Bill advances that gives counties power to phase out short-term rental units

Mar. 18—A bill that seeks to give the counties the power to control short-term rentals—even phase them out—is still alive after crossing over from the Senate to the House where two House committees moved the measure forward.

A bill that seeks to give the counties the power to control short-term rentals—even phase them out—is still alive after crossing over from the Senate to the House where two House committees moved the measure forward.

The Senate version of Senate Bill 2919, authored by state Sen. Jarrett Keohokalole (D, Kailua-­Kaneohe ), was amended Friday during a joint hearing of the House Committee on Housing and House Committee on Tourism. The measure, which is inching closer to a joint House and Senate conference committee, next heads to its final referral before the House Committee on Finance for consideration.

State Rep. Luke Evslin (D, Lihue-Wailua ), who chairs the House Committee on Housing, said, "We are not phasing out vacation rental units with this bill. We are simply removing the barrier within state law so that the counties, if they choose, can do this as they see fit again within a constitutional framework which will limit how they can utilize this."

Evslin said zoning codes were developed before new technologies like online host platforms, and "I don't think anyone could have expected the broad proliferation of vacation rentals that we have now when our zoning codes were developed, and we need to have an ability to walk some of that back."

He added, "We are literally losing housing stock every year, right ? We need to do something, and we need to give the counties the power to do something."

Lawmakers mostly supported the bill Friday, although a majority of the testimony for the hearing came from those opposed to the measure.

State Rep. Richard Onishi was the only dissenting vote from the House Committee on Housing. Evslin voted yes along with state Reps. Micah P.K. Aiu, Darius K. Kila, Lisa Kitagawa, Tyson K. Miyake and Chris Todd. State Rep. Lauren Matsumoto voted yes with reservations.

State Reps. Sam Satoru Kong and Elijah Pierick, from the House Committee on Tourism, voted no. Voting yes were Chair state Rep. Sean Quinlan as well as state Reps. Natalia Hussey-­Burdick, Daniel Holt and Nadine K. Nakamura. State Reps. Trish La Chica and Rachele F. Lamosao were excused.

Pierick (R, Royal Kunia-­Village Park-Honouliuli-­Hoopili-part of Waipahu ) said, "I appreciate the intent behind the bill. I'm all about localizing authority versus like top-down authority so giving the counties the power to do this. At the same time, there's a majority of testimony in opposition, so in alignment with that testimony, I'll be voting no."

Onishi (D, South Hilo-­Keaau-Honuapo ) said, "Unfortunately, the counties have chosen not to address and not to enforce laws and ordinances that are available to them. I think we are doing a disservice to people who, as they have testified, are using the ability to rent portions of their homes or a second property that they own in order to support their livelihoods. We have absolutely zero data on who those people are, and as testifiers have expressed this could put them in jeopardy of losing their homes—not necessarily to a local person, but to possibly a person that is coming from out of the state, so we have absolutely gained nothing."

While attempts to regulate short-term rentals have gone on for decades at the county and state levels, the deadly Aug. 8 Maui wildfires, which displaced thousands of people from their homes, have fueled a push for what some view as needed controls and others view as overreach.

In addition to SB 2919, at least two other major short-term vacation rental bills also survived crossover, including :—House Bill 1838, which seeks to allow "counties to enact a zoning ordinance to amortize or phase out nonconforming single-family transient vacation rentals over a 'reasonable period of time.'" The Senate committees on Commerce and Consumer Protection ; Energy, Economic Development and Tourism ; and Government Operations have scheduled a public hearing for 9 :40 a.m. Tuesday.—House Bill 2416, introduced as part of Gov. Josh Green's package to create a tax amnesty program with the aim of enticing short-term rental owners to convert their properties into longer-term housing, crossed over and has been referred to three Senate committees : Energy, Economic Development and Tourism ; Water and Land ; and Ways and Means.

Groups against The renewed focus on short-term rental legislation by state lawmakers has inspired pushback from vacation rental groups across the islands, which over the past several years have begun to get more organized.

Along with hosting platforms like Airbnb, testifiers included trade groups such as the Hawai 'i Realtors, Hawaii Legal Short-term Rental Alliance, Oahu Short-term Rental Alliance and individual members of Hawaii's short-term rental industry.

The Hawaii Mid and Short-Term Rental Alliance, formed in May due to increased pressure at the state Legislature and across county government, also testified against SB 2919. HIMAST Vice President Jennifer Wilkinson told the Honolulu Star-Advertiser that the organization has been meeting with state lawmakers this session to advocate for the rights of about 35, 000-plus short-term rentals across the state.

"We want to be part of the solution, " Wilkinson said. "If (short-term rentals ) are phased out on each of the counties, which is what it looks like is the attempt that will be made, it's going to have ripple effects across the economy for each of the counties and the state."

Wilkinson said HILSTRA, using state and AirDNA data, has estimated that short-term rentals in Hawaii generate almost $750 million each year across the various taxes, including general excise taxes, the state and county transient accommodations tax, property taxes, other fees and state income taxes.

Kelly Lee, a HIMAST board member on Oahu, said Hawaii Tourism Authority data shows that 21 % of people who use short-to midterm rentals in the state are nonvacationers. She said short-term rentals provide flexible lodging options for service members, traveling medical professionals, local residents who need to transition between homes or who have been displaced by disasters, and support a person's ability to travel as they prefer.

Some studies suggest that as many as 33 % of visitors who stay in vacation rentals would be less likely to visit if that lodging option were removed. That's not inconsequential given that HIMAST said data from the state and from property managers shows that in 2022 short-term rentals generated $4.8 billion in total direct visitor expenditures and supported nearly 49, 000 jobs across the state, which paid an average of $39 an hour.

Lack of understanding Caitlin Miller, a HIMAST board member on Maui, said, "There's a lack of understanding of how many people would be impacted and what it would take to replace $39 an hour on average for most people. You are talking two to three jobs, not one job."

"The big thing is getting people to see the industry as their neighbors, and their friends and their family not as a large corporation, " Miller said. "Because the hotels are large corporations ; short-term rentals are small businesses."

Hawaii hotels and Native Hawaiian advocacy groups historically are not often on the same side. However, the Hawai 'i Hotel Alliance supported SB 2919 Friday along with members of Lahaina Strong, a Maui advocacy group that is using customary fishing rights to camp overnight at Kaanapali Beach to raise awareness of the need for decent housing, especially for those displaced by the Aug. 8 Maui wildfires.

Paele Kiakona, Lahaina Strong advocacy and communications coordinator, said, "Sixty percent of our people have now left the islands because the short-term rental industry has exacerbated the housing market and created a space where people can no longer afford it. So if we continue this track that we've been on, then our people will no longer be here. Hawaii will be unrecognizable."

Hawai 'i Hotel Alliance President Jerry Gibson said there are still about 3, 500 people living in about 1, 500 Kaanapali hotel units, down from a peak of 7, 800 people in the immediate aftermath of the fire.

"Lahaina Strong has the same basic thoughts that the hoteliers have. Hotels want housing for their workers. They want housing for their people, " Gibson said. "So I think the goal is the same for us to build housing as fast as we can, turn short-term rentals into longer-­term rentals as quickly as possible, get the right legislation."