The city’s draft rules that would set new boundaries for Oahu’s short-term rental market represent a first step down what’s sure to be an evolving regulatory effort.
The Department of Planning and Permitting (DPP) will convene a public hearing on the rules at 10:30 a.m. Tuesday at the Mission Memorial Auditorium; information on remote participation options are posted online (808ne.ws/vacationrentals). Surely DPP will hear from people who feel the proposed guardrails are too inflexible, or not strong enough.
But what’s most critical is that the right-sizing of the visitor accommodations sector begins in earnest now. DPP officials have said final rules will be adopted by Aug. 1; the process of issuing new permits would follow.
Allowing the pent-up demand for Hawaii vacations to flood into Oahu unguarded ultimately could wash out the resolve to correct what has been, for decades, the weakening of land-use controls.
It’s crucial for the public, including those who want access to the limited number of spots where licensed bed-and-breakfast units will be allowed, to see that this access is provided fairly, and that neighborhoods get the protection that they deserve.
And, as critics of DPP already are pointing out, last week’s unsealing of federal bribery indictments against five current or former employees of the city agency should only intensify the public push for permit applications to be handled equitably. Regardless of how the investigation plays out, the episode itself underscores the need for transparency in how the department does business.
The enactment of Bill 89 in 2019 ended a standoff dating back to 1989, with the Honolulu City Council putting a stop to nonconforming use certificates (NUCs) for vacation rentals. The inventory of rental units on Oahu grandfathered in with the legal NUCs has been estimated at 800 today.
Legally, rentals for periods shorter than 30 days have been prohibited ever since. Nonetheless, enforcement was difficult, and illegal vacation rentals flourished.
The count skyrocketed into the thousands with the advent of the internet, and especially of online booking platforms such as Airbnb and Vrbo. Over time many of these properties were bought up by investors who quickly recognized how lucrative the business was.
Some housing advocates — including Hawai‘i Appleseed Center for Law and Economic Justice, which published a report on the issue in 2018 — have rightly argued that on an island so desperately in need of housing, uncontrolled diversion of long-term residential units only makes the problem worse.
Further, neighbors increasingly have complained about noise and disturbances, with absentee owners renting out whole homes, assigning nobody on-site to field complaints.
That is one reason why Bill 89, and multiple unsuccessful measures preceding it, were written to authorize only additional B&B units in the residential zones around the island. The idea was that there would be a resident on premises to better manage the lodging.
Under the new ordinance, the addition of new whole-home rentals is limited only to resort districts.
And even B&Bs would be strictly capped, to keep too many from proliferating in small areas. Most estimates put the potential addition of B&Bs at about 1,700, divided among the eight City Council districts.
The exception is the North Shore, where the North Shore Sustainable Communities Plan bans new B&Bs. Bill 89 was written to honor limits set in development or sustainable-communities plans. This kind of hard exclusion is one of the points of contention among those in vacation-rentals organizations who argue the bill should have accommodated at least some for those who favor them.
Among the key rules DPP is proposing:
>> Short-term rentals (STRs) would be prohibited within a 1,000-foot radius of another STR.
>> Applications would be taken Aug. 1-30 annually with an eligibility determination to be made by the DPP director by Sept. 30 each year. Because of limited permits, the applicant’s place in line would be set by lottery.
>> Advertisements for STRs must include a valid certificate of registration number, or an NUC number.
>> DPP would publish a list of permitted STRs each year.
These last two points would make enforcement easier for DPP investigators and for neighboring residents who tip them off: The database and ad requirements provide the means of identifying scofflaws and penalizing them.
Critics of the proposal argue that the Council passed the ordinance under pressure from the hotel industry to squelch competition that the vacation rentals represent. That observation might be perfectly valid, but that doesn’t discount the validity of regulation, either.
Oahu surely can allow for some measure of vacation rentals, clearly in demand by the 21st-century visitor market, without letting them overrun residential communities. That is the aim that should be top of mind for all who add their voice to the city conversation on Tuesday.