Mayor Rick Blangiardi signs short-term rental bill

A new short-term rental proposal became law Tuesday after Mayor Rick Blangiardi signed a measure that would notably lengthen the minimum stay in most cases to three months from 30 days — making Honolulu among the toughest cities in the country for vacation rentals.

In addition, for the most part short-term rentals on Oahu will only be allowed in resort-zoned areas including Ko Olina, Turtle Bay, Makaha and parts of Waikiki when the law goes into effect Oct. 23. The only exceptions are some apartment-zoned areas in close proximity to resorts where guests would be able to rent an entire property, and bed-and-breakfasts where someone must live on the property.

Under the new law, registering a legal short-term rental will come at a cost, and on-street parking will be prohibited at vacation rentals in communities zoned as rural, residential or apartment-use.

To sign Bill 41, Blangiardi gathered Tuesday at Kailua Beach with Honolulu Council members Esther Kia‘aina, who represents the area; and Brandon Elefante, who chairs the Zoning and Planning Committee.

The new law is welcome news for Ursula Retherford, who has lived in Kailua for 50 years.

At one point, she said, there were about 10 illegal short-term rentals operating in her neighborhood. “You really had a feeling like you’re losing your neighborhood, you don’t know who’s next door,” she said. When her children were young, she said, they walked around the block asking neighbors to sponsor them for a read-a-thon.

“Now I would not dare to have a child go knock on the door, because I don’t know people anymore,” Retherford said, emphasizing the need for enforcement of Bill 41. “This is not the end of it. … There is a lot of money to be made, so they will find ways. So it will need a constant vigilance in order to stop it.”

The Department of Planning and Permitting plans to create a Short-Term Rental Enforcement Branch made up of seven full-time employees, and purchase software to identify illegal properties.

“This has been an ongoing online business … and it’s amazing what we can — without saying too much here — what we can pick up on,” Blangiardi said.

Although the administration has a signed memorandum of understanding with hosting platforms such as Airbnb and Expedia Group to help with enforcement, Bill 41 largely takes care of many of those provisions, said DPP Deputy Director Dawn Take­uchi. The agreement was established in 2019 under former Mayor Kirk Caldwell as a compromise with the platforms. Blangiardi did not take it into full effect.

“I don’t know if we necessarily need to use that,” said Takeuchi.

She cited the plethora of online platforms that are not under the agreement, saying it would make more sense to use Bill 41 instead of drafting an MOU with every single platform.

Oahu has become the strictest city in the country for short-term rentals, said Pam Knudsen, an executive at Avalara, a national company that focuses on short-term rental tax compliance.

“I have not seen anything else or heard of anything else that is a similar rule trying to extend the time frame to the 90 days,” she said.

Other cities have put similar restrictions on the number of guests on the property and parking rules, but some have decided to just implement more fees to offset the burden of short-term rentals in the community.

“For example, Crested Butte, Colorado, implemented an additional fee for short-term rentals,” she said.

“And that fee is specifically earmarked for affordable housing for long-term residents. … It’s a good. They’re using it as an offset to help address some of the issues that the city has, without damaging the economy of the city from people coming in.”

The lack of affordable long-term rental units was one of the main issues the city wanted to address with Bill 41, as a report from the University of Hawaii Economic Research Organization estimated that about 6,000 short-term rental units were operating illegally.

“I absolutely believe that we’ll see more housing come back,” Blangiardi said. “This has really been all about our neighborhoods.”

Knudsen warned that other municipalities with heavy restrictions on short-term rentals have seen dips in tourism activity. However, Blangiardi emphasized that Hawaii was not meant to hold the 12 million tourists who are projected to visit in 2023.

“We were wholesaling Hawaii, the most iconic and beautiful place in the planet. We don’t have to wholesale. People want to come here and spend money,” he said.

“It transcends economic analysis. It really had a lot to do with how we perceive what was right, what was wrong and what Hawaii needs to be on Oahu, as we mentioned — embrace tourism as our economic engine but having that under control.”

Bill 41 could face legal challenges.

Oahu Short-Term Rental Alliance board member Matt Trevino said the organization is already putting together a lawsuit to fight the measure saying it infringes on private property owners’ rights.

“It basically kills the industry,” he said. “They’re basically weeding out what they don’t want. They’re basically stovepiping everybody into a hotel, and I’m not sure if that’s what you really want to do.”

Further confusing property owners are the maps that were drawn illustrating areas where short-term rentals would be allowed in Ko Olina. The map cuts off portions of two properties, Ko‘olina Hillside Villas/ Community and Ko Olina Fairways.

Stephanie Brooker owns a property in Hillside where she and her family split their time between Hawaii and California. It appears to be cut off in the Bill 41 map, and would now be subject to the 90-day rule.

“I’ve lived on and off the island since 1997. And I knew that it wasn’t right to buy a property in an unzoned area to use part time. I purposely sought out Ko Olina because it’s a resort zone,” she said.

“The entire community is set up to enhance and draw in 30-day renters, in a sense. It’s in some ways a retirement community and snowbird community that was specifically built with this kind of housing in mind.”

The community’s association rules already limited short-term rentals in the area to 30 days, so the implementation of the 2019 bill did not affect her property, she said. Many of the housing associations in the Ko Olina Resort area and adjacent properties imposed 30- or 60-day minimum rental restrictions that were often stricter than what was written in the city law.

“I do hope the mayor makes good on his promise to revisit this, and to work with the resort communities on Oahu, to come up with something that’s fair and to make sure that my poor little neighborhood is still a part of the 30-day,” Booker said.

Bill 41 passed the Council in an 8-1 vote, with Council member Andria Tupola voting no. Tupola, who represents the Ko Olina district, cited map discrepancies as among the reasons for her decision.

After the signing of Bill 41

>> Residential community advocates say it will give people back their neighborhoods.

>> The city will need to focus on enforcement.

>> There may be a dip in tourism, but Mayor Rick Blangiardi thinks that could be for the best.

>> There are already legal challenges brewing from short-term rental owners.