Question: If they pass the bill allowing more short-term rentals, how will they issue the permits? Will they favor operators who have been paying their taxes, even if their units are technically illegal?
Answer: New permits would be issued by lottery if requests exceeded the number of permits allowed in a given area, according to Bill 89 (2018), which is under consideration by the Honolulu City Council Planning Committee.
No, short-term rental operators who have been paying required income, general excise and transient accommodations tax while operating illegally (outside an area where short-term rentals are allowed and without a nonconforming use permit) would not be favored in the permitting process if the bill is approved, said District 3 Councilman Ikaika Anderson, chairman of the Planning Committee.
Doing so would penalize others who had “been completely honest” and stayed out of the lucrative short-term rental market without a permit. The city has not issued new permits since 1989.
“I feel that the city should not preclude folks who have not broken the law from seeking a permit or getting a permit” if the bill becomes law, Anderson said.
Kokua Line has heard from short-term rental operators who said that they did all they could by paying income tax, GET and TAT. Those taxes are mandatory, whether the unit is permitted by the city or not. They said they don’t want to be aced out by fellow illegal operators who failed to pay taxes. Economic impact reports about Oahu’s short-term rental market indicate rampant tax evasion by illegal operators.
“I understand their point but I’m not going to reward them for it, even if others are operating and not paying their taxes. It’s not fair to punish someone who has been completely honest” and wants to operate for the first time under the new rules, assuming they are approved, Anderson said.
Bill 89 specifies that no more than 1% of dwellings in each of Oahu’s eight designated development plan areas could be short-term rentals, not counting those in resort zones or certain other areas where vacation rentals are already allowed without permits.
Where the initial number of applications exceed this percentage, “acceptance will be decided by lottery,” the bill states. “When renewal applications fall below the one percent, new applications can be accepted on a lottery basis.”
Bill 89 would permit thousands of new bed-and-breakfast operations on Oahu — run by owner-occupants and taxed at a higher than residential rate — but no “whole home” transient vacation rentals, as commonly offered on sites such as Airbnb and VRBO, where the owner is not present during a guest’s stay.
Interim Council Chairwoman Ann Kobayashi proposed a new draft of Bill 89 that would allow “whole home” vacation rentals, as long as the operators live on Oahu in another home they own, and tax them at the same rate as hotels and resorts.
The Planning Committee is scheduled to consider both versions of the bill on Monday.
Q: How many illegal short-term rentals are there?
A: From 6,000 to 8,000 on Oahu, according to estimates by the city’s Department of Planning and Permitting.
Mahalo
A big mahalo goes out to the Red Cross and its partners, Farmers Insurance and Nordstrom. As a manager of a large condominium with a fair number of senior citizens, I really appreciate the efforts of the workers and volunteers who came out to our project and checked existing smoke detectors and installed new ones as needed. This is a wonderful service and the companies that partner with the Red Cross are to be commended. Mahalo. — Rick Conroy, resident manager of Regency Park
Write to “Kokua Line” at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.
