State's efforts aid counties in tagging illegal vacation rentals

THE ISSUE The state is going after vacation rental owners who haven't paid room and excise taxes.

THE state's pursuit of vacation rental operators for unpaid taxes will assist county governments in trying to control the illegal businesses. Besides standing to gain considerable revenue by cracking down on the hundreds, if not thousands, of un-permitted rentals, the state lends leverage to a collaborative effort to rein in businesses that have caused community conflict.

Officials could help even more if the administration backed off from opposing legislation to require the state Department of Taxation to share information about transient rentals to assist counties in identifying possible violators.

Titin Liem, a special assistant in the Tax Department, told the Star-Bulletin's Alexandre Da Silva that 68 companies operating vacation rentals or bed-and-breakfast units owe a total of $1.5 million in tourist accommodation and general excise taxes.

The department also is investigating another 237 short-term rental operations that might be liable for the taxes, a number that could fatten the state's general fund coffers by millions of dollars.

However, the issue is not as much about the money as the disruption illegal operations can generate in residential districts. Homeowners have complained to authorities for years about the noise, increased traffic and other problems short-term rentals cause, particularly on Oahu where proximity of homes sharpen disturbances.

In Kailua, a suburban neighborhood many tourists prefer to the busyness of Waikiki, illegal vacation rentals have split the community between homeowners who make a living or extra income through rentals and residents who do not want tourism encroachment. Residents also contend that the income-generating rentals attract out-of-state buyers willing to pay more for a home, thus escalating property valuations and taxes.

For almost 20 years, the city has not issued permits that allow rentals of less than 30 days, but a state study found more than 2,000 online ads for Oahu vacation homes, twice as many as legally allowed. More than 8,300 vacation rentals have been logged statewide, most on the neighbor islands where regulations differ from the city's. Still, the quantity outnumbers permits, indicating a proliferation of illegal units.

The city began its own crackdown, increasing daily fines to $1,000 from $50, but logistics and staff shortages have hampered enforcement and when faced with hefty fines, illegal rental owners tend to go to court rather than pay up. Officials have recently been using a workable tactic, lowering fines if rental owners agree to shut down immediately with the threat of having to pay fines in full if they continue.

Businesses that run legal vacation rentals provide visitors with a more intimate experience and have a place in the tourism economy. They should not have to defend their operations because others defy the law.