Honolulu Council considers new rules for short-term rentals

The Honolulu City Council is again considering a measure that would alter the rules for short-term rentals, notably increasing the minimum stay proposal to three months from 30 days unless a special permit is granted.

Originally, a bill introduced in late 2021 called for a minimum stay of six months without the special permit, but late last week Councilman Brandon Elefante, chairman of the Planning and Zoning Committee, introduced an amended version of Bill 41 changing the minimum stay to 90 days.

The administration of Mayor Rick Blangiardi supports a minimum stay of 180 days.

“I felt that (90 days) was kind of middle of what 30 and 180 was,” Elefante said Thursday at a meeting. “I know people who come here for semesters or spend three months; that would sort of be reasonable. But I’m open as the chair of the committee to looking at changing that.”

Department of Planning and Permitting Director Dean Uchida said keeping the minimum stay at 180 days would align with state law and be easier to enforce.

Bill 41 is expected to be considered Wednesday in front of the full Council.

In the bill, new short-term rentals would mostly be allowed only in resort-zoned areas in Ko Olina, Turtle Bay, Makaha and parts of Waikiki. The only exception are some apartment-zoned areas in close proximity to resort areas where short-term guests would be able to rent the entire property, and B&Bs where someone must live on the property long-term, but rooms can be rented to others for short periods of time.

Short-term rental units would be allowed to continue operating in some residential areas under “nonconforming use certificates” granted decades ago. Owners who want to take advantage of those certificates must renew them every two years, and Bill 41 increases the fee for renewal to $4,000 from $600 each time.

Those who live in areas where short-term rentals are permitted would be required to apply for a permit. However, the permits would not remain with the property like nonconforming use certificates. New owners would have to reapply for their properties to be used as legal short-term rentals.

Should Bill 41 pass, Elefante said, buyers of legal short-term rental property in areas zoned for apartment/apartment-mixed use should be notified before purchasing whether it would be allowed to remain a short-term rental. That’s why he also introduced Bill 2, which would require sellers to provide that disclosure.

DPP plans to enforce Bill 41 by creating an enforcement branch of seven full-time positions. To fund that component, the Council will also consider Bill 4, which would bump up property tax classifications for those operating short-term rentals.

Currently, if people are legally operating short-term rentals in residential areas through a nonconforming use certificate, they are still being taxed at the residential rate. Under Bill 4 those short-term rental transient vacation units would be charged at the resort rate. B&Bs would now also be charged at a special rate that had been established but not enforced.

The residential property tax rate set in 2021 is $3.50 per $1,000 in property value. The resort property tax rate is $13.90 per $1,000 in property value. The bed-and-breakfast home rate is $6.50 per $1,000 in property value.

Bill 41 is a departure from the rules that were established under former Mayor Kirk Caldwell in 2019, which allowed a limited number of short-term rentals in residential areas based on a lottery system.

The law was a compromise between short-term rental operators and the city that included an enforcement component through a memorandum of understanding with rental platforms such as Expedia and Airbnb.

Mayor Rick Blangiardi’s administration never took the MOU into full effect, instead opting to introduce Bill 41 to again alter the law around short-term rentals.

Uchida was not sure what the status of the MOU was with these companies because, he said, the platforms had not been cooperative after seeing a draft of Bill 41.

Ann Simons — government affairs manager, Hawaii, at Expedia Group — wrote in an emailed statement that it wanted to see the law passed in 2019 enforced.

“Expedia Group supports the reasonable regulation of vacation rentals, as well as effective compliance with those laws,” she said.

“Rather than debate radical changes, threaten economic recovery, and create needless unenforceable burdens, we urge the County to implement the existing law. Responsible vacation rentals play a critical role and are an essential option for travelers and non-tourist visitors alike.”