Vacation rental bill passes

HILO — After two years, seven bill drafts and a lot of community input, Hawaii County will soon join the other three counties regulating short-term vacation rentals.

The County Council on Tuesday passed Bill 108 on a 6-1 vote, setting in motion the next step in the process: formulation of rules by the county Planning Department. Once drafted, the rules face a public hearing and are expected to be finalized by April 1.

North Kona Councilwoman Karen Eoff, one of the bill sponsors, called the bill a milestone, saying it’s an appropriate way to end the council’s two-year term. A new council will be seated Dec. 3.

“Although it’s been a very long process, I think we’ve set up a procedure where we have a very fair and balanced approach,” Eoff said. “Over the past year and a half we’ve really worked to build consensus.”

Mayor Harry Kim, speaking before the vote, urged the council to bring the bill home.

“This must be controlled because of the disturbance of a lifestyle,” Kim said. “Vacation rental is a business. It’s not a good or bad business, it’s just a business. … This is good where it is controlled.”

He said the council should look around to understand how unregulated rentals are harming residential neighborhoods. The bill includes good neighbor provisions that all vacation rentals must follow regarding noise and parking and requires an owner or manager to be reachable within three hours of receiving a call from a guest, neighbor or government agency.

“We’ve been working on it for two years now trying to come up with a proposal that is acceptable,” Kim said. “From the very beginning the goal was to make Hawaii a good place to live. … I ask the council to finish this work. “

Puna Councilwoman Eileen O’Hara voted against the bill because she didn’t think it offered enough protections for her district, which is recovering from a volcanic eruption. Her attempts to amend the bill to specifically allow replacement rentals to be added if others are lost to disasters were unsuccessful.

“The devil is in the details and there are some things in this bill that I think will not serve the community well,” O’Hara said. “This has a particularly negative impact on the district I represent.”

The bill still gives the Planning Department discretion to allow replacements, said Planning Director Michael Yee.

“We’re passing the framework and we’re going to have to get into the details of forming the rules,” Yee said. “The right place to address that would be in the rules and procedures.”

The bill creates a new category under the zoning ordinance for short-term vacation rental, defined as a dwelling unit where the owner or operator does not reside on the building site, that has no more than five bedrooms for rent on the building site and is rented for a period of 30 consecutive days or less. The bill allows the short-term use of an owner’s primary residence if the owner lives in it for most of the year.

The bill prohibits unhosted short-term rentals in residential and agricultural zones, while allowing them in hotel and resort zones as well as commercial districts. Existing rentals in disallowed areas would be grandfathered in after obtaining a nonconforming use certificate.

All vacation rental owners in existence as of April 1 will be required to register their property within six months and pay a $500 fee, under the new ordinance, 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.

In addition to creating rules, the next step for the county is to create a separate taxing classification, so vacation rentals can be charged a separate property tax from other residential properties. Some council members, such as Hilo Councilman Aaron Chung, would have preferred an omnibus bill that dealt with the tax classification at the same time. Other council members were just glad to get something on the books.

South Kona/Ka‘u Councilwoman Maile David praised Eoff and former Kona Councilman Dru Kanuha for their work getting the bill passed.

“I’ve watched them over the last year put heart and soul in finding an equitable way to craft this issue,” David said. “All the emails we’ve been getting … so many different opinions and pros and cons that are coming toward us from the community. … Although it doesn’t satisfy everybody’s needs, we’ve got to start somewhere.”