Other counties' vacation rental laws could prove Big Island boon

by Bobby Command
West Hawaii Today
bcommand@westhawaiitoday.com
Thursday, November 15, 2007 8:44 AM HST

The Big Island could soon experience a windfall of visitor dollars that would have otherwise flowed into Maui, Kauai and Honolulu.

That's because the other counties in Hawaii recently began enforcing laws regarding unlicensed vacation rentals -- typically single-family homes in desirable residential areas of the islands -- where tourists hope to experience a lifestyle that can't be duplicated at a traditional resort, hotel, bed and breakfast or time share.

"We do enforce nonlicensed bed and breakfasts and rentals on agricultural land that are supposed to be farm dwellings," said Hawaii County Planning Director Chris Yuen. "But we're not engaged in any kind of crackdown on vacation rentals."

There's a reason the Big Island has escaped a controversy that could culminate next month with a federal lawsuit brought against Maui County by an association of renters: Hawaii County's zoning code does not distinguish between long-term rentals and short-term vacation units, also known as transient vacation rentals.

"The other counties do," Yuen said. "They define vacation rental periods as less than 'X' number of days."

According to the Maui County Zoning Code, any unit in a single-family residential area rented out for a period of less than 180 days is considered a short-term rental. On Kauai, 'X' equals 30 days. Such units require permits issued by the respective counties.

Yuen said the majority of the Big Island's transient vacation units are along Alii Drive, the lower Puna shoreline and in Volcano. He said the Planning Department hears "some" grumbling about the rentals but adds they have been a way of life in those areas for decades.

"The complaints tend to come from neighborhoods with stable owners," he said. "These are usually about a 'party house.'"

In a recent article in Conde Nast Traveler magazine, one vacationer is quoted as saying she will not take a chance at booking a Hawaii vacation rental only to find out later the unit is shut down. Another said he will not stay in a Hawaii resort and will instead go elsewhere to spend his vacation.

On Maui, an expert on vacation rentals said the crackdown is bewildering but could be a reaction to decades of growth on the Valley Island.

"I don't have a clear answer," said David Dantes, president of the Maui Vacation Rental Association. "There is a building frustration in general regarding topics like development, a housing shortage, degradation of the environment and increasing pressure on infrastructure."

Dantes said the easiest target could be the vacation rental industry. "We're mostly mom and pop businesses," he said. "We don't have the corporate resources to sustain a fight for our businesses."

Despite a controversy in the late 1990s and early 2000s to reform Hawaii County laws regarding bed and breakfasts, Dantes said the legislation is viewed by embattled vacation rental owners across the state as a template to regulate their businesses.

Indeed, even Yuen said he has received few complaints about legal bed and breakfasts during his tenure in the Planning Department. "One of the reasons for that is there's always a manager or owner on the property at a bed and breakfast," said Yuen, who added it is atypical for a responsible party to live on or near a vacation rental.

"With a few tweaks, your laws can be used by everyone else to answer most of the complaints about vacation rentals on Maui," Dantes said. "We can live with having a manager on the property at all times and, of course, getting a permit if you are on agricultural or conservation land."

Dantes said an important part of the Hawaii County law is a requirement that permits are processed within 90 days. "That's what the federal lawsuit is all about," he said, adding some Maui operators are still waiting for the county to process permits they applied for in 1998. "A former administration promised to process our applications within 90 days -- we even have a letter stating this."

The Maui Visitor Rental Association as well as others have worked with three different administrations in coming up with compromises, according to Dantes, who said the issue has caused a rift within the Maui visitors' industry.

"There is a way to do this without everyone losing their business," he said. "Much to my disappointment there doesn't seem to be a willingness on the part of the opposition to dialogue. When there are important issues the basic approach should be for each side to listen, negotiate and compromise. It hasn't happened, and that's why this has gone to a lawsuit."

There is another problem associated with the transient vacation unit. Yuen said the lucrative potential income derived from the units in desirable areas of Hawaii has the potential to drive out rentals in the area.

"It's already happened in other parts of the island," Yuen said.

One area where such a problem is acute is in the Haena and Hanalei areas of North Kauai, where long-time residents gave way to a booming business of vacation rentals.

But Yuen, who said any kind of new ordinance regarding vacation rentals is not on his to-do list, said there are also benefits to the transient vacation unit business. "The upside is it allows a wider range of people to make money off the visitor economy," Yuen said. "There are a lot of other issues one can take on, and this one isn't one of them."