Marking the latest battle in a years-long war between Honolulu officials and owners of short-term Oahu vacation rentals, a homeowners association has asked a federal court to block enforcement of a new order aimed at curbing illegal rentals.
In a 33-page lawsuit filed Monday in U.S. District Court in Honolulu, the Hawaii Legal Short-term Rental Alliance claims the city and county of Honolulu violated the rights of its members — who rented their properties lawfully. – under various laws, including the constitutions of Hawaii and the United States.
The complaint claims members of the alliance have been renting properties as legal short-term rentals “for years, and in some cases, decades.”
He’s asking the court to stop the city from taking enforcement action against its members and others who were lawfully renting short-term rentals before the Honolulu City Council passed an ordinance tightening restrictions in April. Essentially, the lawsuit says anyone who was legally renting before April should be grandfathered and allowed to continue doing what they were doing.
“The right to own and lease property is a fundamental right under the constitutions of the United States and Hawaii,” the complaint states, “and plaintiff’s members and others like him have interests ownership in the ownership and use of their properties, for purposes of grandfathering, revenue and due process.
At the center of the dispute is a provision of the Land Use Ordinance that defines what constitutes a lawful short-term tenancy. In 1986, in the face of a backlash against bed and breakfasts and short-term rentals that were popping up in residential areas, the Honolulu City Council essentially banned these rentals in most neighborhoods on Oahu. The ban defined a short-term rental as any period of less than 30 days.
The law effectively meant that any landlord could rent a property in 30-day increments 12 times a year. But with thousands of short-term units on Oahu, that setup proved nearly impossible for the city to monitor. As a result, the city council passed a new ordinance in April: Any tenancy for less than 90 days would be illegal under the new law, which comes into effect in October.
The suit seeks to protect landlords who have rented homes for more than 30 days but less than 90. They should be grandfathered and allowed to continue operating as they have been, the attorney for association, Greg Kugle. The complaint asks the court to require the city to put in place a process to determine which landowners should be grandfathered.
“I imagine the city would need some sort of proof,” Kugle said.
Who would be eligible for grandfathering would depend on the process the city puts in place, Kugle said. For example, it is possible that the authorization applies to anyone who has rented their accommodation on a short-term basis even for a single interval of at least 30 days recently, even if the owner had on other occasions rented to visitors for less than 30 days. days and therefore illegally, Kugle said.
“It ultimately depends on what the city accepts,” he said.
Either way, Kugle said, the plaintiffs have a vested right of ownership that the city would take away from them if the law goes into effect. Such takings require the government to compensate the owners, even if the property is not entirely removed. In this case, according to the lawsuit, the partial taking – of the right to rent a property between 30 and 89 days – could total tens or hundreds of millions of dollars.
Ian Scheuring, a spokesman for Mayor Rick Blangiardi, said the administration was unaware of the lawsuit and therefore declined to comment.
Despite Honolulu’s 1985 ordinance banning short-term vacation rentals generally, the advent of online booking tools like Airbnb has led to a proliferation of such rentals in recent years. Fueled by new technology, an estimated 9,000 to 10,000 such units have sprung up on Oahu, most openly flouting the law.
The effort proved polarizing.
On the one hand, tourists have flocked to vacation rentals in residential areas like Kailua and the North Shore as an alternative to hotels and resorts. And, at a time when few new hotels were being built, alternative vacation properties helped the number of tourists visiting Hawaii skyrocket, topping 10 million in 2019. Investors and owners alike made money. And a cottage industry of room cleaners and landscapers has grown up around the companies.
Opponents, on the other hand, blamed renters for turning residential neighborhoods into resort areas, stealing jobs from unionized hospitality workers and taking away housing from renters at a time when Oahu was facing a shortage. of accommodation. A 2017 study by the Hawaii Tourism Authority found that more than one in four homes on the North Shore and 5-15% in Kailua and Lanikai had been converted to vacation rentals. Oahu’s powerful hotel industry also cried foul, calling on city officials to enforce an ordinance that has proven nearly impossible to enforce.
Kugle could not say how many owners of short-term rentals would benefit from the legal challenge. He said the association represents about 1,000 units, but the lawsuit is intended to benefit anyone who has rented a unit for at least 30 days.
“It only protects people who used their properties in this way,” he said.