Oahu short-term rental owners sue city over law raising minimum stay to 90 days

A group of short-term rental owners has filed a lawsuit in federal court asking for an order to stop the city from enforcing a new law that increases the minimum allowable stay to 90 days from 30 days.

The lawsuit alleges the new city ordinance, which goes into effect Oct. 23, is unconstitutional because it interferes with owners’ vested rights to own and rent property and violates state zoning law. The group also seeks relief from the court for its members and others in the same position.

The nonprofit Hawaii Legal Short-Term Rental Alliance says the minimum rental period has been 30 days for more than 35 years, and “property owners, operators and managers have structured their lives and businesses around this settled law.”

Ordinance 22-7, formerly Bill 41, makes no provision for those property owners and operators who for years and even decades have purchased and legally rented their properties for periods of 30 to 89 days, according to the lawsuit, and violates their civil rights.

Alliance members want to be able to continue to advertise and rent their properties for 30 days or more and be grandfathered in under the new law, similar to the continued use of structures that lawfully existed prior to new zoning restrictions.

A section of the new law allows existing owners and operators to continue to provide 30- to 89-day rentals for up to 180 days after Oct. 23. It says they can register to continue as a bed-and-breakfast home or a vacation unit, but they must be for 90 days or more.

The lawsuit, filed Monday in U.S. District Court in Honolulu, alleges those provisions are insufficient and that additional protections are need for existing legal vacation rentals.

Otherwise, thousands of Oahu property owners and related businesses will be irreparably harmed, the complaint says, and the city will possibly face millions of dollars in damages.

In response to the lawsuit, Honolulu Mayor Rick Blangiardi said, “We believe strongly in Bill 41 and the positive impact it will have on communities across Oahu. In Bill 41, we’ve stood up a process that is legally enforceable and will vigorously defend our ability to do so.”

When he signed the bill April 26, Blangiardi said the city anticipated legal challenges to the new restrictions.

The law resulted largely from complaints that vacation rentals are changing the face of residential neighborhoods, with loud visitors and overcrowded streets due to insufficient parking, and that the operations reduce the availability of long-term rentals for local residents.

The lawsuit also notes that 30-day rentals are used by military members transitioning into military housing, medical personnel working at health care facilities on temporary contracts, local residents transitioning between selling and buying homes, and contractors and their employees working on Oahu.

The suit says the new law has caused “immediate and devastating” effects because existing rental agreements after April 21, 2023, have to be canceled, and prospective tenants are considering lodging alternatives.

The alliance is made up of Oahu residents who rent out second homes on their properties or elsewhere and those who rent out their homes while traveling or working elsewhere. Additionally, the group noted, many businesses provide services to and depend on these properties, such as cleaners, landscapers, property managers and booking agents.

Altogether they pay millions in state and city transient accommodation and general excise taxes, the alliance contends.

The new law allows short-term rentals only in resort-zoned areas including Ko Olina, Turtle Bay, Makaha and parts of Waikiki with exceptions for 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 is living on the property.