‘Undercover sting operations’ mop up illegal vacation rentals on Kaua‘i

LIHU‘E — Data-sharing agreements with tech companies and undercover “sting operations” have cut the number of illegal vacation rentals operating on Kaua‘i to the lowest rate in a decade, officials report.

County Planning Department Director Ka‘aina Hull estimated that the number of illegal vacation rentals (also known as TVRs) has fallen from a peak of about 1,500 in 2017 to low double-digits by April 2023.

Kaua‘i’s battle against illegal vacation rentals was born in 2008, when the county council adopted an ordinance forbidding TVRs outside of Visitor Destination Areas,” mainly around Princeville, Po‘ipu and Kapa‘a. (The ban did not apply to rentals that were already operating outside the zones.)

Despite the regulation, TVRs outside of these areas proliferated throughout the 2010s with the rise of apps like Airbnb and VRBO, which allow property owners to easily list their homes as short-term rentals online.

By 2017, the planning department estimated there were 1,500 illegal units in operation.

The tide began to turn in June 2020 when the county established data-sharing agreements with Airbnb, Expedia and VRBO. These partnerships forbid operators from uploading their rentals on the platforms without proper tax-map identification and require the companies to provide monthly reports of all properties on its sites, removing listings that county staff identified as illegal.

“These companies provide us with information on every single Kaua‘i operator advertising on their websites, which allows us to identify each individual and their respective properties operating vacation rentals here on Kaua‘i,” wrote Hull in an email exchange with The Garden Island.

About 70 percent of vacation rentals are listed on these platforms, Hull reported, while the other 30 percent can be found on other websites like FlipKey or Craiglist.

Additionally, the planning department contracted with a third-party platform monitoring company to identify online ads for illegal vacation rentals.

By December 2021, these efforts had cut the number of illegal rentals down to less than 50.

The remaining illegal TVRs are mopped up by a planning department task force, which book “undercover reservations” in “sting operations,” and collect documentation to be used as evidence in issuing violation notices and fines, Hull said.

Illegal TVRs can be subject to harsh fines of up to $10,000 a day if they are discovered. One property owner faced a $130,000 penalty in 2019, according to The Garden Island reporting.

TVRs are also subject to a tax rate that is more than three times that of the homestead tax class, which most owner-occupied homeowners’ primary residences fall under.

“Even when the illegal operator shuts down, if they used their property for one day or more for vacation rental use — illegal or otherwise — this property is subject to TVR tax rates,” Hull wrote.

The reduction of illegal vacation rentals doesn’t mean there is a shortage of legal TVRs on the island, however.

According to Airdna, a website that tracks Airbnb and VRBO data, there are 5,534 active vacation rentals on Kaua‘i, largely concentrated in Princeville and Po‘ipu.

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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.