Hawaii County government won’t approve short-term vacation rentals where homeowner’s associations prohibit them, the Board of Appeals ruled unanimously Friday in denying an appeal from a Keauhou View Estates property owner.
Alaska resident Lynn Allingham, president of Nortecca Properties Inc., had purchased the foreclosed property in 2016 on an online auction site and rehabilitated it for a vacation rental. She paid $442,334 for the three-bedroom, two-bath home on a quarter-acre lot, county records show.
But when she applied to be grandfathered in after the county began requiring STVRs to be registered, her application was denied on the grounds the homeowner’s association had a restrictive covenant prohibiting rentals of less than 30 days.
Allingham contended the county is not in the position to enforce private entities’ declarations of covenants, conditions and restrictions.
In addition, she said, the subdivision declaration filed with the sate Bureau of Conveyances was not referenced in the title report, so she was unaware of it, and she took “umbrage” at the county’s assertion she misrepresented that fact in her application.
Allingham’s attorney Barbara Franklin said the county’s interpretation of a defective rule allows the director to “bootstrap” a rule that says the county can’t invalidate homeowner association restrictions into “something more than it really is.”
“The director stepped outside his authority,” Franklin said. “The county is not Keauhou View Estates. … It is the job of the owner’s association to enforce their own covenant.”
Planning Director Zendo Kern, defending decisions made by the previous administration, said the county code is clear that the county will not invalidate covenants, conditions and restrictions imposed by private property regimes.
“I think it’s pretty clear when you read this code. If you have a CC&R on your property it is honored,” Kern said. “The moment we start overriding CC&Rs, we’re running into very dangerous territory.”
Kern said he took “slight almost offense” to some of Allingham’s arguments, saying the appellant and her attorney were probably smarter than he was, but he had common sense.
“I know we’re on an island in the middle of the Pacific, but I don’t think we’re that country,” Kern said.
Kern said the county denied two other STVR applications in the subdivision for the same reason. The short-term vacation rental law in general has been controversial, he said. There have been more appeals of STVR cases than appeals in the whole prior history of the county, he said.
Deputy Corporation Counsel Jean Campbell said the county would “open up a can of lawsuits” if the STVR was approved, and could also be sued itself.
“This is an ingenious argument,” said Board member Niel Thomas. “but it leads to a result that I think goes against public policy. … throwing this task back onto the neighbors and saying just go ahead and sue each other.”
