Hawaii Island’s Short-Term Rental Shake-Up: Navigating the New December Regulations
The island of Hawaii is a paradise for many, drawing millions of visitors each year. A significant part of this tourism ecosystem is the short-term vacation rental market. However, the rapid growth of STVRs has also brought challenges, particularly concerning housing affordability and neighborhood impact. In response, Hawaii County has been refining its approach, culminating in new regulations scheduled for implementation this December. These changes, rooted in Ordinance 2018-114 and further shaped by recent legislative action, aim to strike a better balance between economic opportunities and community well-being.
The Regulatory Blueprint: Ordinance 2018-114 and Its Evolution
The foundation for Hawaii Island’s current STVR regulations was laid with the adoption of Bill 108, which became Hawaiʻi County Ordinance 2018-114. Enacted by the Hawaiʻi County Council in November 2018, this ordinance was a proactive step towards managing the burgeoning vacation rental industry. It sought to bring order and clarity to a sector that was rapidly expanding.
Key Provisions of the Original Ordinance
Ordinance 2018-114 introduced several critical changes designed to regulate STVRs effectively:
- Definition of Permitted Zones: The ordinance clearly delineated specific zoning districts where STVR use is permitted, providing a clearer framework for legal operations.
- Establishment of Standards: It set forth operational standards and provisions that STVRs must adhere to, aiming to mitigate potential negative impacts on surrounding communities.
- Nonconforming Use Certificates (NUCs): A crucial element was the provision for existing STVRs operating outside of permitted zones to apply for a Nonconforming Use Certificate (NUC). This allowed them to continue operating legally, provided they met certain criteria and renewed their NUCs annually.. Find out more about Hawaii Island vacation rental law December.
These provisions were designed to provide a pathway for compliance while also establishing clear boundaries for future STVR development.
The December Deadline: What Property Owners Need to Know
The upcoming December effective date for the new regulations marks a critical juncture for STVR operators on Hawaii Island. Compliance is paramount, and understanding the requirements is the first step.
Mandatory Registration and Permitting
Hawaii County now mandates that most vacation rentals obtain a Short-Term Vacation Rental (STVR) Permit. This isn’t a simple checkbox; the application process is comprehensive. Owners must submit detailed information, including site plans, floor plans, and various compliance documents, to demonstrate that their property meets the county’s standards. This enhanced oversight aims to ensure that all legal STVRs are accounted for and operating within the established guidelines.
Navigating Nonconforming Use Certificates (NUCs)
For those pre-existing STVRs operating outside the newly defined permitted zones, securing a Nonconforming Use Certificate (NUC) remains a vital requirement. These NUCs are not a one-time grant; they require annual renewal. This ongoing process ensures that properties granted an exception continue to meet the county’s standards and community expectations.
The “Good Neighbor Policy”: Fostering Community Harmony. Find out more about Hawaii County short-term rental regulations guide.
A cornerstone of the updated regulations is the emphasis on a “Good Neighbor Policy.” This policy directly addresses common concerns raised by residents regarding the impact of STVRs on neighborhoods. Key aspects include:
- Quiet Hours: Strict adherence to designated quiet hours, typically from 9:00 p.m. to 8:00 a.m., is expected. This aims to minimize noise disturbances and preserve the peace for permanent residents.
- Parking Regulations: Rules governing parking are being implemented to prevent congestion on local streets and ensure adequate parking for both residents and guests, reducing a frequent source of neighborhood friction.
- Property Use Restrictions: Limitations on how properties can be used are in place to help maintain neighborhood character and prevent activities that could disrupt the community fabric.
Adhering to this policy is crucial for maintaining a positive relationship with the local community and ensuring the continued legality of STVR operations.
The Essential Local Contact
A non-negotiable requirement is the designation of a local contact person. This individual must be available 24/7 to promptly address any issues or concerns that may arise with an STVR. This ensures that there is always a point person to handle complaints or emergencies, providing a direct line of communication and accountability.
Enforcement and Consequences: Upholding the Rules. Find out more about Ordinance 2018-114 vacation rentals tips.
Hawaii County is stepping up its enforcement efforts to ensure compliance and curb illegal operations. Recent legislative developments, such as Bill 47, mandate the registration of most transient vacation rentals and the platforms that host them.
Registration and Oversight
Bill 47 is a significant measure designed to enhance oversight of the STVR market. By requiring registration of both rentals and hosting platforms, the county gains better visibility into the sector, enabling more effective monitoring and enforcement. This move is crucial for ensuring a level playing field for all operators and for accurately collecting taxes.
Penalties for Non-Compliance
Operating an STVR without the required registration or permits can lead to substantial financial penalties. Fines for non-compliance can reach up to $10,000. Furthermore, the county has the authority to take action against hosting platforms that fail to comply with regulations, underscoring the seriousness of these new rules.
Moving Beyond Complaints: Proactive Enforcement
There’s a growing understanding that relying solely on resident complaints is not enough for effective enforcement. The county is moving towards a more proactive approach to identify and address illegal STVR operations. This means actively seeking out non-compliant properties and taking swift action to ensure regulations are upheld across the board.
Zoning: Where Can You Legally Operate an STVR?. Find out more about Good Neighbor Policy Hawaii vacation rentals strategies.
Understanding the zoning regulations is fundamental for anyone involved in the STVR market on Hawaii Island. The new rules clarify where these rentals are permitted and where they are restricted.
Permitted Zoning Districts
Short-term vacation rentals are generally permitted in specific zoning districts, including V (Visitor Destination Area), CG (Commercial General), and CV (Commercial Village). They are also allowed in residential and commercial zoning districts that fall within the island’s General Plan Resort and Resort Node areas. Additionally, the RM (Residential Medium Density) district, particularly for multi-family dwellings with a condominium property regime, is considered a permitted zone.
Restrictions in Residential and Agricultural Zones
Crucially, STVRs are generally prohibited in residential and agricultural zones unless the property has obtained a valid Nonconforming Use Certificate (NUC). The Hawaiʻi Supreme Court has reinforced the prohibition of STVRs on agricultural lands, affirming that farm dwellings cannot be used for short-term rental purposes under state law. This clarification is vital for property owners in these zones.
The Economic Tightrope: Balancing Tourism and Housing
The STVR market on Hawaii Island presents a complex economic picture, offering significant benefits while also contributing to housing challenges.
Economic Contributions of STVRs. Find out more about Hawaii County short-term rental regulations insights.
STVRs are a major economic driver for Hawaii Island. In 2024, STVR lodging revenue was estimated at approximately $710 million, a figure that rivals the revenue generated by the hotel industry. Each STVR unit also supports local employment, averaging about 1.6 full-time and 4 part-time jobs. Furthermore, these rentals contribute significantly to local government revenue through various taxes. The potential loss of annual Hawaii County transient accommodation tax revenue if STVRs were curtailed could range from $3.35 million to $5.11 million.
The Impact on Housing Affordability
However, the growth of STVRs has a direct and often negative impact on housing affordability for local residents. When homes that could be used for long-term residents are converted into vacation rentals, it reduces the available housing stock. This scarcity drives up rents and home prices, exacerbating Hawaii’s affordable housing crisis. Studies suggest that removing all STVRs could potentially lower median monthly rents by $35 to $160, illustrating the tangible effect on the cost of living for residents.
Statewide Influence and County Autonomy
Recent state-level legislation has further empowered Hawaii’s counties to manage their unique STVR landscapes.
Senate Bill 2919: Granting More Local Control
In May 2024, Governor Josh Green signed Senate Bill 2919 into law. This bill significantly enhances the power of Hawaii counties to regulate short-term rentals. It grants them “home rule” authority, allowing them to control the time, place, manner, and duration of land and structure usage for STVRs. Importantly, it also empowers counties to phase out transient accommodation uses in residential or agricultural zones, giving them greater flexibility to address local concerns. You can find more details on Senate Bill 2919.
County-Specific Regulations
Hawaii’s approach to STVR regulation is largely county-driven. Each island government establishes its own distinct rules, reflecting the unique tourism patterns, housing markets, and community priorities of that specific island. This decentralized system allows for tailored solutions that best fit the needs of each community. For instance, the regulations on Maui differ from those on Kauai and Hawaii Island, highlighting this localized approach.
Looking Ahead: Studies, Engagement, and Future Refinements. Find out more about westhawaiirealtorscom guide.
The county is committed to an ongoing process of evaluation and adaptation regarding STVR regulations.
Economic Impact Studies Underway
The Hawaiʻi County Department of Research and Development is conducting a comprehensive economic impact analysis of vacation rentals on Hawaii Island. This study, mandated by a county council resolution, aims to provide policymakers with crucial data to inform future decisions and potential adjustments to rental laws. The findings will be vital in understanding the full scope of STVR impacts.
Community Input is Key
The county recognizes the importance of public opinion in shaping effective policy. They are actively seeking community input through surveys and public hearings. This engagement is crucial for gathering feedback on the impacts of short-term rentals and ensuring that decisions are balanced and informed by the perspectives of those most affected.
Streamlining and Simplifying Efforts
The Hawaiʻi County Council is also working to simplify its existing short-term rental laws. Amendments are being made to existing bills in response to concerns raised by various stakeholders. These efforts are aimed at creating a more streamlined, effective, and understandable regulatory framework for everyone involved.
Understanding STVR Taxation in Hawaii
Navigating the tax landscape for STVRs in Hawaii involves understanding both state and county-level obligations.
State Transient Accommodations Tax (TAT)
All short-term rental operators in Hawaii are required to obtain a Transient Accommodations Tax (TAT) license from the state Department of Taxation. They must then pay a state TAT of 10.25% on their gross rental income. This tax is a significant contributor to the state’s general fund.
County Transient Accommodations Tax (HCTAT)
In addition to the state TAT, Hawaii County levies its own transient accommodations tax, typically set at 3%. Operators registered with the state and holding a valid State TAT number are generally considered registered for the Hawaii County Transient Accommodations Tax (HCTAT). It’s essential to ensure proper registration and remittance for both state and county taxes.
General Excise Tax (GET)
Hawaii’s General Excise Tax (GET) is a business tax assessed at 4% on most goods and services, including short-term rentals. Some counties may impose additional GET surcharges, so it’s important to stay informed about any local variations. Operators are required to post their state tax ID on their listings, ensuring transparency and facilitating tax collection.
Conclusion: Adapting to a New Era of STVR Management
The upcoming December implementation of new STVR regulations on Hawaii Island signifies a pivotal moment. It reflects a commitment to balancing the economic benefits of tourism with the pressing need for affordable housing and the preservation of community character. For property owners and operators, adapting to these enhanced oversight and stricter standards is not just a legal requirement but a step towards fostering a more sustainable and harmonious tourism model. As Hawaii County continues to gather data, engage with the community, and refine its approach, further adjustments to these regulations are anticipated. This evolving landscape requires ongoing vigilance and a willingness to adapt from all stakeholders. By understanding and complying with the new rules, operators can ensure their businesses thrive while contributing positively to the unique and cherished environment of Hawaii Island. Are you an STVR owner on Hawaii Island? How are you preparing for the December regulations? Share your thoughts and experiences in the comments below!