Hawaii Vacation Rental Owners Association drops lawsuit challenging city’s new controversial vacation rental law. from Star Advertiser newspaper article by Gordon Y. KL Pang October 5, 2019.
Operators of so-called “30-day” vacation rentals on Oahu will continue to do business under a settlement agreement approved Friday by a U.S. District Court judge.
The agreement reached between the city and the Kokua Coalition, also known as the Hawaii Vacation Rental Owners Association, makes it clear a rental agreement has to be for no less than 30 days and that a property owner cannot rent to more than one party during a 30-day period.
As a condition of the agreement, the coalition dropped its lawsuit challenging the city’s new but contentious vacation rental law that cracks down on those operating unpermitted bed-and-breakfast and transient vacation units.
City law says that technically, a property owner can’t rent a room or unit for less than 30 days unless specifically permitted to do so. Ordinance 19-18, which went into effect Aug. 1, imposed higher fines on violators and also made it a violation to advertise an unpermitted rental.
In its lawsuit, the coalition had argued that it had a prior arrangement with the city which allowed its clients to sign contracts allowing them to operate vacation rentals so long as they rented or leased to only one tenant every 30 days.
The 10-page stipulation and order — signed by attorneys with the city and the coalition and approved by District Judge Derrick Watson — states the new ordinance “does not require a renter to physically occupy a rental for any minimum length of time.”
Additionally, “the advertising restrictions (in the new law) apply to illegal short-term rentals, not legal long-term rentals,” the agreement states.
Opponents of residential vacation rentals have criticized the arrangement, arguing that there’s no way the city Department of Planning and Permitting could enforce its laws against unscrupulous property owners who might ignore the requirements and rent to more than one party over a 30-day period, or would charge a tenant differently based on the number of days through secondary or side agreements.
But the stipulation order signed Friday states that “rental agreements, advertisements, solicitations and offers to rent property violate (the ordinance) if the price paid for the rental is determined, in whole or in part, by anticipated or agreed upon occupancy of the property for less than thirty days.”
As a result, the settlement agreement said, 30-day rentals would be allowed only if “the owner and/or operator has not limited the actual occupancy of the premises to a period of less than the full stated rental period.” It also states that the owner/operator cannot condition “the right to occupy the premises for the full stated rental period on the payment of additional consideration.”
Gregory Kugle, a Kokua Coalition attorney, said the order does not significantly change how the ordinance is applied, “but just clarified some ambiguities in the ordinance and how it will be interpreted and enforced” by DPP.
“It provides clarity for those owners who have been engaged in legal rentals of 30 days or more to continue to do so, while allowing the city to enforce the restrictions on illegal short-term rentals,” Kugle said in a statement.
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Deputy Corporation Counsel Brad Saito said “the settlement agreement specifically prohibits basing the price of a rental on an anticipated or agreed-upon stay of less than 30 days.”
The property owner “cannot create a 30-day rental contract but limit the occupancy of the property to less than 30 days or require the payment of additional money for a longer length of stay,” Saito said.
As a result, a property owner cannot rent to more than one party over a 30-day period. Because the renter has a bona fide right to the use and possession of the property for 30 consecutive days, “you cannot have overlapping rental agreements or arrangements to provide the property to two different parties,” Saito said.
“That’s always been the city’s position, and we have enforced based on that basis in the past,” he said.
A group of owners in the Waikiki Banyan complex have separately filed a lawsuit against the city, challenging the new vacation rental ordinance. A hearing on a preliminary conjunction is scheduled for Nov. 25 before state Circuit Judge James Kawashima.
Meanwhile, the city has begun ramping up its enforcement activities against violators even as supporters of short-term rentals continue to argue that the new ordinance has had a dramatic effect not only on operators, but on overall Oahu tourism.
Since Aug. 1 the city has issued 75 notices of violation to owners who were advertising unpermitted short-term rentals. During the same time frame, the city issued 13 violation notices for vacation rentals that were violating longtime occupancy laws.
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