Counties differ in approach to regulating vacation rentals
HONOLULU — New state legislation giving the counties the power to reduce or even phase out short-term vacation rentals has triggered different responses — none likely to result in immediate county action even on Maui, where proposed reform was inspired by the housing needs of those displaced by the deadly Aug. 8 wildfires.
HONOLULU — New state legislation giving the counties the power to reduce or even phase out short-term vacation rentals has triggered different responses — none likely to result in immediate county action even on Maui, where proposed reform was inspired by the housing needs of those displaced by the deadly Aug. 8 wildfires.
Senate Bill 2919, which became Act 017 when Gov. Josh Green signed it May 3, makes it possible for county lawmakers to “regulate the time, place, manner, and duration in which uses of land and structures may take place.”
The new law “clarifies that uses that include the provision of transient accommodations are not considered residential uses and may be phased out or amortized by the counties,” and as of Jan. 1, “expands the scope of the transient accommodations tax law to include certain shelters and vehicles with sleeping accommodations.”
While the new law clears up issues of state preemption, counties still must craft their policies. That takes time given the heavy vetting needed to satisfy the public and to avoid other legal or constitutional issues.
So far, Kaua‘i is staying the course. Oahu is evaluating the authority that the law gives to the counties, and according to Mayor Rick Blangiardi’s Communications Director Scott Humber, the “extent to which the city would most effectively implement this authority based on Oahu’s current STR (short-term rental) landscape.”
Hawai‘i County Council Chair Heather Kimball said the Council does not plan to use the new state law to amortize vacation rentals; however, like Hawai‘i Island Mayor Mitch Roth, she hopes the change might ease objections to a package of bills previously introduced to close transient accommodation rental (TAR) loopholes.
Kimball said language in the package’s key Bill 121-24 currently requires “everybody operating a transient accommodation rental in the county to register regardless if it’s hosted or not. It also establishes more clearly defined standards of operations that I think will be easier for folks to follow and for us to enforce on the county side. It makes clear what the penalties are and boosts that up a bit.”
Hawai‘i Island’s Bill 122-24 removes the current bed-and-breakfast section, which the new code makes redundant. Bill 123-24 removes most of the restrictions for building ohana units if they are used for long-term housing.
Roth said the new state law isn’t necessary to advance the county amendments. However, he said, “it does take away one legal argument that people on the other side might have that it could only be done by the state.”
He added, “The big thing we are looking for is to have control on those vacation rentals that may not be registered and may be doing it illegally and may not be taking care of issues that are interfering with the community.”
Kimball, who introduced the bills with council member Ashley Kierkiewicz in January at the Hawai‘i County Council’s policy committee on Planning, Land Use and Economic Development, said they were first discussed with the community in November 2022 and now are before the planning commissions.
Bills 121-24 and 123-24 garnered unfavorable recommendations from the Windward Planning Commission, though members supported 122-24. The Leeward Planning Commission continued a prior hearing to Wednesday at noon at the West Hawai‘i Civic Center in the Council Chambers, Building A. Deliberations are scheduled for Bill 121-24, which already has concluded its public testimony phase. It will accept public testimony on Bill 122-24 and Bill 123-24.
Kimball said once commission recommendations are finalized, the bills return to the committee and will have at least two readings at the Council before they are forwarded to the mayor.
“Optimistically, I would say it would be September before it would be finalized through the entire process,” she said.
The path to amend Hawai‘i Island’s transient accommodations rental code shows that nothing is swift when it comes to the complex process of county vacation rental reform. That’s why it could take the Maui County Council some time to evaluate Maui Mayor Richard Bissen’s proposal to phase out 2,200 vacation rentals in West Maui apartment districts by July 1, 2025 — and eventually all 7,000 units in apartment districts across Maui.
Bissen announced the proposed changes May 2, the day before Green signed Act 017 into law. He was flanked by Maui council member Keani Rawlins-Fernandez. Also present were members of the advocacy group Lahaina Strong, who called for a ban on Maui short-term vacation rentals in the aftermath of the Aug. 8 wildfires, which displaced 12,000 residents and exacerbated Maui’s shortage of affordable housing.
Bissen said at a May 2 news conference “that most, if not all, of these TVRs (transient vacation rentals) impacted by this legislation were previously built and designed for workforce housing in West Maui, and our goal is to return them to their intended purpose.”
The Maui County Council tried to limit short-term vacation rentals to hotel districts in 1989, but Rawlins-Fernandez said an opinion written by then-Deputy Corporation Counsel Richard Minatoya exempted units built before March 5, 1991. Bissen’s bill seeks to repeal these units, which are known as the “Minatoya list,” she said.
Bissen expects some legal challenges. His proposal also needs to go before planning commissions on Maui, Lanai and Molokai before going to the full Maui County Council, where Rawlins-Fernandez said she expects her colleagues to pass it.
Yuki Lei Sugimura, vice chair of the Maui County Council and chair of the Budget, Finance, and Economic Development Committee, told the Honolulu Star-Advertiser that Rawlins-Fernandez “spoke on her behalf. She can’t speak on how we would vote.”
Sugimura, who represents Upcountry Maui, which also had homes damaged in the Maui wildfires, said, “I think we are all waiting to see what the bill is going to be when it comes to us. More facts and details are needed.”
She said balancing the budget to account for the lost tax base as federal, state and other support wanes could prove challenging. Sugimura said planning commission recommendations from Molokai, Lanai and Maui also might differ.
“It will be interesting to see what the planning commissions come back with, whether there is support or not,” she said.
Ana Lillis, deputy planning director for Maui County, said Bissen’s proposal goes to the Maui County Planning Commission at 9 a.m. June 25 at the Maui County Council’s chamber, also known as the Kalana o Maui Building, in Wailuku.
She said the commission must work through all verbal testifiers, which might entail more than one meeting. Lillis said hearing dates are still pending for the Lanai and Molokai planning commissions.
She said it could take days to months before the bill, with each commission’s feedback, heads to the Maui County Council.
O‘ahu hasn’t announced actions related to the new state bill yet, but changes are anticipated. After all, state Sen. Jarrett Keohokalole (D, Kaneohe- Kailua) introduced SB 2919 in part to clarify a 1957 law enacted before statehood that was successfully used against Honolulu in the case of Hawai‘i Legal Short-Term Rental Alliance v. City & County of Honolulu.
U.S. District Judge Derrick Watson on Dec. 21 granted the Hawai‘i Legal Short-Term Rental Alliance a permanent injunction that exempts existing home rental owners from a provision in a 2022 city law that sought to increase the minimum rental period for residential properties on O‘ahu to 89 days from 30 days.
Humber told the Star-Advertiser in an email that “to enforce the STR rental period of less than 90 days, the city would need to establish administrative rules to provide a procedure for identifying nonconforming STRs (short-term rentals) that would be subject to this change in STR time/manner restriction.”
He added, “Unlike Maui and its clear Minatoya list of 7,167 distinct nonconforming STRs, Honolulu has approximately 800 STR (short-term rental) NUCs or nonconforming use certificates, which would need to be evaluated for amortization. Outside of the 800 NUCs, Honolulu anticipates there could be landowners claiming they have STRs (short-term rentals) that are nonconforming. Should the City decide to amortize these STRs and the 800 NUCs, it would need to amend the Land Use Ordinance and establish administrative rules.”
Humber said such administrative rules would:
• Create a mechanism for identifying existing nonconforming STRs such as a registration system.
• Establish the deadline for the cessation of STR operations.
During this process, Humber said the city also might:
• Reconsider its policies on the rental durations that will be prohibited as STRs.
• Designate an administrative appeal agency to resolve disputes related to the phaseout of STRs under the amended ordinances.
When asked whether O‘ahu should consider eliminating NUCs, Humber said, “The 800 NUCs is not a large number like the 7,167 on Maui’s Minatoya list, and generally tend to comply with the requirements of the law to ensure that they are not negatively impacting surrounding neighborhoods. We would need to determine the need to phase these STRs out.”
Kaua‘i Mayor Derek S.K. Kawakami said in an email to the Star-Advertiser that Kaua‘i continues to “stay the course” in efforts to address the illegal transient vacation rental market on Kaua‘i.
“Illegal short-term rentals are an increasing problem in many parts of our state and it can affect our housing inventory,” Kawakami said. “On Kaua‘i, we are fortunate that we have been able to crack down on illegal TVRs through constant World Wide Web monitoring, proactive enforcement, and negotiated agreements between third-party platforms who now assist in our enforcement actions and only advertise legitimate units on our island.”
He added that such efforts have “reduced illegal vacation rentals on Kaua‘i from 1,500 in 2017, to less than 50, today.”
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Star-Advertiser staff writer Dan Nakaso contributed to this report.
