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Oahu Short Term Vacation Rentals Prohibited with New Bill

Discussion in 'US - Hawaii Timesharing' started by Maverick1963, Jul 30, 2019.

  1. Maverick1963

    Maverick1963 TUG Member

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    I looked for related threads but did not find one. Hope it is not redundant. And this may be good for general discussion.

    Honolulu City/County is making a bill effective to stop illegal short term vacation rentals without permit. It has not been completely okay to rent out properties for 30 days or less. But there were no regulations. Now higher penalties will be charged on owners and operators. Authorities are sending warning to owners who list their vacation rentals with Airbnb, RVBO, etc. If you have reservations, you may check with the owners. If you are in the process of planning, it is better to avoid such options.

    https://www.honolulu.gov/dppstr
     
  2. OldGuy

    OldGuy Guest

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    Our County up North has had a similar policy for short-term rentals for a long time.

    It is a matter of properly registering them.

    But, speaking of the vacation rental companies, the State of Florida has been pro-active about them collecting sales and tourism tax, I guess the traditional lodging industry wanting to even the playing field.
     
  3. Maverick1963

    Maverick1963 TUG Member

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    Honolulu City/County turned down the plan to let Airbnb collect transient tax. Hotel industries are supporting the bill but the authorities and people living there have a concern that more and more properties are bought for short term rentals. That is harming the availability and price of residential properties.
     
  4. T_R_Oglodyte

    T_R_Oglodyte TUG Lifetime Member

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    That merely reflects the power of the hotel industry lobby in Honolulu. Most jurisdictions are glad to have AirBnB or VRBO collect and remit since it's much cheaper and easier for government to deal with one payee instead of hundreds of payees.

    The agencies use local registration and zoning issues to control the number and location of short-term rentals. And then they collect the tax money from the portal site. Much simpler, and it's also much easier to audit to verify that all moneys due are being paid. The trickier issue in tax collections is when property owners get their permit, but then also do off-portal rentals. In those cases, the owner is responsible for collecting and remitting.
     
  5. alwysonvac

    alwysonvac Sighting Expert TUG Lifetime Member

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    Bought and sold several over the years including Disney & Four Seasons
    Yes, this is a problem that is impacting many major cities. :(

    There are lots of articles regarding this topic. Here are some.

    Is Airbnb Ameliorating – or Exacerbating – Inequality in Cities?
    https://www.usnews.com/news/cities/articles/2019-05-02/airbnbs-controversial-impact-on-cities


    Housing Crisis: How tourist apartments are hurting Madrid’s neighborhoods
    https://elpais.com/elpais/2018/02/26/inenglish/1519648621_095942.html?rel=mas

    What Airbnb really does to a neighbourhood
    https://www.bbc.com/news/business-45083954

    Top Cities Where Airbnb Is Legal or Illegal
    https://www.investopedia.com/articles/investing/083115/top-cities-where-airbnb-legal-or-illegal.asp
     
    Maverick1963 likes this.
  6. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    OK, so if I understand this law and the exceptions correctly, certain areas can and certain areas cannot have privately owned short term rentals without filing a permit which will be limited in number. If a building falls into one of the Resort Zones then you don't need a permit. So for example condos that are rented in the Ilikai which is right next to the Hilton Hawaiian Village doesn't need a permit, however, condos that are rented in the Wailana across the street from the Hilton Hawaiian Village do.
    That seems kinda arbitrary. Also, there are areas in Waikiki that are further away from the Ocean and the main tourist resort areas that don't need a permit. While there is certainly a Labor Union push for this crackdown it seems like there is some type of political connections situation going on in the designation of areas.
     
  7. cerralee

    cerralee TUG Member

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    So...where do timeshares fall into the mix? If someone owns a deeded week and wants to rent it out is it legal? How about association owned weeks? It seems to be complicated. Timeshare is on the non-conforming side of Kuhio and unit is not on the list of registered units.
     
    Last edited: Aug 8, 2019
  8. Maverick1963

    Maverick1963 TUG Member

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    Over the time, hotel areas have been expanded in Waikiki. So zoning cannot be black and white, I believe. Apart from zoning, use of land must be permitted by the authority. So there are hotels outside of resort mix area. It's not an issue of land use, but Ritz Waikiki Residence is exceptional because it is built wide along the beach. It was a long established rule to build a high rise with wider faces toward east/west so that it should not much get in the way for views from other condos. After a long debate, Ritz got a okay. Business mush have influenced administration.

    For hotel and even condotel, property tax is higher than residential properties. Also commercial property owners in the wider Waikiki area are paying tax for the area re-development. https://www.wbsida.org/overview There is give and take between the authority and businesses.

    When it comes to condo, the usage is decided unit by unit. So for example, Waikiki Beach Tower has units managed by hotel companies as well as ones owned by individuals. I suppose the hotel operation inside a condo is different from Short Term Rental requiring NCU permit. If condo units are not managed by a proper hotel company or not approved for NCU, they are illegal. And condos within resort mix do not required permit but residential condos have house rules. Usually short term rental is prohibited. Of course, intentional violation is another issue.

    Regarding timeshare, I do not see problem in rental by timeshare interest owners in terms of unit usage. The building can be used commercially and units can be rented on a daily basis. If you look into details, there may be an issue of transient tax. But at least you can advertise rental of your Waikiki week here in the marketplace and I believe there are no regulations to stop it. The rules for owners will apply and it's up to the timeshare operating company or HOA.

    This new law has not been disclosed completely for application. FAQ is not ready. Based on my knowledge, I tried to give a response to comments, but I am sure there will be more questions. In the past, I suggested the use of short term rental in Hawaii here in this forum sometimes. But my message now as I clarified in the first place - please stay away from airbnb and rvbo type of accommodations on Oahu and maybe on other HI islands.
     
    Last edited: Aug 9, 2019
  9. tompalm

    tompalm TUG Member

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    Most of the locals here are pretty discussed with the mayor supporting the unions and doing whatever he wants. The city council did not recommend to shut down Vacation rentals, but the mayor pushed forward with what he wanted to do. Hawaii has the highest number of union employees at 23 percent with the average across the mainland being around 20 percent. There are still a lot of Air BnB units listed on their website, but that will not continue much longer. The city plans to start fining people $10,000 per day before the month is over. So expect there to be a shortage of places to stay as folks get notice that their Air BnB unit has been canceled and now they have to stay in a hotel. Also, expect hotel prices to go higher.

    Regarding the zoning, most of Waikiki has resort zoning but parts of Waikiki are not included. The Waikiki Banyan condo hotel had to cancel all future reservations and tell the owners that they can’t rent rooms out any longer. The area between Ali Wai and Kuhio that is on the Diamond Head side of International Market place comes to mind as being apartment zone and not included in resort zones.

    There are a couple newspaper articles that I posted last week on the link below. All is not well in paradise. They are having problems with the rail, building the 30 meter telescope and now this. The only good news is that there will be less people on flights coming here and prices should go down. But Southwest and other airlines already stated that they will make adjustments to flights as needed.

    https://www.tugbbs.com/forums/index...ets-or-hotel-rooms-first.293563/#post-2319685
     
    Last edited: Aug 10, 2019
  10. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    Also, the Waikiki Area between Ena Rd. and the portion of the Ala Wai Canal that you need to go over to get to the Ala Moana Mall is also zoned apartment.

    While I agree that lower flight prices is a good thing, less tourists means less tax money collected so that may impact the taxes or services in Hawaii if the Government gets less revenue. By the way there are
     
  11. tompalm

    tompalm TUG Member

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    From today’s paper

    Second vacation rental lawsuit filed by Waikiki condotel
    • Ordinance 19-18 also increases the maximum fine for advertising or operating an illegal rental to $10,000 a day from $1,000 daily.

      A number of the units have exemptions and therefore are allowed to operate legally, but most do not. The Association of Apartment Owners of Waikiki Banyan wants a permanent injunction preventing the city from imposing its new ordinance on its owners.

      The lawsuit stated that 89% of the units in the complex operate as short-term vacation rental units. “These owners purchased their units with the belief, understanding and expectation that their units could be rented out short-term, i.e. less than 30 days,” the lawsuit said.

      During its 40-year existence, “no owner, vendor, operator or the (homeowners) association has ever been cited or sent a notice of violation for operating, allowing, advertising or managing short-term rentals in the Waikiki Banyan,” the lawsuit stated.

      It said the city Department of Planning and Permitting, which is in charge of enforcing the ordinance, refers to the Waikiki Banyan as a hotel on at least three different occasions on its website.

      With the units no longer being offered as short-term rentals, condominium owners are experiencing “significant loss of rental income” of $200 to $400 a night, the lawsuit said.

      “Without this rental income, many owners will be forced to immediately sell their units,” the lawsuit stated. “With so many units simultaneously up for sale, prices are expected to plummet. Losses are estimated to be $30,000 plus per unit.”

      But it’s not just the operators and its associate businesses who will feel negative financial impacts. “As a result of the ordinance, the city and state will lose millions of dollars in tax revenues and hundreds if not thousands of people will lose their jobs,” the lawsuit said.

      Waikiki Banyan representatives met with DPP officials July 29 and were told they could not obtain an exemption from the new ordinance for all the condominium complex’s owners. Some of the property owners argue that it’s a fairness issue because short-term vacation rentals are allowed in buildings on the makai side of Kuhio because they are in a precinct designated for hotel-resort use while they are not permitted on the mauka side, which is in a precinct designated for residential-business use.

      DPP Acting Director Kathy Sokugawa, when asked by the Honolulu Star-Advertiser about the point last week, said the Waikiki Special Design District was created in the 1970s in part because people worried that the area was being overrun with hotels, which led to the creation of apartment and mixed-use precincts for those on the mauka side of Kuhio.

      The association’s law firm is Porter McGuire Kiakona and Chow.

      A spokesman for the city said officials could not comment because they had not yet reviewed the lawsuit.

      The Waikiki Banyan action is the second challenge to the new ordinance.

      The Kokua Coalition, the group of “30-day rental” operators also known as the Hawaii Vacation Rental Owners Association, filed a lawsuit Aug. 1 seeking an injunction to stop the city from enforcing the new ordinance against its property owners.

      The coalition is arguing that its clients have been allowed by DPP to operate 30-day rentals, where operators rent to a single customer every 30 days, regardless of how long they actually stay.

      A motion for a temporary restraining order is scheduled to be heard Thursday in U.S. District Court.
     
  12. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    To further my thoughts about the Resort Areas being somewhat arbitrary and inconsistent and supporting the Waikiki Banyan Lawsuit; The map of the Resort Areas shows the entire area between Kuhio and the Ala Wai being Apartment Zoned. I know some of those areas are Resort/Hotel type areas. Furthermore, the Allure Condo on the Eva Side of the corner of Kalakaua and Ena which is right next to the Waipuna is in an area that is mostly Apartment Zoned but it is considered in the Resort Area?
     
  13. Boopeboop

    Boopeboop TUG Member

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    Generally speaking, whenever a developer intends to build a hotel on a non-resort zoned lot (vice versa on all property types), they need to go through zoning reclassificaton process, or else it would not be permitted. However, since Waikiki Banyan is built exactly like a normal condo, it is possible that it was under a residential permit.
    On the side note, a quick search on the units' property tax class shows that most of the Banyan units are residential class, meaning 0.35% for property tax rate. Versus a legal condotel unit classified as hotel and resort would be paying 1.39%. The difference is quite obvious on paper and I have a hard time believing that the real estate agents didn't tell the owners before the purchase.
    (Source: http://qpublic9.qpublic.net/hi_honolulu_display.php?county=hi_honolulu&KEY=260250050000)

    To your thoughts about the inconsistent zoning - city planning doesn't necessarily always group the same type of zoning into one area. There are many school of thoughts in city planning, and there are no set ways on how it has to be done.
     
  14. tompalm

    tompalm TUG Member

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    Lots of condo owners use their condo for several months during the winter and rent it during the rest of the year. The new bill will make it very difficult to rent during the remainder of the year. The real problem is that there will be a shortage of places to stay during the busy season from Dec - Feb, Spring Break or Summer. The estimate is that 8000 rooms will be removed each day from the market. People will need to cancel their trip this winter or buy tickets to another island.
     
  15. tompalm

    tompalm TUG Member

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    From today’s paper

    More inspectors hired to tackle problem of illegal rental
    • The cost of the hires is $132,312.96. The six will be paid $24.18 an hour working 19 hours a week for up to 10 months, according to the memo.

      DPP’s Residential Code Enforcement Branch has 17 full-time, permanent inspectors who handle not just vacation rental violations, but other property usage issues, Sokugawa told the Honolulu Star-Advertiser.

      The three new hires joining the permanent staff will work exclusively on short-term rental complaints and violations, Sokugawa said.

      Unless specifically permitted to do so, rentals of 30 days or less are illegal on Oahu except in hotel-resort zones. The city stopped issuing approvals for such units in 1989. The city estimates that there are 6,000-8,000 illegal vacation rentals on Oahu, although others have estimated there may be as many as 25,000 unpermitted units outside of hotel-resort areas.

      Ordinance 19-18, formerly Bill 89 (2018), makes it illegal to advertise a vacation rental of less than 30 days that isn’t permitted to operate. It also upped the fines for advertising or renting an unpermitted vacation rental to a maximum of $10,000 a day instead of $1,000 daily.

      In late July, DPP announced that it sent out approximately 5,000 “courtesy” warning letters to owners of properties where illegal vacation rentals may be operating. DPP relied on “pin drops” on street maps used by online vacation rental hosting platforms to identify the owners who received the letters.

      But the pin drops show only approximate locations, and DPP received hundreds of complaints from people who said they were sent the letters by mistake. DPP officials encouraged them to identify possible vacation rentals around their neighborhoods.

      Sokugawa said that the ordinance appears to be having an impact on the number of illegal rentals, at least the ones being advertised. While DPP staff counted 5,000 illegal ads on July 19, they counted only about 3,200 illegal listings on Tuesday, she said.

      “The good thing is we’ve already made a difference on this industry based on the kinds of calls we’re been getting and the decreased level of ads on the World Wide Web,” Sokugawa said. “We’ve already made a significant impact on the illegal short-term rental industry … without even issuing a single (violating notice).”

      She added: “I’m hopeful that once we do issue (violation notices), the number will go down further.”

      DPP is expected to issue its first violation notices soon, Sokugawa said.

      Recently, DPP issued four violation notices on vacation rentals. But those were for violating longtime occupancy laws, not the new vacation rental ordinance.

      Meanwhile, U.S. District Judge Derrick Watson was scheduled today to hear a request for the court to issue a temporary restraining order blocking the city from enforcing the ordinance.

      The Kokua Coalition, which filed the lawsuit, is arguing that renters were allowed to operate so-called 30-day rentals under an agreement reached with the city. Coalition representative said renters should be allowed to continue renting to a single tenant every 30 days, regardless of how long the tenant actually stays.

      Opponents call such agreements sham contracts and point out that it’s difficult to determine if there is actually only one tenant in any 30-day period.
     
  16. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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  17. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    I respect your thoughts supporting city planning not necessarily grouping the same type of zoning into one area. However, I offer more specific thoughts to the contrary: One of the main reasons for zoning is so that residential areas can be where families live and not have transients in the same immediate neighborhood. The Allure Condominium is on the corner of Ena and Kalakaua an is zoned as Resort/Hotel. From what I understand the Allure Condominium is a very large primarily family oriented Building and as I mentioned it is right next to the Waipuna which is also a family oriented building that is in an area that is zoned apartment residential. The Condominiums right across Kalakaua are also in an area that is zoned as apartment residential. However, most of buildings on Kuhio are anything but residential, but the area is zoned residential.

    You can defend these instances as the the prerogative of the zoning board if you wish. However, I will continue to look at them as arbitrary and inconsistent.
     

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