Tag Archives: VRBO

Honolulu City Council Votes to Shut Down Short-Term Vacation Rentals With Bill 41

The Honolulu City Council voted today at its monthly Hearing with 8 “YES” and 1 “NO” vote to adopt Bill 41. This April 13, 2022 action presented a much stricter approach to this decades-old controversy for the island of Oahu, Hawaii.

Predictably, the Opposition against Bill 41 came from the Board of Realtors and short-term vacation rentals operators. Support came from die-hard community activists and community groups who had been protesting for decades. Labor Union Unite Local 5 and housing advocate groups also supported Bill 41 on the argument that affordable housing is being usurped by the more affluent.

However, there were accusations of corruption, conflict of interest, and it being a “rush job”. There were questions as to who made the decision to draw the boundaries or decide which building was included and which building was out. There were also accusations of “insider trading”; did people in the know invest in these properties before hand?

The Director of Planning and Permitting Dean Uchida chose to recuse himself and was not seen today at the Council Hearing. However, several testifiers mentioned that the DPP Director should have recused himself at the onset. His wife is an Executive Officer with the Aqua-Ashton Hospitality which has interests include short term condo-tel in Waikiki.

I hope the Department of Planning and Permitting comes out with a Q & A information so it it will be easier to understand.

For now, those who have their Non-Conforming Units Certificates ( (NUC) will be grandfathered in. They will have to pay yearly registration fees and probably higher property taxes. This list here shows the exceptions that were provided by DPP in 1987. Other than this list, operators in residential areas are ruled out as illegal.

Notably, the 30-day contract (instead of the 29-days short term rental category) that many vacation rental operators use will no longer be allowed. It’s now changed to 90 days.

Operators can be fined up to an initial fine not to exceed $5,000 and a fine not to exceed $10,000 for each day thereafter that the advertisement is on public display. (This raises questions here too. Not every operator needs to use the standard platforms. What about private alumni or business groups?)

Here are the areas that will be permitted to have new operations:

In the North Shore of Oahu, both the Kuilima West and Kulima East Estates are allowed. Note that this area is zoned “Apartment “, not “Resort” :

Below is the west side of Oahu in Ko’olina. However, certain Makaha areas do not appear permitted even though it was designated as “resort” in the recent Oahu General Plan. However, note the Apartment-zoned areas are now allowed in Bill 41.

Below is the Waikiki area. Note again that these are Apartment-zoned, not “Resort”.

If you wish to read the fine print, here is the council approved Bill 41 document. Note the underlined language.

Enforcement is the buzzword for both sides of this issue.

At the Hearing, City Councilwoman Andria Tupola who casted the lone “NO” vote and expressed her frustrations about getting correct data and clarifications. She noted that the Deputy Director was new and trying to educate herself on this issue. This was a valid point. With our years of observing and participating at Honolulu Hale, one can see the uncertainty, lack of experience, and institutional knowledge. The former Acting DPP Director Kathy Sokogawa knew the DPP workings inside and out through her decades of employment.

The DPP Deputy Director told the City Council that they would be hiring seven new inspectors. The big question is how DPP is going enforce its long list of requisites, besides registrations and so forth. And how DPP is going to handle the thousands of illegal vacation operators?

I believe that the city can expect challenges because there appears to be irregularities, inconsistencies, and discrepancies. But as the City Council likes to say of any bill, ” This is not a perfect bill, we can improve in the future.” Any lawsuit expenses against the city will be paid for by the taxpayers of Honolulu.

Prior to Bill 41, there was Bill 89 that adopted and signed by Mayor Kirk Caldwell on June 25, 2019. Bill 89 would have allowed an approximate 1,700 new vacation rentals through lottery. However, there was no traction from the Caldwell Administration despite holding rule-making discussions.

Upon being elected, Mayor Rick Blangiardi nominated Dean Uchida as the Director of Planning and Permitting. Former Acting DPP Director Kathy Sokogawa resigned and a lot of institution knowledge left with her. Bill 41 was then proposed with this first version that included the Gold Coast. It has since been taken out from the final version. There had been amendments along the process.

What is my take on this?

Before Bill 89 was finally approved and adopted, I initially testified that DPP should start by addressing the most egregious cases first. DPP did not appear to have the organization to enforce so much so quickly. It should take the bite of the elephant incrementally.

Also, I objected to making mom-and-pop bed and breakfast rentals pay more fees and taxes. How would it help our local residents if they had to keep paying more?

Will Bill 41 work? Again, the devil is in the enforcement. How is DPP going to clam down? Through the use of fines and then non-judicial foreclosures? We’ll have to wait and see how this is rolled out.

On the other side of the coin, real estate agents are already farming neighborhoods to list properties to sell. It’s a fact that luxury homes are not going to be affordable even if it’s a long-term rental. There are quite a bit of those in Oahu where properties are owned by LLCs and out-of-state investors.

Will vacation rental owners sell or will they hold? Chances are high that many will hang on because Hawaii is still a politically stable place to invest in. We should see more rentals open up to create a little more rental inventory. Even then, the value of real estate does not need to come down.

Choon James has been a real estate broker for over 30 years. She’s been involved in environmental and social justice activism since her high school years. She was a Honolulu mayoral candidate in 2020. She can be reached at ChoonJamesHawaii@gmail.com 808 293 8888

NEW VACATION RENTAL LAWS For Honolulu, Oahu

  The City and County of Honolulu City Council adopted Bill 89 and Bill 85 on June 17, 2019 after many long and contentious hearings.

Honolulu Mayor Kirk Caldwell signed Bill 89 into law on June 25, 2019. On July 3, the City Council chose not to address Bill 85 Veto.

Here is the information provided by the Department of Planning and Permitting:

 June 21, 2019

City Department of Planning and Permitting

New Regulations on Short-Term Rentals

Bill 89 CD2 was adopted by City Council on Monday, June 17. It is awaiting action by Mayor Kirk Caldwell. Its main points:

 _Allows a limited number of new Bed and Breakfast Homes (B&B) in non-resort areas under a new registration process, with annual renewal required.

 _Continues to prohibit Transient Vacation Units, or “unhosted” rentals, in non-resort areas, unless the dwelling has a Nonconforming Use Certificate (NUC).

 _Regulates hosting platforms, such as Expedia or Airbnb, requiring monthly reports to be filed with the Department of Planning and Permitting, which will share the information with City Council.

 _Makes illegal any form of advertising short-term rentals which are not in compliance with zoning regulations as provided in Bill 89. Bill 89 CD2: http://bit.ly/2Kt9Qu9

The following Questions and Answers are based on the assumption that Bill 89 CD2 will shortly be enacted into law.

ADVERTISING

I own an unhosted, “whole house,” or Transient Vacation Unit. I pay taxes. Can I continue to advertise online and in the local newspaper?

Only if the dwelling has a NUC or is located in a resort district.

When will the department start enforcing the new advertising restrictions?

Beginning August 1, 2019.

What are the fines for illegal advertising?

Owners of the property involved in illegal advertising will be notified, and if the advertisement is taken down in 7 days, no fine will be imposed for a first offense. If not taken down within this deadline, fines of between $1,000 and $10,000 can be imposed for each day the advertisement remains on display.

If the management company for my property places an illegal ad, will the company get cited?

They may be cited, but Bill 89 CD2 says, “The burden of proof is on the owner of the subject real property to establish that the property is not being used as a bed and breakfast home or transient vacation unit or that the advertisement was placed without the property owner’s knowledge or consent.”

REGISTRATION OF NEW BED AND BREAKFAST HOMES

I have been operating a Bed and Breakfast Home for several years. Do I still have to obtain a registration number?

Yes, unless you have a NUC.

I only rent out my house for more than 30 days at a time. Do I need to register?

No.

I only rent my house while my family spends 2 weeks each year visiting family on the mainland. Do I need to register? When can I register?

Registration will begin no sooner than October 1, 2020.

Why do we have to wait more than year to register?

The time is required for the Department to develop more specific procedures for implementing Bill 89 CD2, including the adoption of rules, and creating the software to help with enforcement and the registration process. If necessary, it provides time to acquire more staff and to train them.

What are the registration requirements?

There are more than a dozen requirements. Most notable:

 _Applicants must be “natural persons,” and not an organization or company

 _Applicants must have a home exemption granted under real property tax law

 _There must be insurance coverage for bed and breakfast use

 _The initial registration fee is $1,000. For annual renewals, the fee is $2,000

 _No more than 2 bedrooms can be used for visitor accommodations

 _Quiet hours must be observed between 10 pm and 8 am

 _If part of a homeowners or apartment owners association, approval by that association must be obtained

 _Neighbors within 250 feet must be given a phone number to contact to make complaints 24 hours a day

For the complete list of requirements, refer to Bill 89 CD2: http://bit.ly/2Kt9Qu9 3

Are there other requirements?

Density Limit. No more than 0.5% of the total number of dwelling units in each regional development plan area (DPA) can be used as B&Bs. Here are the limits by area:

New B&Bs are not allowed in the North Shore area, based on directives of the North Shore Sustainable Communities Plan: http://bit.ly/2Y4QpLg

Condominium Limit. Up to 50% of units in a condominium building may be allowed a B&B, subject to AOAO approval.

Nontransferable. Registration numbers are not transferable to another property, nor transferable to another homeowner.

Separation Minimum. B&Bs must be at least 1,000 feet from each other. This does not apply to units in resort areas and NUCs.

Renewal Criteria. Noise and other nuisance complaints can be grounds to deny renewal requests.

For the complete list of requirements, refer to Bill 89 CD2: http://bit.ly/2Kt9Qu9

How long will it take to get registered?

It is not yet determined. An online registration process is anticipated, but certain requirements will have to be verified; e.g. compliance with parking requirements.

If only a limited number of registration numbers will be given out, how can I guarantee to get one?

There is no provision for guarantees.

How will it be determined who gets a registration number?

Generally on first-come, first-served basis. If the number of requests exceeds the limit for a DPA, then a lottery will be held.

How will the lottery system work?

This will be fleshed out in the Rules. There will be a public hearing on the draft Rules before they are finalized.

I am currently operating a B&B, and do not have a NUC, so will need to register. Will I get priority in the registration process?

No.

Can I advertise and operate a short-term rental once I register?

No. To avoid a citation, operation cannot occur until the registration process has been completed and registration number issued.

MORE INFORMATION

Note that DPP has not mentioned about the property tax designation to “Resort”.  It’s unclear whether it would be based only on the two bedrooms of a home.

Refer to the Department’s website:honoluludpp.org

Email the Department:info@honoluludpp.org

Call the Department:

Advertising Restrictions: 768-8127

Registration Process: 768-8127

General Zoning Information: 768-8252

Make a complaint: 768-8127

Public Information Officer: 768-8284

Choon James has been a real estate broker for over 30 years. She can be reached at 808 293 8888 ChoonJamesHawaii@gmail.com 

Daniel James has been a Real Estate Associate for 5 years. He can be reached at 808 542- 5165 http://www.HawaiiRealEstateOhana.com