Council panel advances vacation rental bill

  • Ed Rapoza and Charla Thompson present testimony to the county council panel on Bill 108, the vacation rental bill, Tuesday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)
  • Public testimony is given before the county council panel regarding Bill 108, known as the vacation rental bill, Tuesday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)
  • A county council panel hears public testimony on Bill 108, the vacation rental bill Tuesday at the West Hawaii Civic Center. (Laura Ruminski/West Hawaii Today)

HILO — A bill regulating vacation rentals took a big step forward Tuesday, clearing a council panel on its way to two final votes.

Bill 108, more than a year in the making and now on its fifth draft, passed the council Planning Committee on a 6-1 vote, with Puna Councilwoman Eileen O’Hara voting no and Hilo Councilman Aaron Chung and Puna Councilwoman Jen Ruggles absent.

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“This bill was in no way meant to ban vacation rentals but to protect neighborhoods,” North Kona Councilwoman Karen Eoff said. “We do have to start somewhere; we’re the only county in the state that doesn’t have regulations.”

Planning Director Michael Yee asked the council to keep the bill on track.

“Hawaii was special way before vacation rentals came into play. Every major tourist town is looking at how to find the right balance,” Yee said. “The idea of not striking a balance today or finding a path would be a mistake.”

Mayor Harry Kim defended council members who were taking heat from some disgruntled vacation rental operators.

“The administration asked the council to do this,” Kim said. “This is no different from regulating any other business. … This is about zoning for the island, which is needed. We cannot allow our businesses to go on without regulation. … This was something that should have been regulated a long time ago.”

Among those praising the county for its work was an Airbnb spokesman.

“We think you’ve struck a pretty fair middle path,” said Matt Middlebrook, public policy manager for Airbnb in Hawaii, testifying from Kona.

Middlebrook recommended the county allow new vacation rental nonconforming use permits when people drop out of the program, so as to “refill that bucket” in an industry with rapid turnover. He said Oahu started with 3,000 rentals in 1989 and it’s now down to 800.

He also recommended a grace period for those who lost their rental homes during the Kilauea eruption.

Some vacation rental owners found the bill too onerous. Many asked for an economic impact statement for each district before going forward.

Vacation rental owner Pamela Small, testifying from Kohala, deemed the bill “convoluted, bloated, draconian and punitive.” She said two of the council members, Kohala Councilman Tim Richards and Eoff, own vacation rentals themselves and are trying to limit competition.

“What you propose in this vacation rental bill will cripple Puna,” Small said.

The Board of Ethics earlier cleared Richards and Eoff of conflicts of interest in voting on the bill.

Several neighbors of the rentals, however, said the bill doesn’t go far enough.

Kailua-Kona attorney Michael Matsukawa, speaking as a citizen rather than an attorney, hinted that litigation could follow legislation.

“The citizenry is prepared to test the false assumption that underlies Bill 108,” he said in testimony, “What is not listed as a permitted use for the RS District is prohibited. A judge will be asked if this provision is clear and obvious to its meaning and effect.”

He said the whole bill is based on the false premise that vacation rentals in residential zones need to be grandfathered in because they were previously a permitted use. That’s not the case, Matsukawa said, because 1999 county zoning code clearly states “any use not listed among the permitted uses in a zoning district is a prohibited use within that district.”

Matsukawa said the county should enforce its existing zoning laws, rather than grandfather the violators.

“Don’t be afraid to enforce the law,” he said. “Changing the law is the easy, but irresponsible, way out.”

Regulating vacation rentals on land in the state agriculture district remains a sticking point. State law requires all dwellings on farm lots that were created after June 4, 1976, be farm dwellings only. Because of the overriding state law, county planning officials say they can’t issue nonconforming use certificates on agriculture properties created after 1976.

“It’s making it crystal clear that if a dwelling was approved as a farm dwelling, the special permit could not then subjugate that,” said Deputy Planning Director Daryn Arai.

In the long term, the restrictions could be modified by changes to the county general plan, with overlays for specific areas such as Volcano village and Pahoa town, said Yee. Changing agriculture designations to rural designations would be a good step, he said.

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That didn’t satisfy O’Hara, who said her Puna district doesn’t have prime farmland as defined by the state.

“We’re trying to thread a needle through a jumble of archaic state land use laws,” O’Hara said. “For us to move forward right now puts the kibosh on a lot of people in Puna. … It is a huge pull out of the pocket of constituents in my district. … You call it ag. It’s not really ag. These laws were written in plantation days.”

  1. Colin12345 October 17, 2018 8:29 am

    Matsukawa is correct in my opinion. The County has long allowed vacation rentals (“transient accommodations”) on the theory that the building is a “dwelling” as defined in the Zoning Code and the day-by-day use is occupancy by a “family” (no more than five unrelated people), and therefore it’s all good. The flaw with that County theory (as currently applied by its regulators) is that the Zoning Code definition of a “dwelling” clearly says “used for RESIDENTIAL occupancy…” Well, have you ever met someone staying at a hotel (of any type) or B&B that would tell you, or an inquiring police officer, that that “dwelling” was his/her RESIDENCE? Of course not! So why would the County choose to interpret its own law to say that an overnighting couple/family is “residing” at a vacation rental unit? Google up the definition of “reside” or look at your home dictionary. They all say “permanent or long term residence” or words to that effect. So, Matsukawa is right. It’s very like a judge wouldn’t waste more than an hour throwing out this new language that says a prohibited use (vacation rentals) can be “grandfathered in” as legal when it was never legal to begin with.


    1. Alex October 17, 2018 5:05 pm

      Yes, the cat is finally out of the bag. Of course, the County will remain in denial about the legality, because it would invalidate the need for Bill 108 — why regulate if you can just enforce it?


  2. MilitantModerate October 17, 2018 5:45 pm

    I bought a condo this year which had previously been used as a vacation rental. I haven’t used it as a vacation rental but I paid a high price for it thinking I could use it as a vacation rental in the future if I needed to. But when this passes my condo will no longer be allowed to be used as a vacation rental. I expect this will reduce the resale value of the condo. Will the County therefore reduce the assessment of the condo and the associated property tax?


    1. Alex October 17, 2018 6:36 pm

      Most likely not, but this is something you should bring up at Bill 108 hearings. The County is planning to set up a whole new “commercial” real property tax class for vacation rentals. Everybody that gets grandfathered under Bill 108 will start to be taxed under that new category once it is instituted. (This is in addition to TAT and GET.) I wouldn’t expect the County to reduce property taxes for anyone that does not get grandfathered, but – at least – your taxes will not further increase, unlike anyone who gets a “non conformance” permit.


  3. Dana Butler October 17, 2018 8:40 pm

    The quote from the lady in Kohala is wrong. She said the bill would cripple Puna, not Kona.

    This bill will cripple Puna, still barely recovering from the lava flow.

    It also won’t address the issues of those in residential neighborhoods in Hilo and Kona adversely affected by illegal rentals, as those illegal rentals will be grandfathered in.

    If the county simply enforced existing zoning laws, vacation rentals are not allowed in areas zoned for residential use.

    In Puna, they should allow for agricultural tourism.


  4. wutzhappn October 18, 2018 11:37 am

    Karen Eoff and the mayor’s crony planning commissioner, Yee, are despicable. This guy isn’t even from the Big Island. He moved here last year to be the mayor’s henchman on this bill. They do not care in the least what this bill will do to the local economy, especially in Puna. They should be ashamed of themselves. All of them.


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