Vacation rental owners would be subject to a separate — and presumably higher — property tax rate than other homeowners, under a Honolulu City Council bill introduced this week.

Bill 60, introduced by City Council Budget Chairwoman Ann Kobayashi and Council Chairman Donovan Dela Cruz, creates a separate real property tax category for residential vacation units, defined as a dwelling in a residential zone used to provide lodging for compensation for less than 30 days and is not a bed-and-breakfast.

The bill follows separate legislation introduced in May — and now under review by the city Department of Planning and Permitting — that aims to crack down on illegal vacation rentals. Unpermitted vacation homes have been a divisive issue in the community, particularly in Windward O'ahu and the North Shore.

"It was apparent to us that the TVUs (transient vacation units) definitely have impacts on the community and they are different from residential, so that justified to me why they should have a different rate," Dela Cruz said. "The likelihood is that their rate would be higher, especially if we want to provide additional tax relief to our local residents."

The city administration proposes property tax rates, which are set by the City Council.

Dela Cruz said the measure could also provide the city with another enforcement tool against unpermitted operations.

"First of all they shouldn't be there in the first place, but if they are there, then that may be another tool that the city can use to clamp down on them," Dela Cruz said. "But we gotta look at the impact. ... It may be a catch-22 for the owner, but for the city, I think that's another way we can hopefully crack down on TVUs."

The City Council banned new permits for vacation rentals and B&Bs in 1989 to prevent the proliferation of the units, but many say the law is unenforceable. There are 942 permitted vacation rentals on O'ahu, but it's generally acknowledged that many more are operating illegally.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.