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Many local residents are upset about the rapid expansion of Airbnb on Oahu. However, short-term vacation rentals go back much further than Airbnb.

What Airbnb has done is lower the barriers to entry, making it much easier for anyone to rent out their space as a vacation rental. This has made it much more popular and widespread.

From a certain perspective, this can be a good thing. This expansion has democratized the tourism industry and made it much easier for everyone to benefit. After all, all residents pay a price for living in a major tourist destination; our roads, beaches, and favorites hikes are all more crowded.

But most of us do not benefit directly and the majority of the profits go to hotels and large businesses, many of which are owned by corporations located elsewhere. Airbnb has made it possible for everyone to benefit financially from the fact that we live in such a popular tourism destination.

Even if you do not have a property to rent out, there are also other economic benefits.

Vacation rental owners need to keep their places in good condition, so they are much more likely to hire contractors to repair and maintain their rentals. Likewise, they often need managers, cleaners, and landscapers, creating extra employment for local residents.

Furthermore, the visitors staying in vacation rentals spend money at local restaurants and shops. In essence, this takes the tourism dollars and spreads them out more evenly throughout the island, instead of concentrating them in a few locations, such as Waikiki.

Every local who makes more money has more money to spend at other local business, benefitting those not directly related to the tourism economy. So areas like Hauula or Waimanalo or Waianae are able to benefit in a way that was more difficult before. 

On the other hand, the problem with short-term vacation rentals are also abundantly clear.

If you can make significantly more money renting out your space as a vacation rental, why would you rent it out to local residents? Every house run as a vacation rental takes one house off the market. This constrains the supply, which drives up already high rents and makes it difficult to find rental properties.

Also, investors who know they can make a lot of money running a property as a vacation rental are willing to pay higher prices, potentially driving up already expensive home prices. Furthermore, many vacation rental owners are nonresidents who take this revenue out of state. This is to say nothing of the impact in local communities which have been hollowed out by vacation rentals. 

Airbnb has lowered the barriers to entry, making it much easier for anyone to rent out their space.

Opponents of vacation rentals argue that the solution is straight-forward.

The state and county need to crack down on illegal vacation rentals. They are appalled that so many are willing to flagrantly violate the county zoning regulations.

However, in general, people follow laws that they think are fair and humans tend to base our morality on what others are doing. So anti-Airbnb sentiment is probably most effective as a shaming tactic, rather than as an actual attempt to get the city to enforce its zoning regulations.

As a society, we create laws to create the kind of society we want. Periodically, those need to be updated to reflect changes in society. Since we live in a democracy, we are all responsible to see that these changes take place. 

Perhaps we should look at another related example of county zoning laws to see how this plays out. I think it shows how our strict adherence to the law (especially on the level of zoning regulations) is somewhat conditional.

Let’s Increase Density

Most of us know that a significant portion of the housing supply on Oahu is already in violation of county zoning laws. How many single-family homes do you know of that have been divided up in multiple units?

Although it is legal to rent out rooms in your house, there are laws limiting the number of allowable appliances and the number of unrelated persons living in one house. In my experience, these laws are often ignored. Although there are valid reasons for some of these laws, the reason for ignoring them are more compelling:

There is a massive shortage of affordable housing, people need help paying their significant mortgages, and we have decided, wisely I think, not to develop more land. The only way to meet the demand for housing within these constraints is to increase density.

Since the state and county have largely failed to create a legal way to do this, the market has taken over, and individuals have done it on their own.

We need a smarter law that recognizes the actual situation for most residents and reflects our concerns as a society, our communities and the environmental impacts. 

In most cases, I think this has been successful in meeting the needs that the government has refused to meet. We have more affordable housing without increasing suburban sprawl and creating unsafe living spaces.

There are undoubtedly some instances where individuals have created housing that is not acceptable, but we need a better set of regulations to distinguish between these and others. The recent law allowing accessory dwelling units was a small step in the right direction, but still the sizes are too restrictive to fit most existing accessory dwelling units.

Instead, we need a smarter law that recognizes the actual situation for most residents and reflects our concerns as a society, our communities and the environmental impacts. 

One of the reason the current regulations of transient accommodations are ignored is that they are unfair and arbitrary.

For example, from 1986 to 1989, the state allowed people to apply for nonconforming use permits for rentals operating before 1986. Essentially, this law allowed those who have been benefitting from this practice to continue to benefit and excluded everyone else. These are the so-called legal vacation rentals.

However, if you look at the text of the actual law, it limits these vacation rentals to two rooms within a house with a maximum of four guests. (.)

So basically, even the “legal” vacation rentals are almost all in violation of the law.

In the case of short-term vacation rentals, what would regulations look like that would provide some of these benefits to our communities without causing too much harm?

First, limit the total number of allowable short-term rentals to a certain percentage of units within a given community, say, somewhere between 3-5 percent.

Or let individual communities decided on a number within that range. Certain exceptions could be granted to locations designed with short-term vacation rentals in mind, such as apartment buildings in Waikiki or elsewhere.

In distributing permits, give priority to local residents renting out space in their primary residences. Each household can receive only a single permit. Permits should be granted for five years. Once the allowable number of permits are distributed, the remaining and future applicants are put on a waiting list and granted permits the during next cycle. 

The advantages of this system is that it creates a way for local residents to profit from the tourism economy and spreads those profits evenly throughout the island. Because they are limited to primary residences, visitors will not disrupt local communities. Because permits are limited to five years and are nontransferable, they should not impact property values and allow as many people as possible to benefit.

Having a community of legal vacation rentals will provide the state with tax revenue and a community to enforce rules against non-conforming rentals, who endanger the entire community. Potentially, this solution provides many of the benefits while negating the worst problems. Of course, as will all solutions, it will need to be rigorously enforced to be effective.