Short-term vacation rental bill blasted

HILO, Hawai‘i — A proposal to rewrite how Hawai‘i County regulates short-term vacation rentals led to hours of backlash from residents accusing the Hawai‘i County Council of overreach.

Bill 121 would establish new regulations for transient accommodation rentals, or TARs, further restricting where and how they would be allowed to operate in an effort to protect the island’s residential market from an increasing amount of out-of-state TAR owners buying up the county’s limited housing stock.

The bill establishes rules and definitions for all three types of TARs — owner-hosted, operator-hosted and unhosted — and sets out conditions for how each type can be operated, with owner-hosted units having the fewest hurdles.

Among those regulations is a requirement for all TAR owners to register their units with the county for an initial fee ranging from $500 to $1,000 depending on the type of unit, and prohibitions on ‘ohana units or guesthouses being used as TARs, as well as a series of standards of conduct required of all registered TARs.

The measure was wildly unpopular among residents, dozens of whom held court for nearly four hours on Tuesday to decry the bill during a meeting of the council’s Policy Committee on Planning, Land Use and Development.

Linda Swanson, president of the West Hawai‘i Association of Realtors, said the bill violates the 5th Amendment of the U.S. Constitution, arguing that its protection of private property rights would be “eroded” by Bill 121’s limitation on how a private residence can be used.

Many TAR operators said they will be forced to close their units or sell their homes if the measure passes. Several said their rentals are their primary source of income and cannot feasibly be converted to long-term housing, which is defined by state and county standards as a unit rented for more than 180 days at a time.

Holualoa Airbnb operator Mary Jo Lake said she flat out refuses to pay additional fees to register with the county, saying she already pays “close to 18 percent” in general excise and transient accommodations taxes.

“I can afford to take my ‘ohana unit out of the B&B rental pool, but a lot of people can’t,” Lake said. “I can stop, and I will stop, if you insist on me buying this extra permit.”

Still others felt the measure has been concocted without sufficient financial due diligence to determine the economic impacts to the island. Several noted the bill will benefit hotel and resort franchises — because more tourists will simply choose those businesses to stay at — while hurting local business owners.

“Where are your experts?” asked vacation rental operator Terri Richards. “Who are you talking to?”

Another testifier called the bill a “farm killer,” saying that countless farms throughout the county rely on renting out ‘ohana units for supplemental income. Others said that the fines established by the bill — $2,500 for a first violation, and $10,000 for a third — are unfairly high.

“Bill 121 would remove the ability for small farms such as ours to subsidize farming operations with one transient accommodation rental,” wrote Rachel Laderman and Dan Kelly. “TARs placed on or near farmland actually help fund agricultural practices and build support for buying local.”

There was little testimony on Tuesday in support of the measure. Two letters, by Waikoloa resident Connie Holz and Kailua-Kona resident Trish Sierer, said their neighborhoods have been negatively impacted by TAR renters.

“I am a condo owner and sadly have to deal with transient renters all the time, which means partying and loss of a feel of community,” Holz wrote. “There is not enough affordable housing, and this is the major reason.”

County Fire Chief Kazuo Todd spoke noncommittally about the bill, noting the displaced victims of the Lahaina wildfires could have been rehoused more easily if fewer homes on Maui were owned by out-of-state, short-term-rental operators.

Puna Councilwoman Ashley Kierkiewicz and Hamakua Councilwoman and Council Chair Heather Kimball, who co-introduced the bill, defended it in their own lengthy presentation after listening to residents’ testimony.

Kimball said many testifiers misunderstood the potential impact of the bill, and stated that most current TAR owners will not be barred from continuing their work.

“Anybody (operating a TAR) out of their primary residence, they can start at any time,” Kimball said. “If it’s operator-hosted, we’re going to grandfather in everybody that’s in the nonconforming areas. The only exception to this will be … if they are not providing accommodations in a dwelling that’s safe … like a chicken coop or something.

“There’s been a lot of talk about what you can do on your own property,” she continued. “And we respect and appreciate that, but there’s also the understanding that when you buy a residential home … there’s going to be that residential environment around you. … It’s not just enough to say ‘This is my home, I can do whatever I want.’ There are expectations of the public that you have safety precautions in place.”

Homeowners also can live in an ‘ohana unit and rent out their primary dwelling, Kimball said.

Ultimately, the committee as a whole was supportive of the measure, with members agreeing further regulations of the industry are necessary.

“When we talk about the impact of transient accommodation rentals on the housing market, we’re not just talking about removal of potential housing from the inventory, although that does happen,” Kimball said.

“The greater impact is actually the pressure on the market for rental costs: As you increase the inventory of TARs in an area, it has this inflationary pressure on housing rates and rental rates, because you can get … four times more for a short-term rental.”

Hilo Councilwoman Jenn Kagiwada said she was disappointed by some of the public reactions to the bill — specifically, a handful of TAR operators who said they cannot or will not consider transitioning to long-term rentals.

“To me, that’s very upsetting,” Kagiwada said. “We’ve got people on our island who need homes, so to say, ‘I would never do a long-term rental’ … it’s very disappointing, and I’ll leave it at that.”

While some committee members, including Kohala Councilwoman Cindy Evans, expressed trepidation about the bill, they were mollified by the knowledge that the measure is still a long way away from becoming law. It next must be discussed by the Windward and Leeward planning commissions before being sent back to the council’s Committee on Planning, Land Use and Development for another discussion.

If that committee votes in favor of the bill, it then goes before the full council for another two readings — with opportunities for more public feedback at each stop on that trail.

After about five and a half hours of discussion, the committee voted unanimously — albeit with Puna Councilman Matt Kaneali‘i-Kleinfelder absent — to forward the bill to the planning commissions.

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Email reporter Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.