Hawaii lawmakers are hoping to ease the state’s worsening housing crisis, where locals face the highest housing costs in the nation and one of the worst rates of homelessness, by phasing out short-term rentals.
Two bills, HB1838 and SB2919, have moved readily through the state legislature this spring, and could provide new avenues to limit the short-term home rental industry, which has exploded in recent years across the state’s four populated islands.
The issue has been a challenging one for officials in cities and states across the U.S., including Los Angeles, New York, Nashville, and Bozeman, Montana, who have looked for ways to rein in the ballooning popularity of Airbnb and other online home rental platforms without eliminating the economic benefits that such properties draw.
In Hawaii, last summer’s Maui wildfires have uniquely forced attention on the housing crisis, which was reaching a critical juncture even before the fires displaced thousands. Proponents of the short-term rental phase-outs hope this new sense of urgency could help push these bills into law in the coming weeks.
The two companion bills would give counties new authority to change residential zoning, including the power to phase out short-term renting. However, it’s important to note that even if these bills pass, nothing would happen overnight. County officials would have to adopt new rules to limit rentals, and if they enact a phase-out, officials say, it would probably go into effect over several years.
“The bill does not enact anything specific to the regulation of those properties,” said state Sen. Jarrett Keohokalole, one of the co-authors on the Senate bill. “It simply … makes it clear that the counties do have the authority to regulate vacation rentals if they choose.”
The bills essentially provide the legal framework for counties to limit short-term rentals in a variety of ways. Honolulu officials attempted to redefine the length of a short-term rental in 2022, but a federal judge recently ruled that current state law barred them from doing so.
State Rep. Luke Evslin, the chair of the House Committee on Housing, said that even if these bills pass, they probably won’t eliminate short-term rentals on the islands. Instead, he said, the legislation would give local governments opportunities to define the neighborhoods where tourists could rent short-term units and, ideally, free up more homes for locals seeking long-term rentals.
He said that this legislation alone won’t solve the state’s growing housing crisis, but he thinks it’s a first step to “stem the bleeding.”
“I think it’s one of the steps that we need to take to try and solve our housing crisis,” said Evslin, an author of the House bill. “On Kauai, for example, more units are becoming vacation rentals every year than we are building annually, so we have literally declining housing stock on Kauai, and the same thing is happening on Maui — even pre-fire.”
The bills’ supporters include local housing nonprofits, hotel companies, local leaders, and even some homeowners who also rent units or rooms. However, there is also a broad swath of opponents, including realtor groups and rental alliances. All of these groups have a financial interest in preserving property owners’ ability to do short-term rentals.
Airbnb’s Alex April, head of the company’s public policy for Hawaii, didn’t expressly oppose the legislation in her statement to legislators, but she did mention concerns about the financial losses that the state could see if the bills pass. April also cited ongoing work between Airbnb and Hawaii counties to help limit illegal renting, which has included memorandums of understanding to remove properties that are not operating within the law.
“We remain committed to working with you on fair and reasonable solutions that protect the rights of hosts and preserve the significant benefits that short-term rentals provide to Hawaii communities,” April’s statement said.
Evslin insisted that the bills are constitutional, but noted that it will depend on how counties choose to implement the phase-outs, which could lead to possible legal fights.
Keohokalole said he wants to see the end of a system that has been “pushing local people out of their residential communities in favor of economic activity.”
“We’re seeing the wholesale conversion of residential communities in Hawaii to speculative, short-term rental development,” he said.
Hawaii Gov. Josh Green said that he supports the two bills going through the legislature that would allow for phasing-out such rentals.
A majority of short-term rental owners don’t live in Hawaii, according to the governor. He said he wants to control the proliferation of illegal vacation rentals to mitigate the years-long housing crisis that is causing local residents to leave the islands.
Both bills have been voted out of their respective chambers and are moving into conference committee, where another round of changes can be made before a final vote, which must occur before May 3, the end of the state’s legislative session.
“Similar bills have been introduced every year for the last decade or so and never gone all that far,” Evslin said. “I don’t want to jinx it here, but I’m optimistic for their success. … I think that this is different in that there is really broad support across the legislature for action.”
If the measures pass, it would be up to county leaders to look into phasing out short-term rentals and in what capacity. Any phase-out would have to occur over a reasonable amount of time, likely years.
