils have tried for three decades to enact legislation to slow the steadily growing short-term vacation rental industry, which has exploded in recent years with the advent of online vacation rental hosting platforms such as Airbnb, VRBO and HomeAway.

Short-term rental units are those rented for less than 30 days. They included what are defined as transient vacation units, also known as whole-home rentals; and bed-and-breakfast establishments, which are typically rooms in houses “hosted” by an operator who stays on-site during the rental.

The city stopped issuing new permits for both types of vacation rentals in 1989. There are currently 770 legal ones outside of resort zones, where they are legal without permits. DPP estimates there are 6,000 to 8,000 illegal vacation rentals on Oahu, although some have put the number as high as 20,000.

Opponents of illegal rentals argue that the proliferation of them has stolen business from traditional hotels and resorts, altered the character of residential neighborhoods, overtaxed the infrastructure and robbed the island’s residents of valuable housing stock.

Supporters say residential vacation rentals are the wave of the future and offer Oahu’s visitors an alternative, and often cheaper visitor accommodation than the traditional hotel and resort stay. They also argue that vacation rentals create many jobs and provide operators additional income that allows them to keep their properties.

Under the new law the city will issue roughly 1,700 new hosted vacation rental permits — but not until October 2020.

Operators said that’s too few and too late for them to stay in business, and warned of dire consequences to the overall visitor industry and Oahu’s economy in general.

Caldwell said Monday the DPP will continue to crack down on violators despite two lawsuits challenging the law that were filed this month.

Asked about the outcry from the operators and their supporters, Caldwell said, “I do think there are things (in the ordinance) that can be fixed around the edges. … There are areas that perhaps could be improved or fixed.”

Caldwell originally proposed allowing a larger number of rentals be allowed and that TVUs be included in the mix. But given that the new law only recently went into effect, the mayor said he doesn’t believe he will be proposing such a change.

He said he and others are monitoring the number of flights and visitors arriving on Oahu to see whether, as vacation rental operators warned, the ordinance will create a drop in arrivals.

“But it’s too early to find that out,” Caldwell said.