New O'ahu Rental Enforcement Protects Quality of Life for Residents

In June, Honolulu Mayor Kirk Caldwell signed into law a new ordinance which provides for better enforcement of O‘ahu’s existing laws regarding vacation rentals, essentially barring popular platforms like AirBnB from advertising unregistered vacation rentals outside of resort areas such as Waikiki, Turtle Bay, and Ko Olina.

While the restrictions (which also limited the number of units) have been in place for nearly four decades, enforcement was difficult, particularly after the number of units grew with the popularity of online booking platforms. In fact, owing to the nature of the booking platforms, the Hawai‘i Tourism Authority (HTA) even has difficulty estimating the total number of Vacation Rental Units (VRU) available for sale in the state at any given time—estimates range as high as 10,000 units statewide.

Proponents of the bill have numerous reasons to offer their support, including better control over land use regulations designed to maintain quality of life for residents. VRUs have also been painted as the cause of higher land values driving higher residential property taxes, increased transient traffic in residential neighborhoods, and a misrepresentation of a property’s intended use for tax purposes.

Opponents of the bill point to studies done by HTA indicating that a number of visitors who book VRU accommodations would not have traveled in absence of the accommodation type’s availability. They also point out that hotel occupancy and revenues have been relatively steady in spite of the growing popularity of VRUs; arguing that VRUs drive net visitor growth to the state.

While arguments in support of the development of Hawai‘i’s vital tourism industry are well-taken, the bill is a positive step in ensuring effective land use for the benefit of O‘ahu residents.

Sustainable tourism growth in Hawai‘i will eventually require common-sense limits on visitor accommodation inventory. It is unfair for O‘ahu residents shopping to rent or own residential real estate to compete in the same marketplace as inbound leisure travelers, whose exposure to the island’s accommodation costs lasts only for the duration of their visit. 10,000 rental units off the housing market to accommodate visitors creates an inventory shortage significant enough to drive up the cost of the remaining units for O‘ahu residents.

By compartmentalizing separate marketplaces for local residents and visitors (and real estate buyers who seek to accommodate visitors in residential areas) helps O‘ahu—in part—address its affordable housing crisis.

It’s also part of a larger question facing the travel industry the world over. The global population with means and ability to travel for leisure is at its largest ever and continues to grow. How can our insatiable demand for travel and the associated need for accommodation be met without encroaching on the accommodation needs of the local residents who are vital in providing their welcome?

While VRUs create revenue streams for their owners (many of whom are out-of-state organizations operating multiple units rather than Hawai‘i residents renting a single unit) and indirect contributors to the local economy, the framers of the ordinance brought up myriad concerns with the practice.

A primary concern is stranger danger. In residential communities, the accountability for owner-occupiers is their very address—if the community has a concern with a community member, they can knock on their door. With transient visitors occupying VRUs without hosts on-site, there’s less transparency. Short term visitors have virtually no stake in the community’s long-term safety or quality of life; similarly, neither do their landlords, beyond the commercial viability of their rental. The result is communities being subject to a steady stream of transient visitors instead of full-time residents who live and work there.

Another concern is the equitable distribution of the tax levy. Operators of unlicensed VRUs do not pay their fair share of tax to the community. Previously, owners of unlicensed VRUs were not paying the state’s Transient Accommodations Tax (collecting the tax on an unlicensed VRU would be to acknowledge its existing as a VRU) but also benefitting from the lower tax rate assigned to residential units, whether owner-occupied or leased to a long-term tenant (commercial and hotel/resort property tax rates are many times higher to cover their higher infrastructure uses).

The purely capitalist argument in defense of VRUs is that private citizens should be permitted to do as they please with their real property, but this is in conflict with zoning laws implemented and enforced by the people’s elected government representatives to ensure fair, sustainable land use. While these representatives undoubtedly heard from their constituents on both sides of the issue, it’s a strong statement of support for its merits that the measure was passed unanimously.

Unfettered rental of residential properties to satisfy O‘ahu’s strong demand for visitor accommodations is one of many drivers of the island’s affordable housing crisis, and its closely related homelessness crisis, both of which have detrimental impacts to the quality of experience for both residents and visitors alike.

Restrictions on land use in Hawai‘i date back to the very moment the first Polynesian voyager stepped foot off their canoe. In the feudal society the voyaging Hawaiians brought from the South Pacific took root in Hawai‘i it was the ali‘i, or ruling chiefs, that had kuleana (responsibility or obligation) to malama ka ‘aina (care for the land).

In those days, malama ka ‘aina often consisted of portioning out of responsibility to other ali‘i of lower station, and in turn to commoners, to work the land for communal benefit. Other times it meant managing the use of the land through kapu, managing development for maximum sustainability.

Today, it is the elected representatives of the island’s residents who now have kuleana to maximize sustainable yield from the land for their constituents. While O‘ahu’s residents have every interest in supporting a strong visitor industry, they cannot do so at the expense of affordable housing in safe communities that provide an acceptable quality of life for residents. The modern-day kapu on unlicensed VRUs protects this vital need.

The author recognizes the importance of Hawaiian language diacritical marks such as the kahako (macron), but some of these may have been omitted for web browser compatibility.