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CENTER FOR LAW & ECONOMIC JUSTI(V o-< •
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Board of Directors Testimony of Hawaii Appleseed Center for Law& Economic Justice
David J.Reber,Esq.,President Commenting on Bill 108 (2018) in Hawaii County
Nathan Nelson,Esq.,Vice President
County Council Planning Committee
Patrick Byrne,Treasurer
Naomi C. Fujimoto,Esq.,Secretary Tuesday,July 10``',2018 at 10:30 A.M.
Michael R.Cruise,Esq.
David Derauf,M.D. Hawaii County Council should add restrictions to its permitting process and
Joyce Lee Ibarra strengthen its enforcement strategy before passing Bill 108.
Neal Milner
Blake Oshiro,Esq. The Hawaii Appleseed Center for Law & Economic Justice is working to build a
Garret Sugai Hawai`i where everyone has genuine opportunities to achieve economic security and fulfill
their potential. We change systems that perpetuate inequality through research, policy
development, education, coalition building, and advocacy.
Co-Executive Directors
Victor Geminiani,Esq.
Gavin Thornton,Esq. Thank you for the opportunity to testify regarding Bill 108.
Hawaii Appleseed appreciates Bill 108 as an important first step in establishing
a regulatory framework for short-term vacation rentals (STRs).At the same
time,Appleseed recognizes that balancing the economic interest in allowing
vacation rental growth with the affordable housing interest is an extremely
complicated matter. The complexity of STR regulation is evidenced by the
myriad of STR ordinances throughout the nation. Some cities are in the
preliminary stages of understanding successful STR regulation and have
passed very basic ordinances, and some, such as San Francisco and New
York, have a wealth of knowledge and experience at the foundation of their
most recent ordinances. Before Hawai`i County Council passes Bill 108,it
should consider the legal challenges and successes faced by other cities with
the most experience. These cities have already endured the trial and error
process for us and have models of success that Hawai`i County could
replicate. Their experience also indicates that irreversible damage could be
done to HawaiTs long-term housing stock if some of the mistakes they made
are repeated here.Appleseed thus urges council to table Bill 108 until further
research confirms absolute best practice.
The Affordable Housing Problem
With the second highest per capita homelessness population of all 50 states
and the District of Columbia,and with the highest housing and rental costs
in the nation,it is imperative that Hawaii County only passes an ordinance
that will function to improve, not worsen, the affordable housing crisis in
119 Merchant St,Suite 605A our state.
Honolulu,HI,96813
(808)587-7605
hiappleseed.org
Ref. To: P f.
Ref. Date
Hawaii Appleseed Center for Law and Economic Justice
July 23,2018
Page 2 of 7
Currently the housing supply in Hawai`i is not keeping up with demand. Hawaii gained 8,458 housing
units from 2011-2014,but this pace is insufficient to create the 24,551 units it needs between 2016
and 2020.1 Hawai`i Island in particular will feel the demand squeeze in the next decade as its
population continues to rise.2 In 2016, 17% of the units in Hawai`i County were "unavailable," three
times the number of unavailable units in Honolulu. What's more is that we can expect low-income
populations to be hit the hardest as approximately 74% of the total housing units required by 2025 in
Hawai`i will be needed for households making less than$75,000 per year.'
The prevalence of STRs is exacerbating this problem by taking units out of the long-term rental
market for those that need it the most, and perhaps permanently. In Hawai`i County in 2014 there
were 4,986 individually advertised short-term vacation rentals, demonstrating that 1 out of 16 housing
units may have been stripped from the residential market for transient vacation rental (TVR,i.e. both
STR and B&B) use. Moreover,a large number of TVRs are owned by non-residents who have less of
a stake in the progress of local communities. It is estimated that 42.9% of homebuyers in Hawai`i
County are non-residents.Local researchers suggest that it is the expansion of such investor
ownership that is especially reducing the housing stock and driving up rent.'Additionally, this
problem is worsened when rentals are for entire homes. On Hawai`i Island approximately 49% of
TVRs are for entire homes or condos,and 93% of TVR listings are for entire homes throughout the
state.'The unregulated proliferation of TVRs and STRs especially are thus making it even more
difficult to curtail the existing housing crisis in Hawai`i County and the state.
Economic Costs
Although Hawaii derives some benefits from STRs through increased tourism spending and tax
collection, the benefits are far outweighed by the costs. San Francisco,which like Hawai`i County has
struggled with high housing costs and a proliferation of S 1'Rs, found that every housing unit
withdrawn from the market to be used as an STR produces a net negative economic impact, even if
the unit generates host income,visitor spending, and hotel taxes. San Francisco estimates that their
local economy loses up to $300,000 per STR per year. The impact of STRs in Hawai`i County is likely
to be similar.
In particular, STRs could cause significant job loss and a decrease in wages for the local population.
As platforms like Airbnb detract visitors from hotels, hotel workers could lose their jobs entirely. If
' Hawai`i Housing Planning Study,SMS Research&Marketing Services for Hawai`i Housing Finance and Development
Corporation,Dec.2016 (p.5,34).Available at
https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_111416-FINAL-122216.pdf
2 Nancy Lauer,Big Island population rises: Census estimates show Hawai`i County making biggest gains,Hawaii Tribune-
Herald,March 23,2017.
3 Hawai`i Housing Planning Study,SMS Research&Marketing Services for Hawaii Housing Finance and Development
Corporation,Dec.2016 (p.35).Available at
https://dbedt.hawaii.gov/hhfdc/files/2017/03/State_HHPS2016_Report_031317_final.pdf
4 SMS,Hawaii Housing Planning Study 2016 63 (2016),available at
https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_111416-FINAL-122216.pdf
5 2017 Visitor Plant Inventory,Hawaii Tourism Authority,2017 (p.60).Available at
http://www.hawaiitourismauthority.org/default/assets/File/reports/accommodations/2017%20V ISITOR%20PLANT%
20IN V ENTORY%2OREP O RT%20-%2001-17-2018.p d f
Hawaii Appleseed Center for Law and Economic Justice
July 23,2018
Page 3 of 7
these workers are able to find jobs with a platform, their wages could still decrease substantially. A
Los Angeles report estimated that the Airbnb workforce (consisting of domestic cleaning services)
makes $4.08 an hour,resulting in$1.1 million less in wages than hotel workers per week, or$54
million less per year.' It is also important to consider that decreasing the workforce at hotels could
threaten them with collapse.Appleseed urges council members to carefully consider these economic
and social costs when deciding whether to pass the current draft of Bill 108.
Bill 108
Appleseed appreciates the improvements in Bill 108 as amended. It sets forth the groundwork for an
enforcement strategy by requiring that a notification letter be sent to all neighbors within 300 feet of
an STR, and by beginning to outline how complaints will be taken in 25.4(d). Further,we again
recognize the importance of the provision that stipulates that a unit's STR advertisement is prima
facie evidence it is being operated as such,and welcome the amendments that scale registration fees
and the non-conformance unit annual renewal fees. Most importantly,we appreciate that fines have
been added, that they are scaled depending on how many violations an owner has committed, and that
they are funneled into an enforcement fund. However,while Appleseed recognizes the current draft of
Bill 108 as an improvement, further change based on the below recommendations as well as
additional research is needed if it is going to have a genuine impact.
The Permitting Process
First, the grandfathering clauses in Bill 108 are problematic as they (1) are based on false assumptions
that grandfathering is legally mandated and (2) provide too much leeway to units that will already be
out of step with the code.The county is riot legally required to include a grandfathering clause in Bill
108 since STRs were never legal on the Big Island prior to this bill. Per H.R.S. 5 46-4,Hawaii state law
only requires grandfathering units that were previously legal under the code in existence prior to
enactment of a new bill.' Subsequently, the law to apply would be the Hawaii County Code as it
currently stands. The Hawaii County Code states: "any use not listed among the permitted uses in a
zoning district is a prohibited use within that district."'Thus, because STRs are currently not listed as
a permitted use in either residential or even hotel-resort districts, they are legally prohibited and
therefore would not be entitled to grandfathering privileges under H.R.S. 4 46-4.
If the county is going to nonetheless include a grandfathering clause, there should at the very least be
sensible restrictions on NCUs that aim to drive eventual compliance across the board. In an interview
with the San Francisco enforcement team, analysts emphasized the importance of enacting
unambiguous, detailed NCU regulation. Lack of clarity over grandfathering can result in a flood of
administrative disputes that will unnecessarily consume valuable department resources. In addition,if
6 AirBnB,Rising Rent,and the Housing Crisis in Los Angeles,Los Angeles Affiance for a New Economy,March 2015 (pg.
15).Available at https://www.laane.org/wp-content/uploads/2015/03/AirBnB-Final.pdf
7 Haw.Rev.Stat.Ann.§46-4(LexisNexis 2018)
s Hawaii County Code§25-5-1 (2018)
9 Hawaii County Code§25-5-3,25-5-92.
Hawai`i Appleseed Center for Law and Economic Justice
July 23,2018
Page 4 of 7
the county does not carefully consider the restrictions it places on NCUs today, owners of NCUs,in
developing reliance on the new code,will be able to establish a strong zoning estoppel argument that
will make it very difficult for the county to regulate those units in the future. It is thus imperative that
the county takes a second look at its grandfathering provisions.
Second, the permitting process itself could include regulations that would function to better safeguard
the character of Hawai`i Island and its housing market,and place STR benefit in the hands of locals as
opposed to investors and non-residents.As it stands,Bill 108 does not distinguish between
commercial STRs held by owners with multiple units and other STRs. While it scales registration fees
based on the number of bedrooms rented,it does not scale the registration fee based on how many
units an owner rents out.Additionally,Bill 108 still does not cap the number of STRs an owner may
operate. Tightening regulation on commercial users and limiting these numbers during the permitting
stage at the very least is critical to maintaining the long-term housing stock on Hawai`i Island.
Third, council should reconsider the provision that allows registration to automatically rollover to a
new owner regardless of whether that owner already operates several STRs. An STR permit should
not be an absolute privilege upon purchase of property but the product of the county's discretion
after it evaluates whether the owner maintains multiple units and/or a strong history of compliance.
Accordingly,with respect to the permitting process,Appleseed encourages Hawaii County Council to
adopt the following changes to the current draft of Bill 108:
❖ A Sunset Provision for NCUs: Since Hawaii state law would not require that the county
allow for NCUs, at the very least the county should adopt a sunset provision that phases
out NCUs in order to ensure total conformity with the zoning code as soon as possible.
H.R.S. 4 46-4 stipulates that a"zoning ordinance may provide for elimination of non-
conformance units...or amortization or phasing out of nonconforming uses" over a
reasonable period of time.10 State law would thus permit a sunset provision. Such a
provision would give non-conforming units a grace period by which they can adjust to
changing circumstances while also progressing the county toward total compliance. For
example, Oahu's STR bill does not apply the blanket TVU prohibition in residential areas
to non-conforming units immediately but requires compliance by August of 2022 and
Maui's bill includes a similar compromise. The same type of sunset provision should be
included in Bill 108 as it provides an arrangement that gives NCU owners time to make
adjustments while also prioritizing adherence to the county's own laws.
❖ Limitations on the Numbers: •
• Limitations on the number of STR units a single owner may have and limitations on
how many STRs are allowed in areas with the highest demand for affordable housing
• Limitations on the number of non-conformance units an individual may have, as well as
limitations on expanding the non-conformance unit beyond its original size
❖ Amending Section 24.4 (e) and 25-4_.1(g):Restoring STRs that have been destroyed
by a natural disaster should not be required. Instead, the decision to restore a unit should be
a discretionary act made by the department and should depend on a multitude of factors.
10 Haw.Rev.Stat.Ann.§46-4(LexisNexis 2018)
Hawai`i Appleseed Center for Law and Economic Justice
July 23,2018
Page 5 of 7
Additionally, restoring NCUs should not be included at all as that would derail the county
from eventual code compliance. •
❖ Scaling the Registration Fees Based on# of Units Owned: Scaling registration fees for
new and existing STRS based on how many units the owner maintains. Charge $250 for the
first unit, $500 for the second, and $1,000 for the third.
❖ Preventing Immediate Conversion: Requiring that an owner live in Hawai`i County for 5
years before being able to convert their unit to an STR.
❖ Host Transparency: Requiring that all unit and host information is disclosed in the
registration packet for both regular registrations and non-conforming use certificates
(NCUCs)
❖ Restricting STRs to natural persons
Enforcement Strategy
Appleseed appreciates the proposed enforcement amendments to Bill 108 but urges Hawaii County
Council to consider strengthening them. Successful regulators across the country, such as
enforcement agencies in San Francisco and Portland, have found that a permitting process alone,
largely ignored by hosts and platforms,is insufficient'. Evidence of this phenomenon is apparent in
counties around Hawai`i as well. For example,in Honolulu,while only 775 TVUs and B&Bs were
permitted in two zoning areas,up to 4,400 "individually advertised units"were found on booking sites
across two-dozen communities.12 Similarly, although Maui has only issued 223 TVR permits, the
number of active TVRs on the island is estimated at 9,000. The inability to enforce has also hurt law-
abiding residents. In Maui a DPP memo noted that S I'R owners who had gone through the
registration process saw a decrease in occupancy as they were unable to compete against illegal rentals
with lower rates.13 A lack of enforcement thus not only fails to catch those already cheating,but also
could potentially deter otherwise law-abiding citizens from obtaining a permit and following other
provisions of this bill.
The best response to these issues would be to apply the gold standard enforcement strategy used in
cities such as Santa Monica, San Francisco and New York. These cities have witnessed large success
with small enforcement teams (e.g. a team of 5 in San Francisco) by maintaining (1) high fines and (2)
platform accountability and transparency. Fellow regulators in Oahu and Maui are beginning to
follow the model of success in other cities. The counties,realizing that a lack of effective enforcement
has rendered their bills ineffective, are now proposing larger fines of$20,000 for a first violation.
11 Simone McCarthy,San Francisco to Airbnb:Enforce the rules or pay the price,The Christian Science Monitor Oune 15,2018,9:00 AM),
haps://www.csmonitor.com/Business/2016/0608/San-Francisco-to-Airbnb-Enforce-the-rules-or-pay-the-price;Steve Law, City tries new softer
approach to regulate short-term rental companies,Portland Tribune(June 15,2018,9:00 AM, https://portlandtribune.com/pt/9-news/387932-278421-
city-tries-new-so iter-approach-to-regulate-short-term-rental-companies-
12 ROH§21-4.110-1.For a list of permitted rentals,see
http://honoluludpp.org/Portals/0/pdfs/HotIssues/NUCreport.pdf.
13 Memo Report,County of Maui Department of Planning,August 18,2016.Available at
https://www.mauicounty.gov/DocumentCenter/View/105774/091316-Agenda-Item-D 1-Resolution-16-93-
Enforcement-Procedures-for-STRHBB
Hawaii Appleseed Center for Law and Economic Justice
July 23,2018
Page 6of7
Appleseed appreciates that Bill 108 has begun to lay the groundwork for an enforcement strategy,but
thinks it imperative to strengthen it with additional amendments before Bill 108 comes into effect.
Consequently Appleseed recommends the following changes:
❖ Enhance the Community Involvement Section:
o Appleseed appreciates the amendment that requires a notification letter be sent to all
neighbors within 300 feet of a newly registered STR. However, the notification letter
should not be sent at the registration stage but after a unit has been approved by the
DPP, so that neighbors can know with certainty which units in their neighborhood are
properly registered.
▪ The community involvement section could also be strengthened by requiring that
operators post NCUCs or registration numbers on a conspicuous place visible from a
public street on which the STR is located, or by establishing a map on of all legal STRs
in the county on the DPP website.
❖ Strengthening the Complaint Process: 25.4 (d)begins to outline how complaints will be
taken, but can be strengthened with more detail. It should include deadlines for responding
to complaints and sending notifications of violations, and deadlines for setting hearing
dates.
❖ Adding Bodies to the Enforcement Team: Bill 108 should include a provision that will
expand the enforcement team, adding 1-2 people. These people should (1) help the director
take complaints, (2) monitor the platforms for advertised units in illegal areas or without
registration#s, and (3) monitor the streets for evidence of illegal use (e.g. multiple out-of-
state cars).
❖ Increasing Fines: The proposed amendments in Bill 108 that scale fines based on previous
violations are a good start. However, for most STR owners on the Big Island, $1000 is just the
cost of business and is thus hardly an incentive to comply with the law. Although a fine
based on the "offered rental rate" might be greater than $1000, it would only eliminate
profit from a night's rental. Even more, the bill doesn't require the fine be that amount. To
truly disincentive illegal activity,the bill should be amended to require that the director
fine a minimum of$20,000. In Oahu's proposed bill the minimum fine is $20,000. In
Maui's proposed charter amendment the minimum fine also is $20,000.
❖ Increase Transparency in Advertisements: In addition to a permit number, all advertising
material should include the property owner's address and zoning classification.
❖ Involve the Platforms: Hawai`i County must demand accountability and data transparency
from Internet platforms by (1) creating a platform liability provision that fines platforms for
advertising or facilitating an unregistered STR,and (2) including a provision that requires
platforms to disclose host information upon lawful request or subpoena. Maui is considering a
bill that would impose platform liability, and provisions imposing platform liability have
already been upheld as legally permissible both in San Francisco and Santa Monica. Interviews
with both cities suggest this is the primary reason for their enforcement success. Bill 108
should thus be tabled until it includes a similar provision.
Hawaii Appleseed Center for Law and Economic Justice
July 23,2018
Page 7 of 7
Conclusion
Appleseed appreciates that the current draft of Bill 108 has created a regulatory framework that seeks to
balance permitting STR growth with protecting the long-term housing stock and local residents.
Appleseed believes that the bill as it stands,however,neither fulfills its latter purpose nor reflects best
practice witnessed throughout the nation.While we recommend several changes to Bill 108,Appleseed
believes the county should table the bill until these recommendations and additional research have
been carefully considered. By doing so,Appleseed believes Hawai`i County will be one step closer to a
more balanced approach and a more prosperous community.
Attached hereto as an addendum for your reference is Haavai`iAppleseed's report that discusses these
issues more in depth.
Mahalo for the opportunity to comment on Bill 108.
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HAWAII iAP° ,LESEED.
' -.„ .'*';- " 'QENTI:R.FQ$'LAW&'ECONOMIC"l,"7/, RENTAL 1 4
.
Hawai`i Appleseed
Center for Law and
Economic Justice
119 Merchant Street
Suite 605A
Honolulu, Hawaii 96813
(808) 587-7605
www.hiappleseed.org
Authored by:
Victor Geminiani
Madison DeLuca
Contents
Executive Summary 1
The State of Housing in Hawai'i 3
Severe Impact of Housing Shortage on Those Most in Need 4
Economic Challenges Facing Hawaii Residents 5
Hawai'i's Vacation Rental Industry 6
Case Study: Maui 9
Vacation Rental Regulation in Other Major Cities 10
Current State of VRU Enforcement 10
Recommendations 11
Conclusion 12
Endnotes 13
tee � :
Executive Summary
Finding affordable housing has long been a significant challenge for Hawai'i's residents. Over the past
decade, it has risen to crisis proportions. Economic barriers to achieving economic stability are daunting
for most Hawai'i residents, and are nearly insurmountable for low-income households. The growth of the
vacation rental industry in recent years is exacerbating these problems. While vacation rentals offer the
possibility of extra income for some residents and additional tax revenue for the state, many of the benefits
go to nonresident investors. The adverse consequences of housing stock lost to vacation rentals far
outweighs the benefits they might provide to local families and our community.
Hawai'i's housing costs are among the highest in the nation. Hawai'i workers earn the lowest wages in the
nation after accounting for cost of living. These financial pressures are compounded by Hawai'i's
regressive tax system,which places the second highest tax rate in the nation on people in poverty. Given
these factors, an unusually high percentage of our residents are renters-43 percent, the fourth highest
percentage in the nation. Rent is more expensive in Hawai'i than any other state. In recent years, rents
asi at more than twice the rate of wages. It's no surprise that Hawai'i has the highest
have been increasing g p
rate of homelessness in the nation, and families who have called Hawaii home for generations are being
priced off the islands.
At a time when Hawai'i is only building half of the units necessary to keep up with demand, housing stock
available to Hawai'i residents is being eaten up by nonresident purchasers. Twenty-seven percent of
Hawaii home sales are made to nonresidents. On Maui, 60 percent of condominium sales are made to
nonresident buyers.The proliferation of short term vacation rental units (VRUs)—the majority of which are
operated by nonresidents—has added another pressure point by further limiting the availability of housing
for local families.
Over just the last two years, the number of VRUs has increased by 35 percent.There are currently 23,000
VRUs being advertised around the state. Up to 93 percent of them are for entire homes, rather than the
rent-out-a-room image purveyed by the VRU industry. One out of every 24 housing units in the state is a
VRU, with some communities being completely overwhelmed by the industry's growth. On Kauai one in
eight homes is used as a VRU. In Lahaina, the ratio drops to one in three. The reason why investors are
choosing VRUs over long-term rentals is obvious:the average VRU brings in about 3.5 times more revenue
than a long-term rental unit.
The loss of long-term rentals to VRUs means higher housing costs for Hawaii residents. Although Hawai'i
derives some benefits from VRUs through increased tourism spending and tax collection, the benefits are
far outweighed by the costs.San Francisco,which like Honolulu has struggled with high housing costs and
a proliferation of VRUs, found that every housing unit withdrawn from the market to be used as a VRU
produces a net negative economic impact, even if the unit generates host income,visitor spending, and
hotel taxes. San Francisco estimates that their local economy loses up to $300,000 per VRU per year.The
impact of VRUs in Hawai'i is likely to be similar.
oma:. „; .
Hawaii should consider adopting measures that will help reverse the damage caused by the proliferation
of illegal VRUs in the state, including:
• Making it illegal to advertise a VRU that is not permitted and requiring all VRU advertisements to
include a permit number (currently, enforcement agencies report that a VRU advertisement is not
sufficient to prove that the unit is actually being used as a VRU);
• Requiring that internet hosting platforms identify and remove noncompliant hosts;
• Empowering local neighbors to enforce the laws against VRUs by granting them standing to file a
complaint with the courts;
• Increasing the staff of the county enforcement office;
• Requiring owners or hosts to be present whenever they are hosting; and
• If, after cracking down on illegal VRUs, communities decide to modestly increase the number of
VRU permits, dispersing permitted rentals unit in communities throughout the island to avoid
oversaturation.
Unless Hawaii takes action against illegal VRUs, their numbers will continue to rise as investors convert
more homes built for residents into vacation rentals for visitors.Home prices and rents will rise,and Hawai'i's
families, communities, and economy will suffer.
. -, _ •°�.' a . .. .
•
•
The State of Housing in Hawaii'
The housing crisis is one of Hawai'i's most critical problems today. Our housing costs are among the highest
in the nation.1 We have the lowest wages when adjusted for cost of living,2 the highest rate of chronic
homelessness,3 and the highest rate of overcrowding in housing.4 These problems continue to worsen with
housing costs increasing at more than twice the rate of increases in wages.5 Housing has always been
expensive in Hawai'i, but housing costs have rocketed further out of reach for Hawaii residents over the
last decade.
A primary contributor to Hawai'i's housing Rent vs. Wage Increases
problem is that our supply of affordable increases in rent prices have dramatically
housing fails to keep up with demand. outpaced increases in wages since 2000
Although Hawaii gained 8,458 housing from
350% ... _
2011 to 2014, this pace is insufficient to create
the 24,551 units Hawai'i needs between 2016 300% — -- -- — — — —
and 2020 to keep up with new demand.6 For
250%
every two units needed, only one is being
built. 200%
As demand continues to outpace supply, 150% .... _._
housing prices and rents for families who live
100,0
and work in Hawaii will continue to rise. This jilhp Allif
problem is exacerbated by nonresident 50% .40•Ar
home purchasers. Statewide, 27 percent of
0%
Hawai'i's homes sold between 2008 and 2015 oh �1 �a p\ pact) ay akA as ` o`D 5 0\ oa ` \`s
\a \a \a \a• \, \a \a \a Vo
went to nonresidents.> On Maui,investors and
second-home owners hold over 60 percent of Rent-Cumlative%Change
condominiums and apartments8 and 52
Wages-Cumlative%Change
percent of homes are sold to nonresidents.9
This dramatically shrinks the pool of available
housing for our families.
Vacation rental units (VRUs) provide another Percent of Maui
significant pressure, leading to the reduction of 1 homes sold to
available housing for Hawaii residents and - nonresident
driving up rents.VRUs are rental properties being 0 buyers
used as rentals for less than 30 days to transient
parties,and many are illegal.10 In Hawai'i,where
43 percent of households rent—the fourth Percent of Maui
highest percentage out of all the states—this condos and
issue is particularly problematic.11 A sharp �_
increase in VRU inventory, driven by the strong `" % apartments sold
economic returns VRUs generate, undoubtedly to investors and
affects our local housing market. Maui, the second
island with the largest number of VRUs in the homeowners
state, is particularly impacted.
A 8. • w •
fp:
Severe Impact of Housing Shortage on Those Most in Need
Hawai'i's housing shortage most acutely affects residents and families who are the least economically
secure.Housing demand is typically measured relative to"Area Median Income" (AMI)—the income level
at which half of Hawai'i's residents make more and half make less. In 2016,the median household income
for Hawaii was $74,511.12 Approximately 74 percent of the total housing units required by 2025 are
needed for households making less than $75,000.13 In other words, roughly three-quarters of the total
amount of new housing required in coming years needs to be affordable to the lowest-income half of the
population.The greatest housing needs are at the lowest levels of the income scale.
Hawai`i Housing Demand by Income Level (2015-2025)
More than$150K r`
$100K to$150K Ar'ili
$75K to$100K kA 6,4614)646
$60K to$75K -6' 6 6 6 611
$45K to$60K0 0 0 'Pn
$30K to$45K r ilk 6 s 6 m ilk ilk ilk m z n el
Less than$30K6 ,-... ilk 6'
= 1,000 units needed
Not only is there a need for new,affordable homes in the future,the unfortunate reality is that the amount
of planned affordable housing is far below the amount needed to close the availability gap. Units built
by the private market, without the use of government subsidies, are typically priced at levels affordable
only to households at 140 percent of AMI and above—prices well out of reach for the vast majority of
Hawai'i residents. The Hawaii Housing Finance and Development Corporation (HHFDC)—the main state
agency charged with developing and financing housing affordable below 140 percent of AMI—planned
to develop only 5,801 units of housing between 2016 and 2020.14 This is less than a third of the 19,908 units
needed at or below the 140 percent of AMI income level in this time period.15
The lack of sufficient housing stock and increased housing costs relative to wages has resulted in high
rates of crowding (where a household has more than two people per bedroom) and doubling up (where
multiple households live in a single home). In recent years, Hawai'i has been ranked first in crowding for
owner-occupied units and second for renter-occupied units. In 2016, 20 percent of Hawaii's households
were crowded or doubled up.16
Native Hawaiians are particularly disadvantaged by the explosion of VRUs.Their homes are more likely lo
be overcrowded and doubled up, leaving no space to rent out.17 They are also more economically
insecure; while Native Hawaiians participate in the labor force at higher rates than the state average,
they earn significantly less per capita.18
.
Economic Challenges Facing Hawai`i Residents
Living in Hawaii comes with Percentage of Households Facing
serious economic challenges Housing Cost Burdens by Income Group (2017)
that compound the struggle to
find affordable housing. Hawai`i 100785% 86%
is the second worst state for 80% � u <75%
taxing people in poverty,19 and �=� 61 60%
Hawaii residents earn the lowest 60%
wages in the country when 40% } l <q 25%
adjusted for cost of living.20 Forty- eau; rte �, 21% 6%
eight percent of households in ;20% 9% i 1%
"�
Hawaii struggle to afford basic 0% , eAs _,... ._._.
household necessities.21 Fxtrerneiy Low Very low l.ow Middle Above Median
(0-30%AMI) (31%-.50%AMI) (51%-80%AMI) (81%-100%AMI) (100%+ofAMI)
Housing is considered affordable El Cost Burdened Severely Cost Burdened
when a household spends no
more than 30 percent of its income on shelter. Families with expenses exceeding this amount are
considered cost-burdened, while those spending more than 50 percent are severely cost-burdened.22
Seventy-five percent of extremely low-income households in Hawaii spend more than half of their income
on housing.23 This leaves little money to cover other expenses such as clothing, food, and medicine.
Forty-three percent of Hawaii households rent rather than own—the fourth highest percentage in the
nation. Hawai'i's "housing wage" (defined as the wage needed to afford a two-bedroom unit at fair
market rents) is $35.20—the highest of all the states. In comparison, the average renter's real wage is
$15.64. A minimum wage worker would need to work 152 hours a week-3.8 full-time jobs—to afford a
two-bedroom unit, and 116 hours a week-2.9 full time jobs—to afford a one-bedroom unit.24
As the housing market becomes increasingly hostile,
eviction and displacement become more likely. Eviction w ,4e E
can lead to lower credit scores and increased difficulty
finding replacement housing, loss of security deposits and rtNilt4it
personal belongings, and additional moving expenses that " ° s'A W.'
already cash-strapped families can ill afford. g414 .$ btio�
Even if a displaced family can find new housing, it may be
in a different area. This breaks up communities, severs ties
with family and friends, and disrupts children's schooling. 13% of homeless shelter
Classroom turnover hurts our keiki; it leads to lower
achievement, academic progress, and high school clients came from homes
graduation rates. Additionally, unstable housing situations they were unable to retain
can increase substance abuse and incidences of '
psychiatric disorders.25
The most severe consequence of displacement is homelessness. In 2016, almost thirteen percent of
homeless services clients came from homes they were unable to retain.26 As Hawaii has the nation's
highest chronic homelessness rate, keeping people housed should be a high priority.27
Housing costs even drive some residents out of our state. In 2016, approximately 22 percent of survey
respondents said they would move out of Hawaii on their next move. Thirty-one percent of those who
wanted to leave reported that housing was one of the problems causing them to move.28
ra
•
•
Hawai`i's Vacation Rental Industry
The Internet has provided opportunities for anyone to advertise units for short-term rental, regardless of
county or state laws.A sizable percentage of VRU operators (also known as"owners"or"hosts") are willing
to operate in violation the law because the economic returns for a VRU are significantly higher than that
of a long-term rental.
Compounding matters is the recent rise of internet hosting platforms like HomeAway and Airbnb. These
platforms have substantial marketing budgets, near-universal brand awareness among travelers, and e-
commerce infrastructure that makes it easier for people to operate a VRU today than ever before.
Internet hosting platforms also provide significant anonymity.They shield host information from regulators
and permit illegal operations to list on their sites. This makes enforcement nearly impossible and reduces
illegal hosts' fear of getting caught.
Sharp Rise in Hawaii Vacation Rentals
VRUs in Hawaii are pervasive and their numbers are growing. In 2017, the Hawaii Tourism Authority (HTA)
estimated that 23,000 VRUs existed in Hawai'i,29 a 35 percent increase in only the last two years.30
' •"yRras
ma 17, •
• .00crf ert :;44,04C4 ii/AP
;04 . 3 o
A r.
2015 2017
Since Hawaii has roughly 540,000 total housing units, these estimates mean that approximately 1 out of
every 24 units is a VRU.31 The share of VRUs is even higher in towns frequented by tourists. In Koloa on
Kauai, 1 out of every 2.5 housing units is a VRU.32
1: in 24 1 ins 1.0 in 3
, ra r .
° HaI �Home is a �L aua� es�IS iLo : ina Ho es IS
Vacation Renal. ' Vacato�-n-Rental°.a a Vacation Rental
epw °
.
nv :ale ,. voa
Vacation Rental Ownership
Some platforms perpetuate the myth that VRU hosts
are residents renting out extra rooms to make ends
meet.33 At minimum, 52%
of VRUs are
However, the majority of hosts are nonresidents.The
available data is not sufficiently detailed to 4 t• 0 owned by
determine the full extent of nonresident ownership, nonresidents
but it does reveal that at least 52 percent of VRUs
are owned by nonresidents. The true figure is likely
much higher.34
Entire Home vs. Shared Home
Additionally, the majority of VRUs are entire-home rentals. Various sources estimate that between 74
percent and 93 percent of VRUs are for entire-home rentals. A report commissioned by Airbnb derived
the low-end estimate of 74 percent,35 while the high-end estimates were derived from visitor surveys and
data extracted from VRU booking sites. Ninety-two percent of visitors surveyed self-reported that they had
the entire unit to themselves,36 while data extracted from three separate VRU booking sites indicated that
93 percent of VRUs were for an entire home or entire condo.37
!k P
b
9V:".44,,o ; Up to 93 percent
of VRU listings are
. v ® for entire homes
:Pa •
EnttEre h 9 e lis{[ gs
These entire-home rental hosts are likely not renting their primary residence, as the hosts would need to
vacate the premises for the duration of their guests' visits. Rather, entire-home listings are likely posted by
multi-unit hosts who use VRU platforms to facilitate commercial-style rental operations. From 2009 to 2014,
the number of Airbnb booked entire-home listings increased by an annual average of over 100 percent.38
A recent study suggested that hosts with 20 or more units earned more than 27 percent of the total revenue
generated by multi-unit hosts.39 It should be noted that the study was conducted by a group with ties to
the hotel industry, but if even close to accurate, it paints a compelling picture of who is benefiting from
VRUs.
:ar
- . eta
Detriments of Vacation Rentals Outweigh Benefits
While VRUs bring additional tourism,spending, and the potential for taxation, studies have shown that the
negative impacts on cities' economies and housing costs far outweigh the benefits.San Francisco found
that VRUs result in the withdrawal of housing units from the residential market, which leads to higher
housing costs.Every housing unit withdrawn from the market to be used as a VRU produces a net negative
economic impact on the city, even if the unit generates host income, visitor spending, and hotel taxes
every day of the year.The city estimates that the local economy loses up to $300,000 per VRU per year 40
Other cities have also tracked the outsized and negative effects of VRUs. In 2014, Airbnb absorbed one
percent of Los Angeles' rental housing market, and rents rose 7.3 percent.41 Furthermore, if 8,000 illegal
Airbnb listings were removed in New York City,the number of available rental units would rise 10 percent.42
Why Long-Term Rentals Are Being Lost to Vacation Rentals
Renting out a unit as a VRU is more profitable
than renting it long-term, making VRUs
; particularly appealing for nonresident
investors. A 2015 study by Honolulu's Office of
Community Services indicated that at 80
3 :p percent occupancy, the average Airbnb unit
would bring in about 3.5 times more revenue
than a long-term rental.43 Approximately
Amount (�t revenue an
seventy-eight percent of rental units on Oahu
average Airbnb unit can earn less money than the average Oahu
entire-home Airbnb.
generate compared to Thus, on average in Honolulu, a potential host
a long-term rental would only have to rent on Airbnb 73 days out
of the year to earn more on Airbnb than
renting long term. In some areas the threshold
is lower;a Waimanalo host would only have to
rent on Airbnb 26 days to make more than
they would renting long term.44 A report
Value of Building Permits in prepared for the Hawai'i Tourism Authority
Hawaii estimates that revenue from VRUs will reach
$1.9 billion by 2021, an increase of 58 percent
from 2016 revenue.45
/, Given the enormous economic incentives, it is
c 3 �__ _._. .- -- inevitable that opportunists will use VRUs to
er commercialize Hawai'i's neighborhoods.
o Hosts are overwhelmingly speculators and
investors who benefit from the escalating
1 price of housing in Hawai'i,46 and our property
tax rate, which is the lowest in the nation.47
0 _...._.__._. ___ ....__._. ._.. ._ _.__._._. Hawai'i is a safe place to invest money for
CO N •o
rn o o rn N4' c0 N •0 O "ft 00 N O 'Y
•0 co oo o
long-term securityand a high return on
0-, 0. a 0. 0. 0 0 0 o
N N N N investments, at the expense of our residents.
�. a: °°8Y'.•, . .o`°a9'a°° .
Case Study: Maui
With almost 9,000 estimated VRUs48 taking up 13.6 percent of its housing stock/49 Maui is an example of
unfettered VRU proliferation. One in seven housing units on Maui is a VRU. In Lahaina, it is one in three.50
Maui is an example of what the state of Hawai'i could
become if we do not enact stricter regulations.
Approximately 9,000 VRUs Nonresidents dominate Maui's housing market. Sixty
are active on Maui. Only percent of condos51 and 52 percent of homes on Maui
are sold to nonresident buyers.52
223 are legal.
Sixty-six percent of nonresidents who own Maui
property report renting out their units.Only 16.7 percent
Who Nonresident Maui Property of these owners choose to rent to residents only.53 Thus,
Owners Say They Rent To it is no surprise that Maui has the highest percentage of
residential units being used as VRUs in the state.54
r �
`- . Since 2006,the number of housing units produced each
"Don't year on Maui has lagged behind the number of new°
Know" r , Visitors households.A 2014 report commissioned by the County
.%
°$ of Maui shows that by 2020,Maui's unmet housing need
-
�w
55.6% will reach nearly 4,000 units. Seventy percent of these
•00_a �$°` units will be needed for households at or below 80
�
Residents 167 percent of AMI.55 Almost a quarter of Maui residents are
Only ;�,• ,o a:-
severely cost-burdened; this is the highest proportion of
severely cost-burdened residents in the state.56
Even when new units are constructed they are often not affordable;
Maui has the lowest share of affordable housing in the state. Median
sales prices for homes on Maui saw the largest increase (24 percent)
aP;
in the state from 2010 to 2014. 'Furthermore, less than a quarter of
prospective Maui home buyers are able to make an adequate down
Unpermrfted Units
payment.57 , �s,
Maui has taken concrete steps to address the problems posed by , '
VRUs: k
• Potential hosts must obtain a permit, arrange a safety
inspection and provide public signage with their contact t°
information. _'}
• Opposition from neighbors can trigger a Maui Planning . permitted
Commission review of the VRU and neighborhoods have caps Units
on the number of short term rentals that can operate.
• Any dwelling approved for short-term use must have been constructed more than five years
before a permit application is submitted.58
However, lack of enforcement power has limited the efficacy of these regulations. Although the number
of active VRUs is estimated at 9,000, Maui has only issued 223 permits.59
ggp�
Vacation Rental Regulation in Other Major Cities
Cities across the globe are searching for solutions to reduce the proliferation of illegal VRUs and increase
the supply of critical housing for residents.Three examples of such locations are:
San Francisco New York City
• In 2014, San Francisco limited homesharing • New York State law was amended in 2010
to 90 days per year during which hosts are to prohibit rentals of fewer than 30 days
not present for their guest's stay, mandated during which the owner is not present.75
that hosts register their properties, required • In examining Airbnb data from 2014, the
hosts or platforms to collect taxes,71 and New York Attorney General's Office found
only allowed each host to rent out one that nearly 72 percent of New York City
unit.72 listings are illegal. Additionally, while only 6
• In 2016, the city required VRU platforms to percent of hosts ran commercial-scale
verify that listings are registered before operations, these hosts collected 37
posting them online. Non-compliant percent of the city's Airbnb revenue.76
platforms could face fines of up to $1,000
• Subsequently, in 2016 Governor Cuomo
per day.73 made it illegal to advertise an apartment
• The system was implemented in January of for rent for less than 30 days on a VRU
2018, resulting in Airbnb listings decreasing platform.77 Offenders could be fined up to
by almost 50 percent.74 $7,500.78
Barcelona, Spain
• A 2016 study revealed that 40 percent of Barcelona VRUs are illegal. The report also blamed
Barcelona's 33 percent rise in rent since 2013 on the increase in tourist accommodations.79
• Professionally-owned tourist apartments must be licensed, and owners of illegally advertised
properties face fines of up to€60,000.80
• Barcelona doubled its VRU enforcement team from 20 to 40 inspectors. By 2018 the city will have
over 100 inspectors 81
Current State of VRU Enforcement Oahu VRU Enforcement Actions
Increased enforcement is essential to ensuring that the VRU 1200 1035
industry in Hawai'i remains in check. Additionally,the burden 1000
for proving a violation should be reduced—enforcement 800
agencies claim that advertising the unit as a VRU is not, on 600 }.say
its own,sufficient proof it is being used as a VRU. On Oahu for 400
example, from January through August of 2017, Honolulu's 200
Department of Planning and Permitting (DPP) conducted 49 2
1,035 VRU investigations. They issued 49 notices of violation, Initial Violation Code
only two of which were referred to the Code Compliance Investigations Notices Compliance
Referrals
Branch for civil fines.71
vdy%. e • • • •vie. •
Recommendations
Reduce the Burden of Proof
As mentioned in the preceding section, enforcement agencies claim that an internet ad is purportedly
not enough evidence to issue a violation, and it is difficult to gather evidence to prove that someone is
renting a unit for less than 30 days.72 Allowing investigators to use online advertisements as evidence will
shift the burden of proof to the host.There are several options available:
• Implement fines. Other locations, including Austin, Texas,73 and New York State,74 have banned
the hosts of unlicensed or noncompliant short-term rentals from advertising, imposing fines on
those that do. San Francisco has taken the practice of fining even further, placing the burden of
enforcement on rental platforms. Platforms are fined $1,000 per day per unregistered host.75
• Demand data transparency from internet platforms to identify illegal operators and impose
requirements that remove noncompliant listings from platforms. In San Francisco, homesharing
platforms must remove unregistered listings or face a fine. They also must collect data from their
hosts and pass it on the city 76
• Model Honolulu's Bill 20 regarding Accessory Dwelling Units (ADU5). Honolulu has included strong
enforcement provisions in its regulations on ADUs. In 2015, Bill 20 allowed homeowners to build
ADUs on their property to create more affordable rental units.The bill stipulated that rentals cannot
be for less than six months and the property owner or property owner's relative must occupy the
primary dwelling unit on the property.
In addition, Bill 20 strengthened DPP's enforcement powers by placing the burden of proof on the
homeowner. Inspectors can use advertisements on the internet as proof that an accessory
dwelling unit is being used as a VRU. Advertising without a permit creates a presumption that the
unit is being illegally rented and requires the owner to prove that it is not.77 Advertising the ADU as
a VRU can result in revocation of the ADU permit and fines of $1,000 per day.78 Regulations on
VRUs themselves must have equally strong enforcement tools.
Plan Carefully for Expansion of Permitting
Hawaii cannot bear the heavy load of VRUs that has been building over recent years. However, if
enforcement efforts successfully reduce the number of illegal VRU5, it may be appropriate to consider a
modest, controlled expansion of permits, in which case, the following factors should be considered:
• Neighbors should be informed of any permit applications submitted in their neighborhoods and
be given an opportunity to contest the applications.
• Permits should be dispersed fairly around the island, not concentrated in one particular
community that will be overburdened.
• All advertising'material, including websites, should include the property owner's permit number,
address, and resort zoning classification.
• Each unit's property owner or resident should be required to be present during guests' stays.
• Fines for unpermitted units should commence at the issuance of the first notice of violation. Fines
should start low but increase substantially with subsequent violations to the level where they
eliminate the possibility of still making a profit after paying the daily fines. Correcting a violation
should not dismiss the assessed fines.
Broaden the Authority of Enforcement Agencies
Enforcement agencies like the DPP would benefit from more staff and a greater focus on deterrence, not
just compliance. Fines from noncompliant VRUs should be used to fund DPP enforcement expansion.
Support Increased Community Involvement
Community members can work in partnership with enforcement agencies to protect their neighborhoods.
Counties should establish a hotline or reporting app to monitor VRUs and require hosts to notify their
neighbors that they have applied for a VRU permit. Furthermore, neighbors should be explicitly allowed
to use state courts to appeal for enforcement against specific units in their neighborhoods, or to bring
claims against neighborhood hosts directly.
Conclusion
While the VRU industry is arguing that vacation rentals are boosting Hawai'i's economy and residents'
incomes, in reality, VRU are doing more harm than good.The proliferation of VRUs—the majority of which
are owned by nonresidents—is reducing the housing stock available to families who live and work in
Hawaii and increasing our already high housing costs. Residents who have been struggling for years
under the pressures of expensive housing and relatively low wages are reaching their breaking point.
Families who have lived in Hawaii for generations are being displaced from their homes and their islands
by a steady flow of short-term visitors.While Hawaii welcomes its visitors and recognizes their importance
to our economy,tourism needs to be carried out in a way that is balanced and sustainable over the long-
term. The current state of VRUs in Hawaii is not. Hawai'i needs to take action before further damage is
done.
. .ar
Endnotes
2016 American Community Survey 1-Year Estimates Ranking Tables,R2511 and R2514,2016.Available at
http://files.hawaii.gov/d bedt/census/acs/ACS2016/ACS2016_1_Year/state_rank/16_state_ra nking_file.pdf
2 Kolko,Jed.Cities Where Salaries Go Furthest in the U.S., Indeed Hiring Lab(Aug.24,2017).Available at
http://www.hiringlab.org/2017/08/24/salaries-go-furthest-in-us-
cities/?utm_source=Grassroot+Institute+Newsletter&utm_campaign=d062b83822-
Prez Column_10_6_17&utm_medium=email&utm_term=0_9da0fl cl e4-d062b83822-
164734697&ct=t(Prez Column_l0_6_17)&mc_cid=d062b83822&mc_eid=43e403dd28
3 The 2017 Annual Homeless Assessment Report(AHAR)to Congress,The U.S.Department of Housing and Urban Development,
Dec.2017(p.65).Available at https://www.hudexchange.info/resources/documents/2017-AHAR-Part-1.pdf
Selected Housing Characteristics, 2016 American Community Survey 1-Year Estimates, U.S.Census Bureau.Available at
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_16_1 YR_DP04&prodType=table
5 FMR History for Honolulu County,HI, HUD User.Available
at:https://www.huduser.gov/portal/datasets/fmr/fmr il_history/history_fmr.odn?inputname=METRO46520M46520*Honolulu%20Cou
•
my%2B 1500399999&county_select=yes&statename=Hawaii&statefp=l 5&stusab=Hl&fmryear=2016&il_year=2016&area_choice=c
ounty;Median Household Income by State. Historical Income Tables:Households, U.S.Census Bureau.Available
at https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html
6 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016(p.5,34).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_1 1 1416-FINAL-122216.pdf
7 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016(p. 16).Available at https://dbedt.hawaii.gov/hhfdc/files/2017/03/State_HHPS2016_Report_031317_final.pdf
8 Cassiday, Rick.Oahu Rental Housing Study, Department of Community Services City&County of Honolulu,2014(p.55).
Available at https://dbedt.hawaii.gov/hhfdc/files/2015/02/RENTAL-HOUSING-STUDY-2014-UPDATE-CITY-COUNTY-OF-HONOLULU.pdf
'Residential Homes Sales in Hawaii, Department of Business,Economic Development and Tourism Research and Economic
Analysis Division,May 2016(p. 18).Available at
http://files.hawaii.gov/dbedt/economic/data_reports/homesale/Residential_Home_Sales_in_Hawaii_May2016.pdf
1a The Impact of Vacation Rental Units in Hawaii,2016,SMS Research&Marketing Services for Hawaii Tourism Authority Research
Division,Nov.2016(p.2-3).Available at
http://www.hawaiitourismauthority.org/default/assets/File/Housing%20and%20Tourism%201 13016.pdf
11 Out of Reach 2017:The High Cost of Housing,National Low Income Housing Coalition,2017(pp. 16,66).Available at:
http://nlihc.org/sites/default/files/oor/OOR_2017.pdf
12 Census Data Highlights, Hawaii State Data Center,Sept.2017.Available at
http://files.hawaii.gov/dbedt/census/acs/ACS2016/ACS2016_1_Year/OtherFiles/ACS_2016_Analysis_D BEDT_final.pdf
13 Hawaii Housing Planning Study,SMS Research &Marketing Services for Hawaii Housing Finance and Development Corporation,
Dec.2016(p.35).Available at https://dbedt.hawaii.gov/hhfdc/files/2017/03/State_HHPS2016_Report_031317_final.pdf
"Annual Report, Hawaii Housing Finance and Development Corporation,2015(p.3).Available at
http://files.hawaii.gov/dbedt/annuals/2015/2015-hhfdc.pdf
15 Hawaii Housing Planning Study,SMS Research &Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016(p.5,34).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_l 11416-FINAL-122216.pdf
16 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance-and Development Corporation,
Dec.2016(p.8).Available at https://dbedt.hawaii.gov/hhfdc/files/2017/03/State_HHPS2016_Report_031317_final.pdf
17 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016(p.73).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_11 1416-FINAL-122216.pdf
18 Testimony of Kamana'opono Crabbe Relating to Land Use Ordinance, Office of Hawaiian Affairs, Dec.9,2015(p.2).
19 Who Pays?5th Edition,Institute on Taxation and Economic Policy,Jan.2015(p. 15).Available at https://itep.org/wp-
content/uploads/whopaysreport.pdf
20 Kolko,Jed.Cities Where Salaries Go Furthest in the U.S., Indeed Hiring Lab(Aug.24,2017).Available at
http://www.hiringlab.org/2017/08/24/salaries-go-furthest-in-us-
cities/?utm_source=Grassroot+Institute+Newsletter&utm_campaign=d062b83822-
Prez Column 10_6_l7&utmmedium=email&utm term=0 9da0f1c1e4-d062b83822-
164734697&ct=t(Prez Column_10_6_i 7)&mc_cid=d062b83822&mc_eid=43e403dd28
21 Alice:A Studylof Financial Hardshipin Hawaii, Aloha United Way,2017 (p. 1).Available at
Y
https://www.auw.org/sites/default/files/United%20Way%20ALICE%20Report%20-%20Hawaii%2C%202017.pdf
22 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016 (p.7).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_l 11416-FINAL-122216.pdf
23 2017 State Housing Profile,National Low Income Housing Coalition,June 14,2017.Available at
http://nlihc.org/sites/default/files/SHP_Hl.pdf
24 Out of Reach 2017:The High Cost of Housing,National Low Income Housing Coalition,2017(pp. 16,66).Available at:
http://nlihc.org/sites/default/files/oor/OOR_2017.pdf
25 Geminiani,Victor&Chin,Jennifer.Evicted in Hawaii-Lives Hanging in the Balance, Hawaii Bar Journal,2016(p.30-32).
26 Yuan,S., &Gauci,K.T.Homeless Service Utilization Report:Hawaii 2016, University of Hawai'i Center on the Family,2017(p.7).
Available at:http://uhfamily.hawaii.edu/publications/brochures/b761f HomelessServiceUtilization2016.pdf
27 The 2017 Annual Homeless Assessment Report(AHAR) to Congress,The U.S.Department of Housing and Urban Development,
Dec.2017 (p.65).Available at https://www.hudexchange.info/resources/documents/20.17-AHAR-Part-1.pdf
28 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016 (p. 18-19).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_l 11416-FINAL-I22216.pdf
292017 Visitor Plant Inventory,Hawaii Tourism Authority,2017(p.70).Available at
http://www.hawaiitourismauthority.org/default/assets/File/reports/accommodations/2017%20VISITOR%20PLANT%20INVENTORY%20
R EPORT%20-%2001-17-2018.pdf
3°2015 Visitor Plant Inventory,Hawaii Tourism Authority,2015(p.72).Available at
.http://www.hawaiitourismauthority.org/default/assets/File/reports/accommodations/2015%20VISITOR%20PLANT%20INVENTORY%2
OREPORT.pdf
31 QuickFacts Hawaii,Housing, U.S.Census Bureau.Available at:https://www.census.gov/quickfacts/HI
32 Individually Advertised Units in Hawaii,SMS Research &Marketing Services for Hawai'i Tourism Authority,Dec 2014(p.3,7,8).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/research/accommodations%20studies/Individually%20Advertised%20Un
its%20in%20Hawaii%20(Vacation%20Rentals).pdf
33 Geron,Tomio.Airbnb Had$56 Million Impact On San Francisco:Study, Nov.9,2012.Available at
https://www.forbes.com/sites/tomiogeron/2012/1 1/09/study-airbnb-had-56-million-impact-on-san-francisco/#352e35413962
34 Available data show that out of a total of 45,075 short-term rentals,including those characterized as"residential" (VRUs) and
those characterized as"commercial,"31,402(70 percent)were owned by nonresidents and 13,673(30 percent)were owned by
residents.According to the same data set,28,398 of the 45,075 short-term rentals are"residential" (VRUs).Making the most
conservative assumption possible—that residents owned only VRUs and no"commercial"rentals—nonresidents would own 14:725
(52 percent) of the VRUs in Hawai'i.The Impact of Vacation Rental Units in Hawaii,2016,SMS Research&Marketing Services for
Hawai'i Toufism Authority Research Division,Nov.2016(p.6).Available at
http://www.hawaiitourismauthority.org/default/assets/File/Housing%20and%20Tourism%201 13016.pdf
3s Cassiday, Rick.Airbnb&Hawaii Housing,Jan.9,2017(p.14).Available at https://www.airbnbcitizen.com/wp-
content/uploads/sites/27/2017/01/HawaiiAirbnbReportDesigned.pdf
36 Hawaii's Home and Vacation Rental Market:Impact and Outlook,JLL for Hawaii Tourism Authority,Dec 29,2016(p.33).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/JLL%20Report_Impact%20of%20Home%20Rental%20Market%20on%20H
awaii_l 2-29-2016.pdf
372017 Visitor Plant Inventory,Hawaii Tourism Authority,2017 (p.60).Available at
http://www.hawaiitourismauthority.org/default/assets/File/reports/accommodations/2017%20VISITOR%20PLANT%20INVENTORY%20
REPORT%20-%2001-17-2018.pdf
38 Cassiday, Rick.Airbnb&Hawaii Housing,Jan.9,2017(p.2).Available at https://www.airbnbcitizen.com/wp-
content/uploads/sites/27/2017/01/HawaiiAirbnbReportDesigned.pdf
39 Hosts with Multiple Units-A Key Driver of Airbnb Growth,CBRE Hotels'Americas Research,March 2017 (p. 19).Available at
https://www.ahla.com/sites/default/files/CBRE_AirbnbStudy_2017.pdf
4o Amending the Regulation of Short-Term Residential Rentals:Economic Impact Report,City and County of San Francisco,May
18,2015(p.8).Available at http://sfcontroller.org/sites/default/files/FileCenter/Documents/6458-
150295_economic_impact_final.pdf?documentid=6457
41 How Airbnb Short-Term Rentals Exacerbate Los Angeles's Affordable Housing Crisis:Analysis and Policy Recommendations,
Harvard Law and Policy Review,Feb 2,2016 (p.231,240).Available at:
http://blogs.ubc.ca/canadianliteratureparkinson/files/2016/06/How-Airbnb-Short-term-rentals-disrupted.pdf °W5°° ar
42 Woolf,Nicky.Airbnb and house-sharing firms reduced New York housing stock by 10%-study,The Guardian,June 27,2016.
Available at https://www.theguardian.com/us-news/2016/jun/27/airbnb-new-york-city-housing-stock-reduction-study
43 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawaii Housing Finance and Development Corporation,
Dec.2016(p.58).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_111416 FINAL 122216.pdf
44 Financial Characteristics 2016 American Community Survey 1-Year Estimates, U.S.Census Bureau,2016.Available at
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_16_I YR_S2503&prodType=table;Zip
Code Boundaries:US Census Bureau.Available at https://www2.census.gov/geo/tiger/TIGER2010/ZCTA5/2010;Median Contract
Monthly Rent:2015 American Community Survey 5-year Estimates Table B25058, U.S.Census Bureau,2015.Available at
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk;Zip Codes,Honolulu Open Data,City&
County of Honolulu (2017).Available at http://honolulu-
cchnl.opendata.arcgis.com/datasets/62431 dd72960448087a287fa06b87bf5_7;Honolulu,Airdna,Sept.2017.Available at
https://www.airdna.co/market-data/app/us/hawaii/honolulu/overview
45 Hawaii's Home and Vacation Rental Market:Impact and Outlook,JLL for Hawaii Tourism Authority, Dec 29,2016(p.26).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/JLL%20Report_Impact%20of%20Home%20Rental%20Market%loon%20H
a w a i i_l 2-29-2016.p d f
46 Table 21.01—Number and Value of Building Permits, by county: 1958 to 2016,The State of Hawaii Data Book,The Department of
Business, Economic Development&Tourism,2016(p. 1006).Available at
http://files.hawaii.gov/dbedt/economic/databook/db2016/db2016.pdf
47 Logan,David.Property Taxes by State-2016,National Association of Home Builders,Oct 2,2017.Available at
http://eyeonhousing.org/2017/10/property-taxes-by-state-2016/
48 Minutes,Council of the County of Maui Planning Committee,6/16/16(p. 13).Available at
https://www.mauicounty.gov/ArchiveCenter/ViewFile/Item/21920
49 Individually Advertised Units in Hawaii,SMS Research&Marketing Services for Hawai'i Tourism Authority,Dec 2014(p.4).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/research/accommodations%20studies/Individually%20Advertised%20Un
its%20in%20Hawaii%20(Vacation%20Rentals).pdf
50 Individually Advertised Units in Hawaii,SMS Research_&Marketing Services for Hawaii Tourism Authority,Dec 2014(p.8).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/research/accommodations%20studies/Individually%20Advertised%20Un
its%20in%20Hawaii%20(Vacation%20Rentals).pdf
51 Cassiday, Rick.Maui Rental Market,Department of Housing and Human Concerns County of Maui,2014(p.3).Available at
https://dbedt.hawaii.gov/hhfdc/files/2015/02/RENTAL-HOUSING-STU DY-2014-U PDATE-COUNTY-OF-MAU I.pdf
52 Residential Homes Sales in Hawaii, Department of Business, Economic Development and Tourism Research and Economic
Analysis Division,May 2016 (p. 18).Available at
http://files.hawaii.gov/dbedt/economic/data_reports/homesale/Residential_Home_Sales_in_Hawaii_May2016.pdf
53 The Impact of Vacation Rental Units in Hawaii,2016,SMS Research&Marketing Services for Hawaii Tourism Authority Research
Division,Nov.2016 (p.20).Available at
http://www.hawaiitourismauthority.org/default/assets/File/Housing%20and%20Tourism%201 13016.pdf
54 Individually Advertised Units in Hawaii,SMS Research&Marketing Services for Hawai'i Tourism Authority,Dec 2014(p.4).
Available at
http://www.hawaiitourismauthority.org/default/assets/File/research/accommodations%20studies/Individually%20Advertised%20Un
its%20in%20Hawaii%20(Vacation%20Rentals).pdf
ss Cassiday,Rick.Maui Rental Market, Department of Housing and Human Concerns County of Maui,2014(p.27-28).Available at
h tips://dbedt.hawaii.g ov/hhfdc/files/2015/02/RENTAL-H OUSI NG-STU DY-2014-UPDATE-COUNTY-OF-MAU l.pdf
56 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016 (p.7).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_l 1 1416-FINAL-122216.pdf
57 Hawaii Housing Planning Study,SMS Research&Marketing Services for Hawai'i Housing Finance and Development Corporation,
Dec.2016(p.22,26,29).Available at https://dbedt.hawaii.gov/hhfdc/files/2016/12/State_HHPS2016_Report_1 1 1416-FINAL-
122216.pdf
58 Spence,William.Report to the Planning Commissions and the County Council Pursuant to Ordinance 3941 (2012),Section 16,
and a Proposed bill for an Ordinance Amending Title 19,Maui County Code,Relating to Zoning as it Pertains to Short-term Rental
Homes, County of Maui Department of Planning,April 29,2014(p.2, 131-132).Available at
https://www.mauicounty.gov/DocumentCenter/View/91217
59 Short-Term Rental Homes(STRH5), County of Maui(p.7).Available at
https://www.mauicounty.gov/DocumentCenter/View/14762 •
•
ate ®
60 Barcelona fines Airbnb and HomeAway 60,000 euros each, Ajuntament de Barcelona.Available
at https://ajuntament.barcelona.cat/turisme/en/noticia/barcelona-fines-airbnb-and-homeaway-60000-euros-each
61 Ordinance No.218-14, Board of Supervisors of the City and County of San Francisco,Oct. 17,2014(p. 19).Available at
http://www.sfbos.org/ftp/uploadedfiles/bdsupvrs/ordinances14/00218-14.pdf
62 Homesharing in San Francisco:A Review of Policy Changes and Their Impacts, Bay Area Council Economic Institute,Jan.2018
(p.2-3).Available at http://www.bayareaeconomy.org/files/pdf/BACEI_Homesharing_1 1 12018.pdf
63 Said,Carolyn.Airbnb listings in San Francisco plunge by half, San Francisco Chronicle,Jan 16,2018.Available at
https://www.sfchronicle.com/business/article/Airbnb-listings-in-San-Francisco-plunge-by-half-12502075.php
64 Chapter 225,New York City,2010(p. 1).Available at https://wwwl.nyc.gov/assets/buildings/pdf/NYS_chapter 225.pdf
65 A.G.Schneidermand Releases Report Documenting Widespread Illegality Across Airbnb's NYC Listings;Site Dominated By
Commercial Users,New York State Office of Attorney General,Oct. 16,2014.Available at https://ag.ny.gov/press-release/ag-
schneiderman-releases-report-documenting-widespread-illegality-across-airbnbs-nyc
66 Cox,Murray.NYC:Report on the Anti-Airbnb Advertising Law, Inside Airbnb,Nov. 16,2016.Available at
http://i nsideairbnb.com/nyc-report-on-th e-anti-airbnb-advertising-law/
67 Rosenberg,Zoe.Illegal Airbnb listings in NYC will now incur hefty fines, Curbed New York,Oct.21,2016.Available at
https://ny.curbed.co m/201 6/1 0/21/13361942/airbn b-illegal-short-term-rentals-fines-nyc
68 Lomas,Natasha.Airbnb faces fresh crackdown in Barcelona as city council asks residents to report illegal rentals,Tech Crunch,
Sept. 19,2016.Available at https://techcrunch.com/2016/09/19/airbnb-faces-fresh-crackdown-in-barcelona-as-city-council-asks-
re s i d e n t s-t o-re p o rt-i l l e g a l-rentals/
69 Shankman,Samantha.Barcelona Overtourism:Airbnb and Short-Term Rentals,Skift,Aug.3,3017.Available at
littps://skift.com/2017/08/03/barcelona-overtourism-airbnb-a nd-short-term-rentals/
70 Burgen,Stephen.Barcelona cracks down on Airbnb rentals with illegal apartment squads,The Guardian,June 2,2017.Available
at https://www.theguardian.com/technology/2017/jun/02/airbnb-faces-crackdown-on-illegal-apartment-rentals-in-barcelona
71 Donnelly,Christine.City addresses complaint on vacation rental enforcement, Honolulu Star-Advertiser,Sept. 13,2017.Available
at http://www.staradvertiser.com/2017/09/13/hawaii-news/kokua-line/city-addresses-complaint-on-vacation-rental-enforcement/
72 Donnelly,Christine.City addresses complaint on vacation rental enforcement, Honolulu Star-Advertiser,Sept. 13,2017.Available
at http://www.staradvertiser.com/2017/09/13/hawaii-news/kokua-line/city-addresses-complaint-on-vacation-rental-enforcement/
73 Short Term Rental News Release and FAQ,Austin Code Department,March 17,2016.Available at
h ttp://a usti ntexas.gov/article/short-term-re n to I-news-release-and-faq
74 Rosenberg,Zoe.Illegal Airbnb listings in NYC will now incur hefty fines, Curbed New York,Oct 21,2016.Available at
https://ny.curbed.com/2016/10/21/13361942/airbnb-illegal-short-term-rentals-fines-nyc
75 Weise, Elizabeth.Airbnb rentals in San Francisco may dive with new host rules, USA Today,May 1,2017.Available at
https://www.usatoday.com/story/tech/news/2017/05/01/airbnb-san-francisco-settlement-regulations-illegal-
h omeaway/1 01168688/
76 Homesharing in San Francisco:A Review of Policy Changes and Their Impacts, Bay Area Council Economic Institute,Jan.2018
(p.2-3).Available at http://www.bayareaeconomy.org/files/pdf/BACEI_Homesharing_1 1 12018.pdf
77 Ordinance 15-41, City and County of Honolulu,2015(p.5,7).Available at:
1
http://www4.honolulu.gov/docushare/dsweb/Get/Document-168733/dspage03688827543855432191.pdf
78 Accessory Dwelling Unit Homeowners'Handbook,Hawaii Appleseed Center for Law&Economic Justice(p.30).Available at
http://hawaiiadu.org/wp-content/uploads/2016/03/HawaiiADU-Handbook.pdf/
119 Merchant Street, Suite 605A
Honolulu, Hawaii 96813
(808) 587-7605
www.hiappleseed.org
Board of Directors
David J.Reber, Esq.,President
Naomi C. Fujimoto, Esq.,Secretary
Patrick Byrne
Michael R.Cruise, Esq.
David Derauf,M.D.
Joyce Lee-Ibarra
Neal Milner
Nathan Nelson, Esq.
Blake Oshiro,Esq.
Garret Sugai
Co-Executive Directors
Victor Geminiani
Gavin Thornton
Hawaii Appleseed is working to build a Hawaii where everyone has genuine opportunities to
achieve economic security and fulfill their potential. We change systems that perpetuate
inequality through research, policy development, education, coalition building, and advocacy.
HAWAII APPLESEED
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CENTER FOR LAW & ECONOMIC JUSTICE
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