The Mayor of Honolulu, Kirk Caldwell, signed Bill 89 into law today that gives the city stronger tools to regulate vacation rentals. The law also increased the fines on operators who are found in violation. It is anticipated that the new law will be challenged by the vacation rental hosting platforms as well as groups of Oahu operators.

Mayor Caldwell also vetoed Bill 85 (2018) today, a separate measure passed by the Council that would have only cracked down on the thousands of illegal vacation rentals and offered no path for them to become legal. City attorneys argued that the language in that bill conflicted with what is in Bill 89.

Bill 89 (2018) also allows for the permitting of up to about 1,700 hosted bed-and-breakfast establishments (B&Bs) starting in October 2020, the first such permits to be made available in 30 years. But the measure does not offer additional permits for the more prevalent and more profitable whole home transient vacation units (TVUs).

The city stopped issuing new permits for vacation rentals in 1989, and there are currently 816 legal rentals outside of resort zones. The City Department of Planning and Permitting (DPP) estimates that there are 6,000 to 8,000 illegal vacation rentals on the island of Oahu.

The new law requires operators to put the permit number or the address of the vacation unit on any ads, including those appearing on Airbnb, Expedia, and other vacation rental hosting platforms. This will help DPP officials to go after illegal rentals by looking through websites instead of physically having to visit a location one by one. Fines can run as high as $10,000.

Will Hawaii Governor veto related vacation rental Senate bill?

Governor David Ige today put controversial Senate Bill 1292 on his “intent to veto” list. This bill would require vacation rental platforms such as Airbnb and Expedia to collect taxes from transient rental operators on behalf of the state. If the Governor does not veto by July 9, the Bill becomes law without his signature.

At a press conference Governor Ige said, “The state’s taxation of transient accommodations through the hosting platforms should complement the counties’ regulations of transient accommodations.” The Senate bill did not specifically call for the state to hand over to the counties any of the information it receives from the hosting platforms and he thinks a stronger bill could be crafted that works in unison with the city legislation.

“I think knowing that the City Council is going to create a registration process for the (transient vacation units) … allows us to craft a proposal that specifically acknowledges that and allows us to incorporate that into our tax collection efforts,” he said, adding “we want to make sure there are no adverse unintended consequences.”