(Star Advertiser) Council members sped up passage of vacation rental bills

(Souce: Star Advertiser)

Council members sped up passage of vacation rental bills

Key Honolulu City Council members say they moved up the votes on two game-changing vacation rental bills in hopes of influencing Gov. David Ige as he decides whether to sign a controversial bill passed by the state Legislature at the end of October.

Ige has until Monday to announce his intention to veto any bills passed by this year’s Legislature. Senate Bill 1292, which survived a narrow a 13-12 vote, would allow vacation rental hosting platforms such as Airbnb, VRBO and Home­Away to collect taxes on behalf of the state.

The legislative measure generated large opposition, including from those bothered that it would allow the platforms to collect taxes for the state without disclosing to the counties the names of vacation rental owners, the locations of the rentals or other information.

The Council voted Monday to approve two bills imposing stricter regulations and fines on both rental platform companies and vacation rental operators. One of them, Bill 89 (2018), also would permit up to 1,715 new hosted bed-and-breakfast-type operations but no new whole-home transient vacation units (TVUs).

Both Council Chairman Ikaika Anderson and Councilman Ron Menor, who chairs the Zoning, Planning and Housing Committee, said that after the two Council bills moved out of Menor’s committee June 7, they chose to hold Monday’s special full Council meeting to vote on its two bills instead of waiting until their next regularly scheduled monthly meeting on July 3.

But both men gave different reasons for wishing to expedite the bills.

Anderson said he wants the governor to reject the Senate bill on several grounds.

“I don’t feel it’s right that government collect taxes from an illegal business,” Anderson said.

Additionally, “this is a land use issue, and land use issues are determined by the counties,” he said. “Leave it to us to handle it. And we’ve handled it with our action Monday.”

Menor said, however, he’s not certain he wants Ige to veto the Senate bill. He just wanted to send a message to Ige that his administration should review the bill’s language thoroughly to ensure it won’t preempt recent legislation by the city and the other counties that regulate vacation rentals, including Monday’s bills.

“My thinking was that the Council should pass our bills out to the governor before the June 24 notice-to-veto deadline as a way of sending a clear message to the governor that Council members want him to carefully review the Senate measure to make sure it does not preempt the Council’s short-term rental bills,” Menor said.

He said he’s being told that the language in the Senate measure will not prevent counties from enacting land use ordinances that have to deal with vacation rentals. “If there is such a provision, that would allay my concerns,” he said. Nonetheless, he said, the state should double-check.

“If there is any risk of preemption, the governor should veto the measure,” Menor said.

It’s a concern Ige shares. In 2016 the governor vetoed a similar measure, arguing that it would have shielded property owners who illegally operate vacation rentals. The city Department of Planning and Permitting estimates there are 8,000-10,000 illegal vacation rentals on Oahu alone.

Ige’s staff said Tuesday the state administration is still reviewing the bill.

Across the street at Honolulu Hale, Mayor Kirk Caldwell is making it clear that, pending a legal review, he intends to sign Bill 89 rather than Bill 85 (2018). The second bill provides better enforcement tools for the city and stiffer penalties and regulations against violators, but no permitting of any new vacation rentals.

He urged members to pass Bill 89, and they did so unanimously 9-0. They also approved Bill 85 by a 7-2 vote.

But almost as certain as the likelihood of Caldwell signing Bill 89 is the possibility that it will face legal challenges from unhappy hosting platforms, their operators or both.

Airbnb attorney David Louie, in written comments he gave to the Council earlier this month, said his clients are OK with fair regulation but opposed to Bill 89. The bill violates the Fourth Amendment, prohibiting unreasonable search and seizure, because it requires that the hosting platforms submit reports to the city with the names of its operators, their addresses, state transient accommodations tax identification numbers, the length of stays and the prices paid.

Louie pointed to a 2015 California case where the U.S. Supreme Court determined it violated the Fourth Amendment to force hotel operators to make their guest records available to police on demand or face criminal penalties.

“Several courts have specifically applied these Fourth Amendment principles to enjoin ordinances and subpoenas directed at hosting platforms by municipal governments,” Louie said, citing recent lawsuits by Airbnb against New York, Boston and Palm Beach, Fla.

Bill 89’s language also violates the federal Stored Communications Act of 1986, which protects people using internet platforms from the government taking stored electronic private information without due process, such as a search warrant, Louie said.

Ivan Lui-Kwan, an attorney for several hoteliers that support Bill 89, said Louie is wrong.

Lui-Kwan pointed to a March decision by the 9th Circuit Court of Appeals in the case involving the city of Santa Monica, Calif., and online platform company HomeAway.com, part of the Expedia Group. Both HomeAway and Airbnb sued Santa Monica arguing that the city could not require the hosting platforms to disclose listing and booking information and other provisions.

The 9th Circuit ruled that the Santa Monica ordinance did not violate any federal laws “because it holds hosting platforms liable only for their own conduct — namely, for providing, and collecting a fee for, booking services in connection with an unregistered unit,” Lui-Kwan said in a June 12 memo he gave to the Honolulu Council.

The Honolulu bill was patterned after the Santa Monica law, Lui-Kwan said.

If Caldwell signs one of the bills, the city also may be subject to a legal challenge from operators of so-called 30-day rentals.

Those vacation rental operators said that under a settlement agreement with DPP, they are allowed to rent to a party for less than 30 days so long as they agree not to rent to anyone else during that 30-day period. They said Bill 89 would take that way.

Menor said, however, that there is no taking because the proponents of 30-day rentals have misread the agreement. Legitimate 30-day rentals, where renters pay for and are entitled to stay all 30 days but choose not to, are legal, he said.

“Sham” 30-day rentals are the opposite, Menor said. Renters stay less than 30 days, are charged at a rate of less than 30 days and are not entitled to stay 30 days, making them illegal even if the owners agree not to rent to anyone else during that period, he said.

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