Honolulu Sets a 90-Day Minimum for Rentals Outside Resort Zones

On 26 April 2022, Honolulu Mayor Rick Blangiardi signed Bill 41 at Kailua Beach Park, and the shortest legal stay in most of Oahu's rental homes was set to go from 30 days to 90. The City Council had passed the measure by 8 votes to 1 on 13 April. The law kept shorter visitor stays inside the resort zones and a few named areas beside them, and it was written to take effect 180 days after approval.

For an owner renting a house or condo by the month outside those zones, the change was large. A 30-day booking had been the legal minimum outside the resort areas. Under the new law the minimum was 90 days. The ordinance let units that were already being rented for 30 to 89 days at a time carry on for 180 days after the effective date. After that their owners had to register them or rent only for 90 days or more.

Section 17 of the ordinance set the effective date at 180 days after approval. Counted from 26 April, that was 23 October 2022. Blangiardi told reporters at the signing that the city would begin enforcing in six months and would use the time to prepare, Hawaii Public Radio reported.

What the law changed

The center of Bill 41, recorded by the City Clerk as Ordinance 22-7, was the minimum stay. Honolulu Civil Beat reported that the final version required a minimum booking period of 90 days for rentals in most areas of the island. Blangiardi had first proposed 180 days.

Shorter stays remained legal in resort zones and in certain neighborhoods near Waikiki, Ko Olina and the Turtle Bay Resort, according to Civil Beat.

The rest of the law set the terms for owners who could still operate:

• Registration cost $1,000, followed by a $500 renewal fee each year. Hawaii Public Radio and the Associated Press reported that the renewal fee for permitted rentals had been $2,000.
• Bed and breakfast homes operating under nonconforming use certificates in residential districts had to provide one off-street parking space for each room rented and could take no more than four adult guests at a time, the ordinance said.
• Guests of rentals operating under those certificates in country, residential or apartment zoning districts were barred from parking on the public streets nearby.
• Unregistered rentals could not advertise daily rates.

Booking platforms were given a duty as well. Under the ordinance, a hosting platform had to take reasonable care to check that a unit was registered, permitted or otherwise allowed before it took a fee for a booking.

Why the city acted

Blangiardi's administration introduced the bill to reduce illegal vacation rentals in places such as Kailua, which is not zoned for tourism, Hawaii Public Radio reported. He signed it there.

“This is to bring back our neighborhoods where people grew up, where families are raised, and not have them be mini hotels,” Blangiardi said at the press conference, according to Civil Beat.

The counts behind that argument varied by source. Hawaii News Now reported that the city estimated there were between 10,000 and 14,000 short-term rentals on Oahu. KHON2 reported the mayor's figure differently, as an estimate of 10,000 to 14,000 illegal short-term vacation rentals in Hawaii.

Oahu had tried a different approach three years earlier. Bill 89, passed in 2019, was meant to permit 1,700 vacation rentals across the island, with Airbnb and Expedia helping the city enforce the rules once the new permits were issued. Civil Beat reported that the seven enforcement positions created with that law were never funded, and that the city's agreements with the platforms never came into force because the new permits were never issued.

The enforcement question

That history made enforcement the test of Bill 41 from its first day. Hawaii Public Radio reported that the Department of Planning and Permitting had requested seven full-time positions for short-term rental enforcement. Blangiardi said the city was hiring field inspectors who would use new software to check that rentals complied, Civil Beat reported.

Councilmember Andria Tupola, the one vote against, was not persuaded. Civil Beat reported that she welcomed more enforcement against illegal rentals but called Bill 41 “not an enforcement bill” and said the department could enforce the existing law.

What owners and platforms said

The platforms objected. In a letter to the council, Airbnb argued that the bill could amount to a taking of property. “Bill 41 severely damages, if not effectively destroys, the reasonable, investment-backed expectations of these property owners and may constitute a taking that requires the payment of just compensation to injured property owners,” the company wrote, as quoted by Civil Beat.

Expedia Group said in a statement that the city had failed to implement existing law and the enforcement agreement Expedia had signed. Opponents who testified told the council that a 90-day minimum gave the hotel industry an unfair advantage, Hawaii Public Radio and the Associated Press reported.

A property manager at Elite Pacific Properties said in Hawaii News Now's report that the law would push people who need short-term housing into the long-term market and reduce the supply of long-term housing.

Some council members who voted yes had doubts of their own. Carol Fukunaga had drafted exceptions for medical patients, traveling health care workers, students and military personnel, then withdrew them at the 13 April meeting. Heidi Tsuneyoshi said owners in resort areas would pay registration fees that hotels and timeshares did not. Both voted aye with reservations, the City Clerk's notice shows.

Tupola, whose district covers the area from Ewa to Waianae, objected that parts of Ko Olina would lose the right to rent short term, and said owners there had been complying for years, Civil Beat reported.

Some of the opposition was framed in constitutional terms. A board member of the Oahu Short-Term Rental Alliance called the bill government overreach and a civil rights matter under the Fifth Amendment, Hawaii Public Radio and the Associated Press reported.

What it meant for hosts

An Oahu owner reading the news on 27 April 2022 had about six months and a short list of jobs.

• Find the property on the map. Short stays stayed legal only in resort zones and the named areas near Waikiki, Ko Olina and the Turtle Bay Resort, and Tupola had told the council that parts of Ko Olina were being cut out.
• Inside those areas, budget $1,000 to register and $500 a year after that. A bed and breakfast home on a nonconforming use certificate in a residential district had the parking and four-adult limits to check.
• Outside them, plan for bookings of 90 days or more. A unit already rented for 30 to 89 days at a time had 180 days after the effective date before that applied, under Section 14 of the ordinance. Stop advertising a daily rate for an unregistered unit.
• Expect the platforms to ask about registration, since the ordinance told them to take reasonable care that a unit was lawful before taking a fee.
• Watch for a court challenge. Airbnb had told the council the bill might be a taking that required compensation, and an owners' alliance had called it a Fifth Amendment matter.

The harder call was commercial. A house that had paid its way on 30-day bookings needed a new plan before the transition period ran out.

Sources

1. Hawaiʻi Public Radio, Measure to curtail Oʻahu vacation rentals signed into law (26 April 2022).
2. Honolulu Civil Beat, Blangiardi Signs Bill Further Restricting Short-Term Rentals On Oahu (26 April 2022).
3. City and County of Honolulu, City Council, Ordinance 22-7, Bill 41 (2021), CD2: A Bill for an Ordinance Relating to Transient Accommodations (26 April 2022).
4. Honolulu Civil Beat, Honolulu Council Votes To Rein In Short-Term Rentals (13 April 2022).
5. Hawaiʻi Public Radio and The Associated Press, Honolulu City Council approves further short-term vacation rental restrictions in final vote (13 April 2022).
6. Hawaii News Now, Mayor signs bill banning short-term vacation rentals outside of resort areas (26 April 2022).
7. KHON2, Bill banning short-term vacation rentals on Oahu (26 April 2022).
8. City Clerk, City and County of Honolulu, in Hawaii's State Legals & Public Notices, Public notice 0001370919-01, Ordinance 22-7 [Bill 41 (2021), CD2] (4 May 2022).
9. Honolulu Civil Beat, What Happens Now That A Judge Has Blocked Honolulu's New Short-Term Rental Law? (18 October 2022).