Honolulu Planning Commission proposes new short-term rental rules for residential areas only

The Honolulu Planning Commission voted Wednesday to recommend the new short-term rental rules proposed by the city Department of Planning and Permitting to the Honolulu City Council, but only for residential areas.

The rules for the resort areas will be left up to the Hono­lulu City Council and the Department of Planning and Permitting.

DPP’s proposed rules most notably would increase the minimum number of days that a property can be rented without a special permit to 180 from 30. The department’s intention is to cut down on the number of illegal vacation rentals that it says is taking permanent housing away from local residents.

DPP estimates that short-term-rentals represent about 35% of vacant housing and 5% of the state’s housing stock. It also estimates about 20,000 illegal short-term rental units operate statewide.

The new rules would allow the current 808 legal bed-and-breakfast and transient vacation units to continue operating but would not allow any new short-term rental properties in residential areas.

New permits would be issued only in resort areas such as Kuilima, Ko Olina, Waikiki and Makaha. Changes also would require properties to display their certification registration number on all advertisements.

The measure also plans to charge bed-and-breakfasts and transient vacation units in residential areas at the B&B property tax rate, which is higher than the residential rate. The new nonconforming units would be taxed at the resort rate, which is even higher. Up to $3.12 million in real property taxes from the B&B, hotel and resort tax classifications would then be used to staff the city’s Department of Planning and Permitting special short-term rental enforcement unit.

However, when the Planning Commission voted on the new rules, it split the proposal into two portions: residential and resort.

When the commission makes a decision on a policy to the Council, the Council needs a super majority vote— six instead of five— to override the commission’s recommendation. However, in this case, the decision was only made to recommend the new rules for residential areas. The commission declined to make a decision on the rules for resort areas.

The areas that qualify as resort areas would be those specified in the new rules: Kuilima, Ko Olina, Waikiki and Makaha.

To address some issues raised by testifiers at previous public hearings on the new rules, the DPP added in exemptions to the 180-day minimum for temporary employees at health care facilities, full-time students, full-time remote workers, military personnel and homeowners in transition.

These exemptions caused several commissioners to question DPP’s ability to enforce the rule.

“I think enforcement, regardless of what time frame you put on it, it is going to be challenging no matter what,” said DPP Director Dean Uchida.

“If we find it’s being abused, we’ll probably have to revisit it. If it’s working, we’ll try and continue to improve upon it.”

Commissioner Aki Marceau added a recommendation to the residential rules for the Council to look at enforcement of the 180-day minimum stipulation, and potentially consider alternative solutions.

One suggestion that Commissioner Ken Hayashida had was instead of limiting the number of stays, a property owner could have a year but keep the 30-day minimum without the added exemptions.

Uchida maintained that he thought it would be just as difficult to enforce. Marceau also floated the idea of something in the middle, such as 90 days.

However, Uchida said 180 days was best because it is aligned with the state definition of a short-term rental.

Marceau also added a condition to the commission’s decision on the residential rules that DPP do more outreach at neighborhood board meetings.

The difference between an added condition and recommendation by the commission is the Council would need a super majority to overrule a condition, where an added recommendation is optional.

The lack of outreach about these new rules was a point of concern by several members.

Commissioner Steven Lim was on the commission when current short-term rental rules were passed in 2019.

“That community outreach process took a couple of years … In contrast, the current deal was submitted to us in August of this year, maybe only two months ago,” he said.

“The problem that I have is because of the shortened time frame for community outreach, I don’t think many of the people in the community and those families on the website tonight have had very much of an opportunity other than their three minutes to make their views known to DPP.”

The commission’s decision will be sent to the Council to be discussed by council members.