Bill Allowing Hawaiʻi Counties To Phase Out Vacation Rentals Gets Senate Hearing

(BIVN) – A bill that would allows counties in Hawaiʻi to phase out nonconforming single-family transient vacation rental units is making its way through the State Legislature. 

HB 1838 HD2 has passed through the House and on Tuesday was on the agenda for a joint Senate committee meeting at the Capitol.  

The Senate Committee on Commerce & Consumer Protection, and the Committee on Energy, Economic Development, & Tourism, as well as the Committee on Government Operations, heard the bill before a room packed with public testifiers.

There were also nearly a thousand pages of written testimony submitted to the Senate committees. Testimony in support of the measure was submitted by the Hawai‘i State Association of Counties, as well as the Office of Hawaiian Affairs, which stated:

… This measure could assist the counties in better regulating short-term rentals in specific areas as needed.

The commercial use of short-term rentals (STRs) has become concerning as it further strains Hawaiʻi’s limited housing inventory. There is an acute shortage of long-term housing options for residents1, and it is exacerbated when existing inventory is reserved for visitor use only. While the counties are working to address the housing demand, they should also be empowered to gradually phase out the use of housing as STRs over time.

More than half of all STRs in Hawaiʻi are owned by people who do not reside in the state, and 27% of STR owners own 20 or more units.2 Short-term rentals in Hawai’i have proven to be more profitable than renting to local families. But this profit often comes at the cost of the communities where they’re located. By phasing out single-family transient vacation rentals over time, we can ensure that housing is used for its intended purpose of providing long-term homes for our residents.

This is especially concerning for Native Hawaiian residents. The 2020 U.S. Census showed us that more than half of all Hawaiians live outside of our state, their homeland. Preserving long-term housing inventory for residents can prevent the out-migration of Hawaiians and other members of our communities, who are forced to leave due to the increase in lack of affordable housing options.

Moreover, this approach can have a positive impact on our economy by increasing the availability of long-term housing options, which can attract more businesses and workers to our communities. This, in turn, can boost our economy and help Hawaiʻi stay true to our value of ʻohana, which emphasizes the importance of family and community.

On the other hand, the Rental By Owners Awareness Association wrote in opposition to the bill. Alicia Humiston, President of the RBOAA, stated:

This Bill is not to stop illegally operating short-term rentals – this Bill goes after operators who are in full compliance of the law, operating legally within their particular location, either by their nonconforming use certificate or by being legally entitled to operate by zone. Again, this Bill is not a regulatory act to eliminate an illegal use – it is focused on those who have fully complied with all aspects of regulation to be in compliance.

This Bill is not necessary. Short term rentals have operated legally in Hawaii for decades. STR’s are not new. What is new, is the counties now want to do away with short term rentals in people’s homes and individual operators. These are what are known as “mom and pop” operations. There was volumes of testimony last year when HB 84 was proposed, that if this Bill were to pass:

It would cause tremendous hardship on people who have operated legally.

They have held up their responsibility to operate legally, and now the county wants to make what was legal – illegal.

There are many people, on all islands, who rely upon their ability to be able to rent short term to make extra money to pay their expenses. They should have a right to continue to be able to rely upon that income.

A recent economic study was published stating that over the past two years of inflation, the average family has suffered the real loss of $7,400 of spending value. The inflation our country and state have experienced is significant and compounding that with additional loss of income that people could depend on from short term rentals will be a real hardship.

These are legally operating short term rentals. These folks have complied with all the requirements of the laws. They have held up their end of what was required of them. Please do not pass this Bill and allow the counties to destroy what hard working, legally operating people have come to rely upon for income.

The attorneys for Airbnb – Kobayashi, Sugita & Goda, LLP – wrote in opposition to the bill, saying:

We are concerned that this bill is likely to lead to unconstitutional actions that would result in substantial future legal action. As an initial point, it is noted that HB 1838 H.D.2 will not assist in any way to reduce the number of illegal short-term rentals that may be operating in the State of Hawaii. The sole effect of this bill would be to allow the Counties to eliminate the ability of landowners to use their properties in ways that are currently legal, and have been for decades. Although it may seem that the proposed legal change is merely an innocuous delegation of authority, the proposed changes included in HB 1838 H.D.2 would change statutory language that codifies existing constitutional rights that have been explicitly recognized by courts in the State of Hawaii.

The Hawai‘i Association of REALTORS® opposed the bill, while the Hawaiʻi Hotel Alliance wrote in support.

Decision making on the bill was deferred until Wednesday, March 20th.