Honolulu's New Short Term Rental Ordinance
Transient vacation units (also known as short term rentals), are defined as residential dwellings, other than bed and breakfast establishments, that are available for rent for less than a thirty-day period. Transient vacation units have significantly increased over the past several years on Oahu due to social media advertising and online hosting platforms. In an effort to effectively regulate transient vacation units and bed and breakfast establishments, Mayor Kirk Caldwell signed Bill 89 (Ordinance 19-18) on June 25, 2019, which establishes additional regulations and new penalties for violations.
Where Are Transient Vacation Units Allowed?
Transient vacation units are only allowed in (i) resort districts, and (ii) A-1 low-density apartment and A-2 medium-density apartment districts located within 3,500 feet of the Ko'olina resort district. In the Waikiki Special District, transient vacation units are only allowed in the resort mixed-use precinct. Outside of these permitted areas, transient vacation units are only allowed with a nonconforming use certificate.
Advertising Requirements
Under Bill 89, it is unlawful for any owner or operator of an unpermitted transient vacation unit to advertise, solicit, offer, or knowingly provide rental of an unpermitted transient vacation unit. All advertisements for transient vacation units must include a nonconforming use certificate number, if applicable, and the dwelling's street address. If an owner or operator of a transient vacation unit receives a notice of violation, the owner or operator must remove any advertisement identified in the notice. The existence of an advertisement is prima facie evidence that a transient vacation unit is being operated at the listed address. Legally established hotels and time-sharing units are exempt from these advertising requirements.
Hosting Platform Restrictions and Requirements
Bill 89 makes it unlawful for a hosting platform to provide any services for an unpermitted transient vacation unit, including booking services, insurance, concierge services, catering, restaurant bookings, tours, guide services, entertainment, cleaning, property management, or maintenance services. Prior to providing any booking services, a hosting platform must register with the Department of Planning and Permitting ("DPP") and pay a $100 registration fee. In addition, Bill 89 requires all registered hosting platforms to report to the director of DPP on a monthly basis and provide information on each transient vacation unit that it services, including: the names of the persons responsible for each listing, the listing address, the transient accommodations tax identification number of the owner or operator, the length of stay for each listing, and the price paid for each stay.
Fines and Penalties
Prior to the enactment of Bill 89, fines for violations did not exceed $1,000. Bill 89 imposes new civil fines for any violation relating to transient vacation unit requirements. For an initial violation, there is a $1,000 fine and an additional $5,000 for each day in which the violation persists. For a recurring violation, there is a $10,000 fine and an additional $10,000 for each day in which the violation persists. In addition to daily civil fines, the director of DPP may also impose a fine in an amount equal to the total sum received by the owner, operator, or proprietor of a transient vacation unit from any impermissible rental activity during the period that the owner, operator, or proprietor was subject to daily fines.
A copy of Bill 89 can be found at http://www4.honolulu.gov/docushare/dsweb/Get/Document-238476/DOC%20(37).pdf.