Vacation rental rules to be unveiled soon

  • Planning Director Michael Yee testifies before the County Council Planning Committee on recommendations for the Vacation Rental Bill on Tuesday. (Laura Ruminski/West Hawaii Today)
  • Planning Director Michael Yee testifies before the County Council Planning Committee on recommendations for the Vacation Rental Bill on Tuesday. (Laura Ruminski/West Hawaii Today)
  • A vacation rental sign is posted at a home on Alii Drive. (Laura Ruminski/West Hawaii Today)
  • A vacation rental sign is posted at a home on Alii Drive. (Laura Ruminski/West Hawaii Today)

HILO — Hawaii County’s new vacation rental law is almost ready for prime time.

The county Planning Department has scheduled public hearings on draft rules for 5:30 p.m. Feb. 28 in Kona and March 1 in Hilo, Planning Director Michael Yee told the County Council Planning Committee on Tuesday.

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The rules will then be finalized, taking public input into account and presented at a final public hearing April 2 before going into effect April 15, Yee said. He said the goal is to have public drafts available in the next few weeks to give people time to read them before the public hearings.

“(Drafts) are not ready to be distributed this week by any means but we’re getting close,” Yee said.

One eye-opener will be the proposed fines for those operating an illegal short-term vacation rental. Rather than paying standard zoning fines of $500 per day, those operating illegal vacation rentals could be fined $30,000, under draft proposed rules.

“We heard from many folks that the fines have to be high enough to change behavior,” Yee said, adding even Oahu’s $20,000 fine hasn’t been all that effective there.

A short-term vacation rental is defined as a dwelling unit of five bedrooms or less, rented for 30 days or less where the owner or operator doesn’t live on site. All owners of vacation rentals will be required to register with the county and pay a $500 fee.

The rentals will be allowed in these zoning districts: resort, general commercial, village commercial, residential and commercial districts within the general plan resort and resort node and condominiums within the multi-family residential district. Rentals operating outside those districts when the law goes into effect may be grandfathered in if they’re compliant with tax and building codes and apply for a nonconforming certificate that’s renewable annually.

Vacation rentals on land in the state land use agricultural district where the lot was created after June 4, 1976, remain a sticking point. The county can’t go against state law, Yee said.

“If you’re on ag land pre-1976 and you have your vacation rental up and working, you’re OK,” Yee said. “If on a post-1976 lot, you were deemed illegal and you will continue to be deemed illegal.”

Puna residents Eileen O’Hara and Jon Olson, the only two testifiers, said the ag restriction disproportionately falls on Puna, which doesn’t have much land in the allowed designations.

“The visitor industry is both blessing and bane,” Olson said. “Each district should have a certain number of visitor rentals available.”

Two Democratic state lawmakers representing Puna have introduced bills to change it. The bills, SB 480 by Sen. Russell Ruderman, and HB 642 by Rep. Joy San Buenaventura, would allow short-term accommodations that co-exist with a “bona fide agricultural activity” in counties with a population between 150,000 and 500,000. This would allow Hawaii County to join Maui County in allowing vacation rentals on ag land.

“This could be really beneficial,” said O’Hara, a former council member representing Puna. “I hope the Planning Department will be open to supporting these bills.”

Yee said his department could support that kind of legislation, although he hasn’t yet read the bills.

North Kona Councilwoman Karen Eoff, one of the bill sponsors, said she’s heard from many residents praising the county for trying to get a handle on the rentals. She said the upcoming general plan review and update would be a good time to let residents weigh in.

“Would this be one way for the community to decide?” she asked. “There does seem like there’s quite a few all over the island.”

There are indeed quite a few. VRBO, one of several online vacation rental platforms active in Hawaii, lists 3,761 properties in and around Kailua-Kona alone. Specific areas listed include 1,523 vacation rentals in Waikoloa, 1,548 in Puako, 1,891 in Keauhou, 1,576 in Waikoloa Village, 2,134 in Captain Cook, 240 in Volcano, 2,149 in Holualoa, 142 in Honokaa, 243 in Hawi, 2,276 in Kahaluu-Keauhou, 2,122 in Kealakekua, 131 in Naalehu, 2,153 in Honalo, 2,116 in Historic Kailua Village, 2,140 in Honaunau-Napoopoo, 2,286 in Kalaoa, 1,484 in Kawaihae and 185 in Kukio.

Yee said he’s asking for seven new positions in his budget, to be paid through registration fees and fines. He said the department will likely hire people on 89-day contracts in the interim.

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Yee urged owners of structures that aren’t compliant with building codes or were built or added-on without building permits to get those issues fixed before applying for a vacation rental certificate.

“You want to come in; I know you’re going to be afraid to come in,” Yee said. “But I encourage the public to come and visit Planning and DPW.”