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The Honolulu Advertiser
Posted on: Saturday, May 13, 2006

Luxury vacation rentals booming, legally or not

By Alexandre Da Silva
Associated Press

This sign in a Kailua residential neighborhood says vacation rentals are prohibited. But many residents lacking permits for such activity are cashing in anyway, renting for high prices to well-heeled tourists.

LUCY PEMONI | Associated Press

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For $6,500 a night, 18 guests can lounge in a 10-bedroom, beachfront mansion on Maui's south coast.

On O'ahu, a spacious four-bedroom home in the high-rent 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 Hawai'i as visitors look for alternatives to crowded hotels.

Isle residents, in turn, are cashing in on their properties, advertising online with package deals that can include 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 housing.

"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 group 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 Department of Taxation is investigating 216 rentals and bed-and-breakfast operations in the Islands that may violate tax laws.

On O'ahu, 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 such rentals on the island, according to a 2005 state study.

Legal vacation rentals on O'ahu 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 permit process or have limited enforcement, said Marsha Wienert, state tourism liaison.

The trend could be driven by regular visitors who are exploring other options to Waikiki, Wienert said. Hotels were especially busy last year, when Hawai'i 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 permits. Now, proposals are floating in several counties to regulate the industry and improve enforcement of zoning laws.