Vacation rentals were nothing new in Hawaii, particularly in Kailua. Residents of the beachside community had watched for years with trepidation as tourists traipsed in and out of residential homes with luggage in tow. 

But neighbors renting out rooms or converting garages into studios for visitors was one thing. The construction of a 10-bedroom, 10-bathroom house by the owner of a vacation rental company based partly in California was something else entirely. 

The line had to be drawn somewhere, and in 1978 residents of Kailua decided the line was at 125 N. Kalaheo Ave.

“Kailua residents, even those who haven’t paid much attention to rentals in existing homes, are disturbed by the sight of the new motel-like structure going up,” the Honolulu Star-Bulletin wrote, adding that community groups feared it would be used for commercial rentals. “The prospect has them up in arms because they fear that a commercial operation will start to change the Windward residential neighborhoods into large-scale commercial tourist destinations.”

Kailua community groups prevailed in their efforts to block the home from being used as a mini-hotel after filing a lawsuit against the owner. But a decade later, a single monster home was the least of people’s concerns.

By 1989, vacation rentals — legal and illegal — had proliferated to the point where residents in some Windward communities felt their neighborhoods had been altered beyond recognition.

“A friend who lives a few streets away from me has no neighbors anymore,” a Star-Bulletin columnist wrote in 1989. “Oh, there are still houses on each side of hers. But they are owned by corporations and frequently used as vacation retreats for corporate executives or rented to tourists … She and I don’t live in Waikiki or some other resort area. We live in Kailua, but our residential community — and others around Oahu — is slowly being turned into a haven for tourists.”

It was time to “put a lid” on vacation rentals before it was too late, a Kailua resident wrote in a letter to the Honolulu Star-Bulletin that year. 

“Paradise lost is never paradise regained,” the resident wrote. 

Hawaii’s newspaper archives show that Maui Mayor Richard Bissen’s recent proposal to phase out some 7,000 short-term rentals on Maui by 2026 is but the latest chapter in a long struggle over how to regulate vacation rentals in Hawaii.

Decades before Airbnb became a household name, Hawaii residents were having the same arguments that continue to be hashed out today over whether vacation rentals help Hawaii residents survive or drive them out of the state by destroying the housing market.

Regulations that stifle tourist accommodations are “endangering the opportunity of the individual to support himself,” a real estate broker argued in a 1953 Senate committee hearing on rent control.

“We have island residents whose only option is to rent a room. These people cannot compete with the visitor, who, for less than a 30-day stay, can afford to pay a much higher room rate than those who need resident housing,” a reader wrote to the Star-Bulletin in 1989. “Longer-term room rentals simply won’t be available.”

Skating By On A Technicality

In 1978 when residents rose up against the construction of the monster house in Kailua, vacation rentals were “neither new nor unusual,” the Honolulu Advertiser wrote. According to the building department, such rentals were particularly prevalent in Sunset Beach, Kailua and Lanikai. Indeed, when a reporter visited the home that was causing such consternation, they noted a sign advertising a furnished two-bedroom rental for $50 a day posted directly across the street.

The man building the 10-bedroom house on Kalaheo Avenue owned three homes used for vacation rentals on Oahu and 24 on Maui, the Honolulu Advertiser reported.

The legality of those rentals, at least on Oahu, often came down to whether there was a kitchen. The island’s first comprehensive zoning code, passed in 1969, subdivided the island into various districts including resort, business, agricultural and residential. In residential districts, a single-family dwelling was defined as a structure with a single kitchen.

Families — or up to five unrelated people living together — could “take up to three paying boarders unrelated to the family, as long as there is only one kitchen” in the dwelling, the Star-Bulletin wrote in 1978. But a kitchen meant having a sink, a stove and a refrigerator.

“Some landlords bend the law by putting a small apartment refrigerator in the unit, and either install a small sink or have the bathroom sink serve double duty. They don’t install a range, but allow tenants to cook with a portable hot plate and small electric appliances,” the Star-Bulletin reported. Those appliances could be easily hidden from a city inspector.

Many vacation rentals in popular beach destinations in the 1970s started out as converted garages, extra rooms and ohana units with limited kitchens, the newspaper reported. Other rentals were “grandfathered in” because they predated the 1969 code.

In 1980, state lawmakers passed a bill directing counties to limit the location of both timeshares and short-term vacation rentals to “appropriate areas.” At the time, most of the attention was on timeshares and the impact they had on residential areas, including the apartment district in Waikiki. Not addressing transient rentals in the bill, however, would have created a loophole “big enough to drop the Capitol through,” one state senator said.

In debating the bill, lawmakers expressed frustration that individual counties had not already addressed the growing issue.

“Because the counties have the power to zone areas, legislators were concerned about usurping county powers, but said they will act since the counties have not,” the Star-Bulletin wrote in 1980.

The 1980 law allowed existing rentals to remain as long as owners registered the unit, a provision legislators hoped would ensure more owners were paying general excise taxes. The bill did not address single-family homes, and lawmakers at the time said they had little idea of how many vacation rentals existed.

Although the counties moved to limit where timeshares and vacation rentals could operate — Honolulu passed additional restrictions in 1980, 1986 and 1989 — enforcing such regulations would prove extremely difficult.

Neighbor Vs. Neighbor

Though multiple ordinances were passed by counties in the 1980s, most were poorly enforced. Loopholes were exploited and neighbors spied on neighbors, taking matters into their own hands.

In 1989, as the Honolulu City Council debated new regulations on bed and breakfasts or vacation rentals operated out of owner-occupied homes, a group of Kailua residents went on the offensive about the lax policing of existing rules.

John Weil, the leader of Save Kailua, told newspaper reporters that he had given the city building department dozens of names and addresses of illegally operated vacation rentals, asking the department head to crack down on neighborhood scofflaws. Building inspectors spent weeks following up on roughly 130 complaints in both Windward and North Shore neighborhoods, following up on tips put together by residents campaigning against vacation rentals. The effort shocked many newspaper readers.

“John Weil and his vigilantes have unleashed onto Oahu homeowners a door-to-door search based on tactics that rival the Gestapo,” one Kailua resident wrote to the Honolulu Advertiser.

“If this is not a use of a city department to harass and intimidate homeowners by a private group, I am blind and deaf,” wrote another.

In 1992, a city planning survey found more than 2,000 illegal vacation rentals operating in Waikiki. Tenant advocates called for the city to crack down on the rentals, but the city expressed concern about using such a survey to drive enforcement actions. Waikiki tenants argued illegal units “ought to be converted to long-term rentals to boost the rapidly shrinking pool of affordable housing in Waikiki” but city leaders also expressed skepticism about whether reducing the number of illegal vacation rentals in the resort area would have any real impact on affordable housing.

A decade later, residents in Lanikai battling illegal vacation rentals found themselves fighting a “not-so-civil-war” with their neighbors.

“Lovely Lanikai is in a turf war as ugly as that of any inner city,” Kalana Best of the Lanikai Association and Keep It Kailua groups wrote in the Star-Bulletin in 2006. “On one side are residents who call it home and who want it to remain a ‘bedroom community.’ On the other are business owners who want it to be a tourist mecca and rent out those bedrooms — however illegally — as bed-and-breakfasts or vacation houses.”

Best said her fence had been egged after lobbying against short-term vacation rentals and that “vindictive operators have asked the police to investigate whether neighbors are harassing their ‘guests.'”

That same year, a Lanikai resident sued her neighbor for operating an illegal vacation rental business, after using surveillance cameras to record the coming-and-goings of visitors. A judge ordered the scofflaw to cease operations or she would be forced to sell her home. Newspapers predicted the court ruling would have a chilling effect on illegal vacation rentals in the area. It did not.

A decade later, in 2019, when the Honolulu City Council moved again to strengthen restrictions and make it easier to crack down on illegal vacation rentals, there were more than 900 units on the market in Kailua.