New vacation rentals on Oahu were discontinued after 1989, but that hasn't stopped many from starting business around the island, including in Kailua. The sun set on a beach in Kailua on Thursday.
Legal or not, B&Bs are flourishing, and so are complaints
Oahu has more than 2,000 online ads for vacation rentals, according to a state study
For $6,500 a night, 18 guests can lounge on a 10-bedroom, beachfront mansion on Maui's south coast. On Oahu, a spacious four-bedroom home in the affluent Kahala neighborhood is listed for $2,500 a night and welcomes up to eight people.
Thousands of private vacation deals have been springing up across Hawaii as visitors look for alternatives to crowded hotels. Isle residents, in turn, are cashing in on their properties, advertising online packages that now offer French chefs, maids and even spa services.
Despite land-use ordinances restricting such rentals to residents who obtained permits before the late 1980s, short-term private rentals are growing beyond control. Residents say they bring traffic and noise into tranquil communities and make it harder for people to find long-term, affordable rentals and leases.
"There's no sense of community, because you've got strangers coming in all the time for two to three days," said Kalana Best, who lives in Kailua and joined the Save Oahu's Neighborhoods, a nonprofit working to preserve residential areas. "It's like a tsunami in slow motion, but instead of a wave of water, it's a wave of people."
As concern grows, the state Tax Department is investigating 216 rentals and bed-and-breakfast operations in the islands that may violate tax laws.
On Oahu, only 1,000 homeowners have a certificate that allows them to rent rooms for less than 30 days. However, there are more than 2,000 online advertisements for the rentals on the island, according to a 2005 state study.
Legal vacation rentals on Oahu are limited to homeowners who applied for a certificate to operate before a 1989 ban on short-term residential rentals took effect. New applications are no longer accepted. Other counties either don't have a permitting process or have limited enforcement, said Marsha Wienert, state tourism liaison.
The trend could be driven by regular island visitors who are exploring other options to Waikiki, Wienert said. Hotels were especially busy last year when Hawaii welcomed a record 7.4 million tourists.
"Visitors -- especially as they repeat -- are seeking different types of accommodations," Wienert said. "And because it has become such a lucrative market, people are not going through the process and getting the type of zonings that are needed."
Resident Larry Bartley began noticing signs of visitors creeping into his Kailua neighborhood about three years ago: houses stayed empty for a few days, then were suddenly packed with loud tenants who drove rental cars.
So he formed Save Oahu's Neighborhoods last year to lobby for tougher enforcement against illegal vacation operators on all islands.
"It wasn't just a Kailua issue," he said.
Until last year, officials had relied largely on finger-pointing by neighbors to catch people who were secretly converting their homes into holiday getaways without proper documentation. Now, proposals are floating in several counties to regulate the industry and improve enforcement of zoning laws.
On Maui, Councilman Robert Carroll introduced a bill to force vacation home operators to display permit numbers in any advertisement. Honolulu is considering similar controls.
"We really don't know how much is out there," said Carroll. "Some people are totally under the radar. It's like the Wild West out there."
As more landlords set aside their property for wealthy visitors, it's becoming harder for people on Maui to find homes to rent, said Alice Lee, the county's housing director. Some end up crowding into one place to share the rent.
"When we are dealing with the homeless and are trying to place people, it's taking much longer," Lee said.
On Kauai, luxurious home rentals make up about 40 percent of all housing in the rural town of Hanalei, according to F. Kenneth Stokes, an economist with the Kauaian Institute.
Stokes, whose group monitors real estate, demographic and geographic data, published a report saying that the transient vacation business is manageable and much smaller, consisting of about 4,200 units for all islands combined.
"There are only a handful of places where the share of vacation housing is what you may call excessive," he said. "I thought that was fairly good news."
But Henry Eng, director of the Department of Planning and Permitting in Honolulu, said complaints from residents, online ads and other independent studies suggest otherwise.
"The enforcement against illegal vacation rentals has increased significantly over the last year," he said.
The state Taxation Department is going over lists of more than 6,900 vacation rentals and 1,452 bed-and-breakfasts identified online by the Hawaii Department of Business, Economic Development and Tourism.
After looking at less than half of all operators traced, tax officials have already begun 93 audits of vacation rentals on Oahu alone and 123 audits of bed-and-breakfasts statewide. Tax Department records show the businesses didn't file a required 7.25 percent tourist accommodation tax and a 4 percent general excise tax.
"We are checking them out," said Sandra Yahiro, the department's deputy director.