TAR Package Overview

At the January 23rd meeting of Hawai‘i County Council’s policy committee on Planning, Land Use and Economic Development, Council Members Heather Kimball and Ashley Kierkiewicz will be introducing a package of three bills related to transient accommodation rentals (TARs), also known as short-term vacation rentals (STVRs). These bills aim to ensure that all TARs in the county are operating safely, legally, and in adherence to the same set of operational standards. These bills are also intended to preserve the character of our residential and agricultural areas while reducing speculative investment in properties within these markets. Finally, the bills aim to address housing affordability for residents by keeping more housing in the long-term rental market, reducing the inflationary pressure TARs have on long-term rental rates, while at the same time making it very easy to build accessory dwellings (‘ohanas) for family or long-term rentals.

Like many counties across the country, Hawai‘i County was not prepared for the rapid expansion of TARs and online hosting platforms that started in the mid-1990s. Bill 108, the first attempt to regulate TARs in Hawai‘i County, passed in November 2018 and included some, but not all, of the recommendations in a Hawai‘i Appleseed report that provided an overview of the impacts of TARs on Hawai‘i’s housing market. This bill only regulated “unhosted rentals” by limiting the areas where they could operate to resort and commercial zones and creating a set of operational standards. TARs already in operation outside of the permitted zones could be grandfathered in, but no new operations would be permitted.

After Bill 108 had been in effect for a little over two years, it became clear that some modifications were needed in the code to address hosted rentals and to clarify the standards of operations to make them easier to follow and more enforceable. The new TARs bill has been in progress since that time, with an initial draft released about a year ago. Since then, there have been three webinars on the bill, which can be viewed below, and numerous constituent and departmental meetings to fine-tune the language.

The draft of the bill (121-24) available for review above, but here are some of the key highlights. All TARs that are rented for less than 180 days will have to register with the county. This is in alignment with both state law and the county real property tax code. There will be three rental types: owner-hosted, operator-hosted, and unhosted. Owner-hosted TARs can be started at any time and in any zoning as long as the owner certifies that the accommodations meet all safety and code requirements and the owner lives on the property as their primary residence. Operator-hosted rentals are permitted in resort and commercial zones, and those in operation outside of those zones as of the first of 2024 will be grandfathered in, but no new operator-hosted rentals will be permitted after the passage of this bill. TARs currently operating in permitted ohana units will be grandfathered in with a nonconforming use certificate, but after the passage of this bill, new TARs in ohanas units will not be permitted.

In addition to the registration process, the standards for operation have been expanded and made clearer. These standards include, for example, guest limits, off-street parking requirements, noise restrictions, and limits on events. The bill also identifies heavier fines for violations of the standards and the possibility of having a registration revoked for repeat offenders.

Finally, the bill requires that hosting platforms like Air B&B and VRBO include TAR registration numbers on all their listings and also provide regular reports to the planning department.

In addition to the main TAR bill, there are two other bills in the package. Since all TARs will be regulated under the new code, there is no need for the current Bed and Breakfast (B&B) section of the County Code. Therefore, one bill (122-24) repeals this code. This will not impact current B&B permit holders in any way. Finally, the third bill (123-24) amends the ohana code, removing most of the restrictions for building ohana units as long as they are used for long-term housing and not TARs.

The TAR package will first be introduced to the Council committee and will then be referred to both the Windward and Leeward Planning Commissions. After the commissions have provided their recommendations, the bills will come back to the committee and then passed on for a minimum of two readings before the Council. There will be a minimum of six public hearings on the bills for the public to provide testimony. Information on how to testify can be found on the county’s website.

In the Hawai‘i Housing Factbook produced by UHERO in June of this year, they report an estimate of 7.8% of the whole-house housing units in Hawai‘i County are being used as TARs. This varies widely across the counties, with some areas like Kailua-Kona at 17%. Other cities like Los Angeles and Las Vegas, which are also tourist destinations, have 1-3% of their housing used as TARs.

The report also suggests that in on O‘ahu, TARs not only affect inventory but increase area rents by 5% on average. The inflationary pressure TARs place on long-term rentals is further evaluated in the UHERO blog entitled: “Short-term Vacation Rentals and Housing Costs in Hawaiʻi”.

After the devastating fires on Maui, we can see the impact a high percentage of TARs can have on housing availability in providing shelter for residents after a disaster (15% Maui). At the same time, we recognize that for many local families hosting vacationers at their homes is something they enjoy and is critical to providing financial support for their families. These bills attempt to strike a balance between allowing residents to continue to start and operate TARs on their properties, while limiting the expansion of investor-owned TARs.