Building permits drop as vacation rental applications snarl process

HILO — The county’s new vacation rental registration laws are stimulating almost as many questions as applications, as property owners struggle to meet county requirements ahead of a Sept. 28 deadline.

As of Wednesday, the county had processed 744 short-term vacation rental applications, compared to 266 this time last month. While the pace of those certificates has picked up, it’s offset by a drastic drop in building permits overall for the first six months of this year, compared to last year.

In fact, county records show, only 1,600 building permits had been issued between Jan. 1 and June 30, a 28% decrease from the 2,059 issued during the same period last year. Those include building, electrical, plumbing and demolition permits.

Logjams in both the Planning and Public Works departments have frustrated the public, members of which have called the newspaper to gripe about a lack of response from the county offices.

“Why is nobody at work in the county of Hawaii?” said one Kohala caller, who asked that his name not be used. He said he called eight or nine numbers Friday with questions about a vacation rental application. “I’m paying tax dollars and you can’t get a hold of anybody. Why is there nobody working at the government?”

One particular sticking point is the requirement that owners registering their property provide proof it is has all the required building, plumbing and electrical permits. That’s been tying up Building Division staff and has been so onerous for many applicants, the county has loosened its rules to allow alternative documents for those whose building permits are incomplete.

“The building permit process was established for code compliance, not as a tool of evidence for a short term vacation rental, thereby creating a natural disconnect,” said Hilo Councilwoman Sue Lee Loy, a former land use consultant.

Lee Loy said she’s working on legislation to try to streamline the building permit process, a process that’s been a steady source of complaints even before the vacation rental laws added to the workload.

“The vacation rentals and the nonconforming use permit has compounded the Building Division’s permit process, but this is a new piece of legislation that the Building Division never had a process for,” Lee Loy said. “You can’t really fault them for not having a process in place.”

Besides, Lee Loy said, building permits rely on getting clearances from other agencies, including the Fire Department and the state Department of Health and Historic Preservation Division, which can add their own holdups to the timeframe.

This is how Hilo resident Sanford Okura described the bureaucracy in a June 28 letter to county officials:

“The Planning Department is requiring the applicant to get the Public Works Department to fill out a form to show that all building, electrical and plumbing permits issued for the dwelling have passed final inspection. … The Building Division refuses to fill out the form on the grounds that for permits issued many years ago, they have not kept records of the final inspection after completion of the work for which the permits were issued.”

Furthermore, Okura said in his letter, “I have been told at the Building Division that in the past (my building permits In question were Issued In 1957, 1961, and 1971) the form used by building inspectors had a yellow copy for the office and a pink copy for the Inspector. The building inspectors would typically write down their final approval of a project on the back side of the pink copy, which they kept themselves, but turned in to the Building Division office the yellow copy, which did not show the inspector’s note that the permit had received final Inspection and approval.

“Thus, the old records at the Building Division show that building permits were issued, but do not show that final inspections were done, even though they were done and approved! I have also been told at the Building Division that if an earlier issued permit had not passed final inspection, a new permit for another project would not be issued on the same dwelling,” Okura added. “Therefore, the existence of later issued permits indicates that earlier issued permits had been approved, even though no written records of the final inspections had been kept.”

The difficulty finding old building permits in the pre-computer era of documents in triplicate has the Planning Department rethinking its rules.

“We’re now considering other offers of proof,” Deputy Planning Director Duane Kanuha said Wednesday.

Those include certificates of occupancy, Federal Housing Administration or Veterans Affairs loans, condominium property regime declarations recorded with the state Bureau of Conveyance and notes from the inspector on the day of final inspection.

Public Works Director David Yamamoto could not be reached for comment by press-time Wednesday. But department spokeswoman Denise Laitinen in an email response said a decrease in permit applications and the loss of experienced plan examiners through attrition contributed to the decrease in permits issued.

“The Planning Department’s Short Term Vacation Rental processes have only had a slight impact to the Building Division staff,” Laitinen said in the email. “The clerical staff has been impacted where significant research is required to locate hardcopy permit inspection files when electronic records were incomplete. However, the Building Division plan review staff have been insulated from the impact of the STVR legislation.”

Many questions remain, however, and some property owners still aren’t aware of the pending registration deadline. There’s an estimated 7,000 vacation rentals operating on the island through such platforms as Airbnb, HomeAway/VRBO and Expedia, roughly ten times the number who’ve registered.

Marissa Ashley, a broker with Action Team Realty and member of the West Hawaii Association of Realtors, said more than 90 people signed up for a July 10 presentation about the new requirements. Many people don’t even realize the new law applies to them, she said.

Ashley likened the current confusion to what happened when new documents began to be required for drivers licenses. She advised property owners to learn about what’s required before submitting their applications.

“We’re going to get there from here. … It’s a process,” she said. “It’s a huge new thing.”

Vacation rentals are defined as dwelling units where the owner or operator does not reside on the building site, that has no more than five bedrooms for rent and is rented for a period of 30 consecutive days or less.

All vacation rental owners in existence as of April 1 are required to register their property by Sept. 28 and pay a $500 fee, showing that transient accommodations taxes, general excise taxes and property taxes are paid in full. Short-term vacation rentals may be established only within a dwelling that has been issued final approvals by the Building Division for building, electrical and plumbing permits.

The nonconforming use certificate for those preexisting in disallowed areas must be renewed annually, at a cost of $250.

Information and application forms can be found at http://www.hiplanningdept.com/short-term-vacation-rentals.

The county expects to collect about $845,000 from vacation rental registration fees and fines during the fiscal year that started July 1. That money will be used to hire two land use plans checkers, two planning inspectors and three planners, as well as purchase software.

The Planning Department has not yet submitted a request to advertise those positions, a Human Resources Department spokesman said Wednesday.