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Vacation Rental Apps Smother Planning Dept

November 6, 2019, 5:36 PM HST
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Vacation rental. PC: Pixabay

The Hawai‘i County Planning Department has spent months sifting through a mountain of paperwork in the form of 4,000 short-term vacation rental applications, which has strained departmental resources and drawn permitting processes down to a slow crawl.

Planning Director Michael Yee, in a report to the Hawai‘i County Council on Tuesday, said around 900 applications have been processed. Yee hopes to avoid missing deadlines, which would precipitate the need for automatic approvals.

Were such approvals to be granted, they would go to permitted zone applications. As such, nonconforming use certificates (NUCs) have been the department’s top priority since beginning the massive undertaking. NUCs are vacation rentals in nonconforming zones, such as agricultural land or residential neighborhoods where some properties were grandfathered in for vacation rental use.

Of the 4,000 applications, roughly 1,150 fall under the NUC category. These are also the rental properties inspiring the most ire from Big Island residents. Yee said public testimony included more than 1,000 submittals on NUCs — well over 900 of them offering critical points of view.

“If you’re a statistician, that’s an amazing number,” Yee told the Council. “People hate vacation rentals in their neighborhoods.”

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The attention Planning has afforded NUC permits hasn’t just sidelined permitted zone applications for the time being. It’s also significantly impacted the issuance of building permits.

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Yee dispelled rumors that building permit applications were being set aside but acknowledged that at the department’s worst point, processing a building permit application took upwards of three months. That number has dropped down to one month or so, Yee said.

Another issue brought up by Yee and the Council was the amount of overtime required to handle the vacation rental workload, as well as the demand put on Planning employees through what Planning consultant Zendo Kern described as a “heavy undertaking” and a “real challenge.”

Yee painted a picture of an overflowing departmental office in Kona, with lines “longer than the DMV.” Councilman Tim Richards, who represents the Big Island’s 9th District, voiced concern over the workload and how it might affect the Planning workforce in years to come. He also asked if Yee would be requesting additional funding to cover the cost of the work.

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As of yet, Yee said Planning will be able to cover expenses within the budget it currently has and by rolling over registration fees to pay out overtime. Each of the 4,000 applications comes with a $500 fee. Around 1,000 will have to pay $250 per year annually, which will also add revenue.

“I don’t think we need to ask for additional resources right now beyond what we planned,” he said.

However, Yee cautioned that registration revenue streams may dwindle with time, adding that the budgetary process to manage them will be an ongoing exercise as years pass.

The department has clearance to hire seven more employees, which will add cost, but those positions will be filled gradually. The plan, Yee said, is to soon post job listings for a Planner III, two building inspectors and to pay for online compliance, as those positions address current needs that must be met with some immediacy.

As many as 90 applications have been denied, with eight on their way to the Board of Appeals. The Planner III position will be required to help manage appeals cases, as Yee expects there will be many more before the process is complete.

Planning hopes to secure an online compliance vendor by the beginning of next year. Based on a hopeful timeline, the first letters and fines dealing with illegal vacation rental operations will head out several months later, potentially by late 2020.

“Technology can find people trying to cheat or lie around rentals,” Yee said.

Just how many cheaters and liars and overall rental properties exist on Hawai‘i Island is an open question.

The current law only deals with non-hosted vacation rentals. Those are defined by several measures — the owner doesn’t live on the property, it is rented for 30 days or less at one time and the unit has no more than five bedrooms.

However, there are also hosted rentals, which will be dealt with down the line, and rentals operating illegally. Yee guessed there are between 6,000 and 8,000 rentals operating on the Big Island.

“How many are hosted and how many are illegal? I have no idea,” Yee said. “We do have illegals. People will just operate until they get busted.”

“I have no clue how many hosts are out there … but I’m sure it’s not a small number given the experience from other islands,” he continued.

Big Island residents offered testimony Tuesday, on issues ranging from inconsistent application verbiage between the Hilo and Kona Planning offices to concerns over the five-bedroom limit to classify a dwelling as a vacation rental.

Greg Brown, of Waimea, said the majority of homes he’s designed, built and/or rented have more than five bedrooms and offer a niche product for multi-generational families traveling together — a product resorts don’t offer.

The need for larger homes won’t go away, Brown said, families will just be forced to squeeze into smaller, less suitable accommodations.

Yee said the five-bedroom provision was a matter of safety. A bedroom limit stops people from creating a lodge in a permitted area and calling it a vacation rental. Lodge-type properties are subject to certain requirements, like fire and sprinkler systems, that don’t always apply equally to short-term vacation rental properties.

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