By Ben Angarone
The head of Honolulu’s permitting department told the City Council last week why the city doesn’t enforce a 2019 law that bars companies such as Airbnb and Vrbo from allowing people to book illegal short-term rentals.
Department of Planning and Permitting Director Dawn Takeuchi Apuna said the city agreed not to enforce a provision in the law in order to settle a lawsuit filed by a group representing owners of vacation rentals.
She told Civil Beat in an interview after the hearing that the city probably won’t act anytime soon to enforce the portion of the law that requires hosting platforms to submit monthly reports on bookings.
“It’s very risky, because they’re going to probably sue us,” she said, referring to the Kokua Coalition, the group that went to court to block parts of the 2019 law.
That’s not what she told Civil Beat in May when a reporter asked about the law. She said the permitting department prefers to treat companies like Airbnb as partners rather than adversaries, and that the department works with them to keep scofflaws off the platform.
Department officials have not explained why they didn’t say anything until last week about the agreement not to enforce the law.
After the council meeting, Civil Beat sent an email asking when Takeuchi Apuna, who wasn’t with DPP when the law was passed, had learned about the lawsuit.
Spokesperson Curtis Lum sent a written statement attributed to Takeuchi Apuna that said, “The Department of Planning and Permitting was part of that suit, so DPP and Corporation Counsel were obviously well aware of that suit and settlement from its inception.”
Civil Beat called Lum and sent a follow-up email to ask why no one had mentioned the settlement before. Takeuchi Apuna responded Wednesday morning in an email, saying her initial answer in May of why they don’t enforce against the platforms was accurate despite not being exhaustive.
“This term is one of many – not the only – policy considerations for us in determining whether we should or should not enforce against the platforms,” she said.
Holding platforms accountable – and using those reports to see if vacationers were booking unregistered short-term rentals – was a big part of the 2019 law.
Instead, the city goes after owners of illegal rentals. But city officials have acknowledged it’s hard to crack down on them, in part because operators learn to evade detection. Some list their properties when city investigators aren’t on the clock. Some jump to another platform if their listings are shut down on one website. One operator racked up almost $1 million in fines before the city moved to foreclose on his property.
Though some say illegal short-term rentals aren’t as common as when the council passed the 2019 law, they’re still a problem. Inside Airbnb, an organization that works to combat the negative effects of short-term rentals, says the site has about 7,900 listings on Oʻahu.
About 1,800 properties are registered with the city as short-term rentals, and more than 700 additional units were grandfathered in decades ago. Another group — more than 1,800 units — aren’t registered but operate legally within hotels. Conservatively, that would mean hundreds of illegal rentals are still operating in the city.
Lawsuit Followed Ordinance
The city’s short-term rental law attempted to balance the negative effects of short-term rentals, such as a diminished housing supply, with the economic benefits to property owners who rent to vacationers.
It took effect Aug. 1, 2019. The same day, the Kokua Coalition, doing business as the Hawaii Vacation Rental Owners Association, went to federal court to block parts of it.
The law allows short-term rentals of less than 30 days only in Oʻahu’s resort zones and some surrounding areas, and only if they register with the city. Registering triggers a higher property tax rate.
The law bars hosting platforms such as Airbnb and Vrbo from collecting a fee to book an unregistered short-term rental. Those platforms are required to register with the city and to submit monthly reports detailing bookings in the city.
Violating any of those provisions carries a fine of $1,000 to $10,000 per day.
In its lawsuit, the Kokua Coalition claimed that the city’s initial enforcement effort, before the law took effect, was “sloppy.” Hundreds of people operating legally were erroneously threatened with $10,000 fines, they alleged.
They also argued that the requirement for monthly reports violated state and federal protections of the privacy of electronic communications as well as the Fourth Amendment’s protection against unreasonable searches and seizures.
About two months later, the vacation rental owners and the city reached a deal to end the suit.
In the agreement, which was included in a court order dismissing the case, the city acknowledged that courts have blocked other cities from enforcing similar ordinances. The agreement noted court orders in New York City, Boston, Portland, Oregon, and Los Angeles.
“Based on its understanding of the current state of the law and its interests in avoiding unnecessary litigation, DPP does not currently intend to enforce” the provision allowing it to penalize platforms that fail to provide monthly reports, the agreement says.
The city agreed to give the Kokua Coalition 60 days’ notice if it intended to enforce that provision, which would give the group a chance to sue to stop it.
City’s Explanation Changes
Some cities have decided to hold platforms accountable for illegal listings, which two law professors have held up as a best practice.
Civil Beat asked DPP about the 2019 law several times in early May, both by email and in interviews. We first inquired how many times the city has fined hosting companies; Lum, the spokesperson, said it had never done so. We asked to see the monthly reports; Takeuchi Apuna said they had never received any.
When we asked how many platforms had registered, spokesperson Davis Pitner said none had done so.
No one mentioned the lawsuit.Asked why the platforms weren’t submitting monthly reports, Takeuchi Apuna said the department didn’t need them to do its job.
“If reports are something that would help us better enforce, then we would probably ask for that,” she said.
During last week’s council meeting, however, Takeuchi Apuna testified during a presentation on DPP’s strategy for short-term rental enforcement that the department doesn’t get booking reports because of the court order in the Kokua Coalition lawsuit. If the city tried to get them, “they will be ready to litigate,” she said.
She reiterated her belief that the city doesn’t need the reports: “We believe the reporting info may be helpful, but it’s not crucial based on the type of enforcements we currently are exercising.”
The lead lawyer for Kokua Coalition, Greg Kugle, said he didn’t have time to talk about the case. Efforts to reach officers in the group were unsuccessful. Another lawyer declined to comment.
That agreement between the city and Kokua Coalition doesn’t stop the city from enforcing other parts of the 2019 law, however: the provisions allowing the city to penalize hosting companies for failing to register and for facilitating bookings of illegal rentals.
In May, Takeuchi Apuna explained the city’s lack of enforcement of those provisions by citing a federal law that shields tech companies from liability when it comes to free speech, saying it could apply to vacation rental platforms.
Council member Tyler Dos Santos-Tam said he was surprised to hear Takeuchi Apuna’s new explanation. He said he had tried to get those booking reports sometime last year and was told the department didn’t have them. He didn’t pursue the matter.
Despite the privacy concerns claimed by vacation rental owners, he said he thinks the city should request the data anyway.
“I think we need to go back and find as much information as possible, and get the platforms to give us this information in a reasonable way,” he said.
One option, he said, would be to get anonymized data, which would enable the city to see where rentals operate and how long guests stay in them. That, he said, could inform future legislation.
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