Vacation rental regulation has roiled government at both state and county levels for decades, so legislation attempting to exert some control over these activities tends to land on the reject pile at the state Capitol.
But the horrific wildfires that gutted the Lahaina community, compounding the worsening shortage of affordable housing, should force a reckoning with the problem this year. Signs of the lawmakers’ determination include a raft of bills aimed at cracking down on the migration of homes into vacation-rental use.
So far Gov. Josh Green’s own initiative to encourage conversions of short-term rentals into long-term housing by offering tax incentives is lagging, with House Bill 2416 deferred and its companion, Senate Bill 3105, unscheduled for a hearing. There has been a hearing on a measure, HB 2778, for a transient accommodations tax surcharge on short-term rentals outside a resort zone.
But what seems to be getting the most urgent treatment is a pair of bills that clarify county rights to curb the number of vacation rentals. SB 2919 and HB 1838 both have advanced out of their first round of hearings.
It’s essential that this fix be made, resolving a legal problem already encountered on Oahu. Counties then would have within their zoning powers the right to phase out nonconforming transient vacation rentals over time.
The push for this arose Dec. 21, when U.S. District Judge Derrick Watson issued a permanent injunction to bar the enforcement of a city ordinance applying to rentals for terms between 30 and 89 days.
Before the ordinance passed, a group of homeowners had been allowed to rent out their residential property for 30-89 days, a term that was not defined as “short term.” They sued when the ordinance redefined anything less than 90 days as a short-term rental subject to the regulations it laid out.
Watson ruled that the city ordinance conflicted with a state law that precludes turning a previously legal use of property into an illegal one. What the Legislature now rightly wants to do is to close that loophole and give the counties complete control over this kind of regulation.
On Friday, SB 2919 drew an especially vigorous reaction from the public. At the start of the hearing, 447 individuals had submitted testimony on that measure, 304 in support, 134 in opposition and nine offering comments, said state Sen. Jarrett Keohokalole, who chairs the Committee on Commerce and Consumer Protection, one of three panels voting.
So there’s likely to be a battle going forward, with those interested in maintaining vacation rentals arguing that there are legitimate demands for short-term rentals. In addition to tourism, these range from families displaced from homes undergoing repairs to workers moving in for temporary employment opportunities.
This is true, but counties would be able to address this need within zoning rules. The real driving force between the diversion of long-term rentals to short-term use is the lucrative tourism market, and local governments need to be able to exercise control over that use, especially when there is a real housing crisis.
HB 1838 cites a report by the University of Hawaii Economic Research Organization, which estimated that statewide, about 30,000 homes, or 5% of local housing units, operate as short-term rentals. Maui was already undergoing an annual decline in housing stock long before the destruction from last August’s wildfires.
If anything positive can emerge from that tragedy, it should be a sharpening of the focus on what’s most crucial to Hawaii’s people: keeping enough housing units available — homes that they can afford.
