Honolulu’s Struggle to Regulate Short-Term Rental Platforms: A Legal Roadblock
The Legal Barrier Preventing Honolulu from Holding Vacation Rental Platforms Accountable
A settlement agreement stemming from a 2019 lawsuit has prevented Honolulu city officials from enforcing crucial provisions of a law designed to regulate vacation rental platforms like Airbnb and Vrbo, according to recent revelations from the city’s permitting department.
Department of Planning and Permitting Director Dawn Takeuchi Apuna disclosed during a City Council meeting that the city agreed not to enforce portions of the 2019 law requiring hosting platforms to submit monthly booking reports. This agreement came as part of a settlement with the Kokua Coalition, a group representing vacation rental owners.
When asked about potential future enforcement, Takeuchi Apuna expressed hesitation, telling Civil Beat, “It’s very risky, because they’re going to probably sue us,” referring to the coalition that initially challenged the law.
This explanation marked a shift from her previous statements to Civil Beat in May, when she characterized the department’s approach as treating companies like Airbnb as partners rather than adversaries, saying the department works collaboratively with platforms to remove unauthorized listings.
The Changing Narrative
City officials didn’t mention the lawsuit settlement until specifically questioned during the recent council hearing, raising concerns about transparency. When asked about the timeline of her knowledge regarding the lawsuit, Takeuchi Apuna, who wasn’t with the department when the law passed, provided a written statement saying, “The Department of Planning and Permitting was part of that suit, so DPP and Corporation Counsel were obviously well aware of that suit and settlement from its inception.”
In a follow-up email, she maintained that her initial explanation about partnership-based enforcement was “accurate despite not being exhaustive,” describing the settlement as “one of many – not the only – policy considerations” in determining enforcement strategies.
The inability to hold platforms accountable represents a significant obstacle in the city’s efforts to control illegal vacation rentals. Instead of targeting the platforms that facilitate bookings, the city must focus on individual property owners, who often employ sophisticated methods to evade detection.
The Core of the 2019 Law and Its Legal Challenge
Holding booking platforms accountable was a cornerstone of the 2019 ordinance. The law permitted short-term rentals of less than 30 days only in Oʻahu’s designated resort zones and surrounding areas, requiring property registration and triggering higher property tax rates.
Crucially, the law prohibited platforms from collecting fees for booking unregistered rentals and required them to register with the city and submit detailed monthly booking reports. Violations could result in fines ranging from $1,000 to $10,000 per day.
The same day the law took effect—August 1, 2019—the Kokua Coalition filed a federal lawsuit challenging these provisions. Their complaint alleged the city’s initial enforcement was “sloppy,” with hundreds of legal operators erroneously threatened with $10,000 fines.
The coalition also argued that the monthly reporting requirement violated state and federal privacy protections for electronic communications and the Fourth Amendment’s protection against unreasonable searches and seizures.
Approximately two months after filing, the vacation rental owners and the city reached a settlement. The agreement, included in a court order dismissing the case, acknowledged that similar ordinances had been blocked by courts in other cities including New York, Boston, Portland, and Los Angeles.
The Settlement’s Impact
In the settlement, the city agreed not to enforce the provision requiring monthly booking reports, stating, “Based on its understanding of the current state of the law and its interests in avoiding unnecessary litigation, DPP does not currently intend to enforce” this requirement.
The city also committed to giving the Kokua Coalition 60 days’ notice if it intended to begin enforcement, providing the group opportunity to take legal action to block implementation.
Despite vacation rental platforms operating throughout Oʻahu, city officials confirmed in May that no platforms had registered with the city, no monthly reports had been submitted, and no fines had been issued to hosting companies.
The Ongoing Challenge of Illegal Rentals
While the prevalence of illegal short-term rentals may have decreased since 2019, they remain a significant issue on Oʻahu. According to Inside Airbnb, an organization that monitors vacation rental impacts, approximately 7,900 Airbnb listings exist on the island.
The city has registered about 1,800 properties as short-term rentals, with an additional 700 properties grandfathered in from decades ago. Another 1,800 units operate legally within hotels without requiring registration. Even with conservative estimates, this suggests hundreds of illegal rentals continue to operate across the island.
Council member Tyler Dos Santos-Tam expressed surprise at Takeuchi Apuna’s explanation about the settlement preventing enforcement. He mentioned attempting to obtain booking reports previously but was simply told the department didn’t have them, with no mention of the legal barrier.
Dos Santos-Tam suggested the city should still pursue this data, potentially in anonymized form: “I think we need to go back and find as much information as possible, and get the platforms to give us this information in a reasonable way.” Such data, he noted, could provide valuable insights to guide future legislation.
Finding a Path Forward
The 2019 settlement doesn’t prevent the city from enforcing other aspects of the law, including penalties for platforms that fail to register or that facilitate bookings for illegal rentals. When questioned about the lack of enforcement of these provisions, Takeuchi Apuna cited federal protections for tech companies regarding free speech, suggesting these might shield vacation rental platforms.
Law professors have identified holding platforms accountable as a best practice for regulating short-term rentals, but Honolulu’s experience demonstrates the complex legal challenges cities face when attempting to implement such regulations.
As Honolulu continues wrestling with balancing the economic benefits vacation rentals provide to property owners against their impacts on housing availability and neighborhood character, the city finds itself constrained by legal agreements that limit its regulatory options—highlighting the persistent challenges municipalities face in the evolving landscape of short-term rental regulation.