(Star Advertiser) Waikiki condo owners will sue to stop new law

(Source: Honolulu Star-Advertiser)

  • PHOTO BY LEE CATALUNA

    Racks of lock boxes hang just outside the front door of the Waikiki Lanais residential condo building. Inside are fobs to unlock the security door to the building as well as keys to individual vacation rentals. Long-time residents of the area say their daily lives are being severely impacted by short term vacation rentals.

The owners of at least one Waikiki condominium complex are preparing to ask a state judge to stop the city from enforcing the new vacation rental law against them.

The first phase of Ordinance 19-18, formerly Bill 89 (2018), takes effect today. It imposes fines of up to $10,000 a day to either advertise or operate an illegal vacation rental on the island.

It’s a powerful enforcement tool for the city Department of Planning and Permitting to stop what are believed to be thousands of illegal vacation rentals on Oahu.

Owners of the 876 individual units in the two-tower Waikiki Banyan condominium complex want to stop the new law through a court-imposed injunction. Christian Porter, an attorney for the Waikiki Banyan Association of Apartment Owners, said he will soon be filing for an injunction against the city in state Circuit Court, seeking to stop enforcement of the new law at the Ohua Avenue complex.

Porter said other Waikiki condominium owners are looking into the same type of action.

The Waikiki Banyan is on the mauka, or mountain, side of Kuhio Avenue, an area where hotels, resorts and vacation rentals are prohibited unless they are specifically permitted through nonconforming use (NUC) certificates that the city stopped issuing in 1989.

Only about 10%-12% of the Banyan units are occupied by their owners, meaning the rest are operating as either short-term or long-term rentals. There are 179 units in the complex with NUCs, said Tom Lonigro, Waikiki Banyan AOAO general manager.

It baffles Lonigro how buildings on one side of Kuhio Avenue are considered part of the hotel precinct, while the other side is an apartment or apartment mixed-use precinct.

“I can understand if you’re talking about a suburb, but we’re surrounded by hotels,” Lonigro said. “We have the Marriott across the street, we have the Hilton on the other side of Ohia, and we’ve been known as a hotel-resort since, well, since conception.”

The building was completed in 1979 and “it’s been running as a hotel since 1979,” he said. “We were built with that front desk and the lobby since the beginning. It’s always operated in this manner. So it’s not like we’re trying to hide anything or we’re trying to skirt the law or anything like that.”

There are six operators managing units at the Banyan, the biggest one being Aston Hotels and Resorts, Lonigro said.

There are also some unit owners who rent out their condominiums on their own without the services of any of the operators, he said.

“This is going to have a serious impact not only on the people who’ve invested in this building, it’s going to have a dramatic impact on the revenues to the city,” Lonigro said. “It’s going to have an impact on the employment of quite a number of people — there’s going to be a significant amount of layoffs if this goes through. It’s not a very well, thought-out ordinance.”

Porter, the association attorney, said he and Waikiki Banyan representatives met with DPP officials seeking an exemption from the law and were rejected.

“What we’re seeking is maintaining the status quo,” Porter said, noting that its owners pay transient accommodations and general excise taxes to operate as vacation rentals.

Kathy Sokugawa, DPP acting director, told the Honolulu Star-Advertiser that many property owners are seeking an exemption from the law and the city can’t arbitrarily allow some but not others.

The Waikiki Special Design District was created in the 1970s in part because of concerns that the area was being overrun with hotels, which led to the creation of apartment and mixed-use precincts for those on the mauka side of Kuhio, she said.

“The policy makers wanted to ensure that residents had a place in Waikiki,” Sokugawa said. “Part of the reason was there was too much development going on. They wanted to ensure there was a certain amount of open space and … a Hawaiian sense of place.”

During the recent, extensive deliberations on the vacation rentals bills, people testified in favor of keeping areas within Waikiki available for residential use.

Meanwhile, DPP has continued to hear from property owners unhappy that they received letters suggesting they may be operating an illegal vacation rental, or asking them to report neighbors who might be operating one.

DPP reported that as of close of business Wednesday, it had received 820 complaints from people about the letters. The department sent out about 5,000 of them earlier this week.

Sokugawa said DPP relied on “drop pins” — used by Airbnb, VRBO or other online platforms to identify the location of vacation rentals.

Those who own properties where there are not vacation rentals need not prove their innocence, she said. “You need to worry if you get issued a notice of violation,” she said, noting that much more research will need to be done before that will happen. Even then, the property owner has seven days to ensure the ad is dropped before DPP will issue a notice of order imposing a fine. At that point, the owner can still file an appeal, she said.

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