Cracking Down on Illegal Vacation Rentals Won't Solve Housing Crisis

HONOLULU (HawaiiNewsNow) - Gov. Josh Green used his strongest language to date on Tuesday to condemn short-term vacation rentals operating illegally, calling the situation “bullsh**” as he spoke in favor of legislation that would convert thousands of them into housing for local residents.

But legislators writing those laws say they probably will not have the impact the governor is hoping for.

Lawmakers trying to find solutions to the decades-old vacation rental conflict say the answer is not cracking down on illegal rentals, but getting owners to walk away from lucrative rental businesses operating legally.

The governor’s profanity reflected his frustration of the situation on Maui, where fire survivors remain in hotels while thousands of homes are rented to visitors. Converting those to long-term rentals sounds easy, especially when the governor suggested thousands are illegal. “We got 89,000 short-term rentals in the state of Hawaii, of which are only 14,000 are legal,” he said, at a news conference Tuesday.

State Sen. Troy Hashimoto of Central Maui said the same is true on the Valley Isle, which has also successfully cracked down on illegal rentals.

On both islands, thousands operate legally under county non-conforming use permits or certificates.

The units were operating as vacation rentals when the zoning rules allowed it, but were considered “non-conforming” after the counties banned them in residential or apartment areas.

Lawmakers plan to give the counties power to convert those to owner-occupant homes or long-term rentals, but because they are legal businesses that’s not easy.

Former Attorney General David Louie represents Air BnB and has been testifying against the effort.

“You don’t get to retroactively go back and say, Hey, I’ve decided you can’t do what you’ve been doing on your property. That’s not allowed,” Louie said at a House hearing on January 31.

“This is going to lead to litigation, it’s going to be unconstitutional.”

Chris Adair, who said she operates rentals on the Big Island, was one of hundreds who testified against the House bill.

“We’ve invested time, effort and resources under the assurance that our rights to use our property will be respected,” she said the rentals make it possible to afford her own home.

The state lawmakers say what the counties will do with the authority to convert the rentals is entirely up to the counties, because each has been operating a different regulatory environment, and faces different legal challenges.

“I think there are various ways that we may be able to find a compromise, to make sure that we can get a hold of short term rentals without having to, you know, pay out the use of your property,” Hashimoto said.

Evslin said litigation is expected and it could be up to the courts to determine when a policy is unconstitutional or demands compensation for the loss of property or income.

“These people can continue to operate for 10 years, and then they lose the permit,” Evslin said was one concept.

“I’ve also heard the possibility of maybe they lose the permit on the sale of the property,” he said.

Both lawmakers say the counties already have what they consider the best tool for discouraging vacation rentals — tax them until they are less profitable.