Broad legalization of B&Bs would skew property values
City Council Bill 187 would legalize bed and breakfasts throughout Oahu's single-family residential neighborhoods, under certain conditions. One of the main conditions is that there would have to be a minimum of 500 feet between any two B&Bs.
Under this 500-foot rule, how many B&Bs could fit on Oahu's land that is zoned for single-family homes?
Imagine Oahu neighborhoods divided into triangular grids with a B&B located at each of the three corners of each triangle in the grid. Each B&B in the grid is 500 feet away from the six closest B&Bs.
Based on this pattern, there could be as many as 4,310 legal B&Bs on Oahu. Under the current version of Bill 187, each of these B&Bs could rent out three rooms, implying a total of 12,930 legal B&B rooms. According to the most recent figure from the state Department of Business and Economic Development and Tourism, Oahu has 26,261 hotel rooms. The potential addition of 12,930 B&B rooms would augment the number of hotel rooms on Oahu by 49 percent.
In other words, we could have half again as many tourists as we do now, spread throughout our single-family residential neighborhoods.
If Bill 187 becomes law, there are some other implications as well.
» Commercialization of our residential neighborhoods with as many as 4,310 B&Bs would drive housing prices and long-term rental prices for local people even higher than they are now. But the rise in housing prices would occur in an uneven way.
For example, suppose that you applied for and got a B&B license. The market value of your property would increase substantially, because you could then make money from it. But what if you were unlucky and your next-door neighbor got a B&B license instead of you? The value of your property would then be much lower than the value of your neighbor's property, because you would no longer be eligible to apply for a B&B license under the 500-foot rule. The value of your property would probably even decline some because of the continual coming and going of strangers next door and the conversion of part of your neighbor's yard into a parking lot for tourist rental cars.
» Our current method of assessing property values for property tax purposes would have to be changed substantially in order to be fair. If my neighbor gets a B&B license, my neighbor's property tax should go way up and my property tax should stay even or even go down some.
» Legal B&Bs should be taxed as resorts.
» Bill 187, if enacted, would be a nightmare for the city to administer and enforce. The Department of Planning and Permitting would need to greatly expand its staff to handle the job. But past experience suggests that the city would not provide the needed expansion of staff. The DPP does not have the staff to adequately police the very small number of legal B&Bs that exist now, much less the many hundreds of illegal transient vacation rentals that also exist now.
» There would be a further explosion of illegal transient vacation rentals, whose owners would not have to worry much about enforcement, because DPP would already have more than it could handle with B&Bs.
Bill 187 is an ill-considered special-interest bill that is not at all in the public interest. The city's Planning Commission should recommend against it, and the City Council should vote it down.
Robert D. Retherford lives in Kailua.