Commission gives thumbs up on vacation rental bill

  • A standing-room crowd fills Building G, testifying at the Leeward Planning Commission meeting on Bill 108 Thursday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)

  • A standing room crowd fills Building G, testifying at the Leeward Planning Commission meeting on Bill 108 Thursday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)
  • Mayor Harry Kim presents testimony at the Leeward Planning Commission meeting on Bill 108 Thursday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)

  • Hawaii County Planning Director Michael Yee explains his recommendations at the Leeward Planning Commission meeting on Bill 108 Thursday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)
  • Rick Thompson, right, testifies with Richard Henderson and Tanya Power waiting their turn at the Leeward Planning Commission meeting on Bill 108 Thursday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)

KAILUA-KONA — After a full morning of public testimony and discussion that went into Thursday afternoon, the Leeward Planning Commission voted to forward to the County Council a favorable recommendation on a vacation rental bill along with some suggestions for changes from the Planning Department and the commission itself.

The bill, sponsored by Kona Councilman Dru Kanuha and North Kona Councilwoman Karen Eoff, aims to better regulate short-term vacation rentals, defined specifically as rentals with five or fewer bedrooms and where the owner or operator doesn’t live on site.

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It’s a bid at stopping unhosted short-term rentals in the county’s agricultural and residential zones.

Owners of existing rentals in prohibited areas would be grandfathered in by applying for a nonconforming use certificate, which must be renewed on a yearly basis. The bill has already gone through the Windward Planning Commission and next returns to the County Council Planning Committee for another hearing and potential amendments. It then goes to the County Council for two more readings.

Hawaii County Planning Director Michael Yee recommended a favorable recommendation on the bill overall, but he outlined more than a dozen recommended changes, touching on matters of housekeeping to more substantive changes like increased fines for scofflaws.

The Leeward Planning Commission Thursday morning heard from residents on all sides of the issue. Some said short-term vacation rentals have disturbed their quiet neighborhoods, while others said running a vacation rental helps them pay the mortgage.

Some, like Larry and Margaret Jose, came frustrated with the impact nearby vacation rentals have had on their lives.

“For these past three nights, I’ve been kept up three nights in a row,” Margaret Jose said, sharing about a vacation rental in Holualoa. “People drinking, yelling, screaming making noise.”

Others, however, spoke out against more regulation on the way people use their property.

“It’ll do harm to the people of Hawaii,” said Greg Gerard of Captain Cook. “You know, we’ve got elder people who are helping with housekeeping, with repairs, things like that. You have no idea the kind of economic consequence you’re bringing if you impose this harsh, un-thought-out bill with huge consequences.”

But from near the meeting’s start, one looming concern was the impacts the bill could have on local condo-hotels situated in a residential multifamily zone just outside the General Plan’s resort code — meaning they’d be cut out of the permitted areas for short-term vacation rentals.

During their presentation on the director’s recommendation, department staff said they are looking at ongoing revisions to the General Plan that could identify areas that could be “more suitable for resort designation,” so they could be a permissible area for short-term vacation rentals.

Commission chairman Keith Unger, though, questioned why the issue isn’t being addressed in the legislation at hand. He said 95 percent of the testimony commissioners had already read concerns this precise issue.

Residents of the properties, including Sharon Diedrichs, who owns a condo at condo-hotel Kona by the Sea, also spoke out about the impacts the legislation could have.

Diedrichs noted her appreciation for the work that has gone into the issue, but said Kona by the Sea “is absolutely a hotel.” She pointed to its front desk for guest check-ins and other amenities.

“This option to join the short-term vacation rental program pool has always been available to us since we purchased our units for those who live there when we decide we need to spend more time on the mainland or move there to care for family or seek medical attention,” she said. “We want to be able to rent out our property, but this bill would take that right away from us just because our zoning doesn’t fit.”

Diedrichs concluded by proposing that the county consider a special designation for properties like condo-hotels so they are “aligned with their intent to serve the tourist community.”

Planning Director Michael Yee said that given the bill’s intent of restricting vacation rentals in residential zones, “these condo-hotels got caught up because they were in the residential zone.”

Since the issue came to the department’s attention, he said, there had been much discussion on what to do about it. Options include reworking it in the General Plan as well as more procedural approaches like considering condo-hotels as “hosted rentals,” which aren’t affected by the bill.

But, he said, the concern arose too late to come up with a fully vetted solution in time for the hearing.

Unger said he strongly supported addressing the issue in this bill rather than waiting for the General Plan. He said it’s unfair to the affected property owners and irresponsible to tell them it would be addressed in a review of the General Plan.

“I think we all understand that could be a five-, six-, 10-year process. That’s a huge process,” he said. “And in the meantime these property owners are non-conforming users.”

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Yee added that bringing an unvetted recommendation to the commission for Thursday’s meeting “would have been dangerous on Planning’s standpoint,” and that there wasn’t enough time to do all the necessary vetting.

In its final vote on recommendations for the bill, commissioners included one recommendation for continued research into ways high-density residential properties could be permitted for use as short-term vacation rentals.

  1. Maloha September 21, 2018 5:45 am

    And Hawaii takes away , another right to private property use, diminishes freedom and retards capitalism….the Democrat junta lives!


    1. konablue September 21, 2018 11:23 am

      That’s right and in so doing inflict one more injury to our only goose (the one that lays the golden eggs). First they increased the property taxes, then the G.E.Tax, next they want to increase the property tax even higher in the requested Con. Con. and now this. Where will the tax revenue come from when they kill the Tourist Industry?


      1. fishman2 September 21, 2018 11:55 am

        I bet your will change your tune when your neighbors rent out rooms to noisy all night parties, take up all the parking in your area, or host all kinds of nefarious activities.


        1. konablue September 21, 2018 12:03 pm

          I can throw a rock and hit no less than three houses in my neighborhood that do short term rentals. I would take any of them over a long term rental that doesn’t care about the property, runs it into the ground and rents to noisy renters that cause continuous problems. I understand that some short term renters cause problems but it is my experience that good will and aloha will solve most problems, you might try it the next time you have an issue with short term renters in your neighborhood. Just politely knock on the door, introduce yourself as a neighbor and ask them to hold the noise down. You would be surprised at how many times something so simple will work. But, it is wrong to impose your will on your neighbors when it comes to private property rights.


          1. fishman2 September 21, 2018 12:46 pm

            There are all kinds of restrictions on “private property rights”. Building codes, zoning, health restrictions, it goes on and on and are pretty standard for civilized society. Your ideas of politely knocking on doors if fine but often the owners are not there and do you really want to go door knocking for every new visitor that comes in?


          2. konablue September 22, 2018 9:02 am

            Well, I guess it’s just me, but when I have a problem with someone I just deal with it. I have had nothing but good results by applying a little aloha and good will. Give it a try you may be surprised.


          3. Say What? September 22, 2018 8:15 am

            Are you kidding, konablue? You want us permanent residents to “politely knock on the door” when full-scale drunken parties are in progress, at, say, 4:00 in the morning? That’s what we’re supposed to do?
            Why should we have to teach and enforce civil behavior? You’re saying we need to fix the problem inflicted on us by mainland owners, peacefully sleeping in their mainland beds while drunken parties rage on in quiet Kona neighborhoods?


          4. konablue September 22, 2018 9:04 am

            How do you deal with issues? Hide behind the curtains and wait for someone else to solve you problems? I have had to deal with issues in the past and find it is always best to address them with aloha and good will, Try it you will be supervised. Another thought, complain to the home owner and they will give the renters a poor review which will make it more difficult for them to use the service in the future.


          5. Alex September 22, 2018 9:40 am

            Koanblue, Say What? has a point here. This is a systemic problem. Goodwill and Aloha might calm today’s party, but who knows about tomorrow’s rowdy group that hasn’t even arrived, yet? And the five other parties that will arrive with it. This has to be dealt with centrally, by regulation.


  2. fishman2 September 21, 2018 9:06 am

    Larry, have you talked to the owners of the offending house?


  3. Dan September 21, 2018 10:11 am

    Hawaii Island has had enough of mainland buyers infiltrating residential neighborhoods with short term rentals, while local residents who live and work here can’t even afford to buy a home. The argument that this move will under employ housekeepers etc is a crock. What it will do is regulate HomeAway, VRBO, and like businesses which have impacted residential communities. It does nothing to affect existing B& B’s, Inns, etc. through grandfathering. Short term rentals can be created and strictly zoned in adjacent resort areas but taxed at a much higher rate, in addition to TAT. Congrats to Dru and Karen for advancing this bill, now make sure to include legal ramifications in the final draft.


    1. Alex September 21, 2018 2:29 pm

      Dan, can you please elaborate on “include legal ramifications in final draft”?


      1. Dan September 22, 2018 1:59 pm

        There are several instances where legal ramifications can be included. Take for example where opportunistic mainlanders have bought homes in southern AG areas in Hawaii and set up short term rentals which violated a Hawaii statute for that land. They knew the law in disclosures, so shut them down or make them sell them or reside in them. Then there is the articles of incorporation sometimes used in setting up neighborhoods here on the island. Many neighborhoods and condo associations have them and the new owners who set up the STVR’s in those neighborhoods and associations are bound by them, because they were included in disclosures when they bought the home or unit. They usually list no short term rentals, no businesses etc. yet the neighbors who are dealing with these short term rental headaches aren’t aware of them from and enforcement standpoint. There is a great map of where these VRBO’s are island wide that a statistician put together. That clearly identifies where the violations are based upon zoning maps in the county.


  4. Ernest T Bass September 21, 2018 5:54 pm

    By the time this is all dealt with I will be dead.
    .
    At that point it will need revising once again.
    Lets just do a 48.5 % Flat GET TAT Tax and get it over with (sarc)


  5. Onolicious September 23, 2018 7:47 am

    Consider this problem:

    County budget is mostly funded by property tax revenues. BI has nearly triple the rate for residential that Oahu does. The State has lied about the reason for TAT and GET and now steals that to fund the unfunded retirement ponzi scheme for State workers. County does the same but with property tax for County workers. I was told about 2/3 of the County budget goes for paying retired County workers. Unfunded gov’ t worker pensions is a nightmare no Gov’t “leader” wants to address, but you might want to review what happened in Detroit…City workers had their pensions cut to 16¢ on the dollar. That was upheld in federal Court and Wall St. bond holders were paid off at the expense of an entire City’s pensioners. Older voters don’t count and will soon die(especially if they’re starving to death) so crushing them economically after making false promises for decades is a “Big win” for current gov’t. They don’t even have bus fare to come down town and complain.

    The current mayor began adding more County workers during his first 2 terms and this process has continued since then. The simple fact is that the need for the county to continue raising the tax rate isn’t going away, in fact it will accelerate. Wages and retirement benefits for most(other than gov’t workers) are not keeping pace.

    When the County first embarked on it’s current round of assessing property valuations ever higher in West Hawaii(not Hilo for some strange reason), then adding insult to injury by raising the tax rate, the County was flooded with tax appeals. How do you think the county addressed that problem? By shortening the time to appeal from 30 days to 14 days so owners wouldn’t have time to appeal by the time they received their new, much higher assessments in the mail.

    In West Hawaii, prices have been driven higher for homes and condos by several factors. Hotel closures(Kona Lagoon, Keauhou Beach and now the Ocean Tower at the Hilton), ever increasing demand by the entire world for a B&B experience rather than a hotel, higher overhead for homeowners pushing them to be more aggressive in generating income, etc. Plus we’ve had over a thousand homes in the past 10 years turned into ‘free rent’ squatter homes. That’s a thousand less potential long term rentals. All this created a perfect storm for the advent and explosive growth of the B&B industry.

    Should the County abruptly turn a few thousand B&B’s into illegal rentals, the results will be catastrophic for real estate prices on this island. Less rental income means far lower home and condo prices. North Kona alone provided 1/3 of the property taxes for this island. Imagine a 50% haircut in sales prices. That is a 50% cut in property taxes. You think the County has thought this through? You think the County won’t double the tax rate immediately? That will be passed right onto rental prices. The good news is that those ‘no longer needed’ B&B’s will be turned into long term rentals overnight and driving down rental prices immediately.

    This has the potential to create an economic downward spiral in prices folks. Now factor in the incredible number of owners that will suddenly find themselves underwater on their mortgages. Most of these are local folks because investors don’t buy homes with 3% down. You do, your neighbor does. Local workers do. Cash mainland investors can dump their investments and take the loss, however painful. You and your neighbor can’t. But you can always squat till the Sheriff shows up one day.

    For the record, in the last housing blowup, prices in West Hawaii fell as much as 80% for some properties. 60% was common for most homes by 2010.

    Do B&B’s need regulation? Yes. But this bill is fatally flawed. If anyone thinks this County can solve problems of this magnitude with this bill, please contact me. I’m trying to unload the bridge I built to Maui for a very reasonable price.


    1. Alex September 27, 2018 7:02 pm

      Interesting comments on property taxes & retirement funding. I also agree with you that the bill is fatallly flawed. It is all smoke and mirrors.

      Your comments on real estate market impacts are odd and seem out of place. You must be in real estate? Otherwise why are you so concerned about the mid term future of property values. The current prices, especially in Kona, are irrationally high and fueled by a lot of speculation from mainland buyers. They must come down, or local folks will never again have the chance to own a home. A friend of mine owns a mortgage agency and he tells me he currently dozens of local applicants with no realistic chances to close on a loan. At the same time, there are mainland cash buyers crawling all over our neighborhoods looking for properties to turn into B&Bs.


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