Hawaii's New Short Term Rental Ordinance - News and Updates July, 2019

By
Real Estate Agent with Kona Home Team (luva llc) RS 62947

I wanted to share a few takeaways from yesterday's meeting with the planning department. First, a Bill becomes an ordinance once it goes into law - prior to, they are always bills - that’s the reason for the change from Bill 108 to the Ordinance 18-114 .

Big Mahalos to the West Hawaii Association of Realtors (WHAR) for being at the forefront of this, and the Planning Department (PD) for their participation, Thank you WHAR members, Mike Drutar, Marissa Ashley, Brian McCourt, Karin Shaw, Linda Swanson and from the planning department, thank you Libby Gillis and Michael Yee.

Disclaimer, this is NOT A LEGAL Opinion, do not base any decisions on my comments, these are merely my observations after attending the meeting at the West Hawaii Civic Center. OBTAIN LEGAL ADVICE from an Attorney and check with Planning Department for specific questions, once the deadline passes, its gone forever!

1: To date there have been 611 applications submitted , about 2/3 of them are rejected for not being filled out correctly. (the county is working on an "example" form to share ) I believe this number is for bother registering and NCU permits.

2: ZERO approvals/denials to date, your application may have been received and "accepted" or even "rejected" but that does not constitute "approval" or "denial"

3: Questions that were asked at meeting - I have heard rumors that if you live next door, or close by (within 30 minutes) that will constitute - "Hosted" ... FALSE . You (host/operator) have to live on property - READ 4

4: Does it have to be the owner that lives on the property - NO, according to today's meeting, it can be an "Operator" that lives on the property to make it "Hosted" . The host or operator does not have to be licensed (but they can only host 1 property, obviously if they are claiming they live there) .READ 5

5: They made it absolutely clear that you have this ONE opportunity to get this NCU permit, this permit will have a "VALUE" in the future. So if you want to chance "gaming" the system... by claiming it is hosted ( i'm not making assumptions that anyone is gaming the system, I just want to make sure that is not running through your mind) , just remember that after Sept 30 2019, you lose any chance of EVER getting "grandfathered in". I will give you a little free advice here, if you are unhosted and have the chance to get a NCU permit, you should apply for it, and if it were me, and it was hosted, but it fit all the other criteria, I would apply for the NCU, again there will be a "value" to the permit in the future.

6: Owner Occupant... Michael Yee stated it goes by IRS code, (he gave us this internal memo below) of all the items that were spelled out in black and white, this one is still in the "grey" area. (Talk to an attorney and tax consultant, this was advised by the planning department).

NOTE: Owner Occupant and/or Hosted STVR are not affected by this new ordinance 18-114. So other than 4,5,6 above, they no longer spoke on Hosted STVR

7: Note, Planning department director Michael Yee made mention that for approx every 50 responses that come in from the letters sent to neighbours, 49 are NEGATIVE, one is positive. On that same note, he clarified that this does not make for an automatic "denial" . This is a grandfather clause time frame, these negative remarks will be taken into account, and probably put you on the "hotsheet" (not his words) for possible revocation of the permit for future violations, but time will tell. My observation is that if you are on that "negative" list (not his words) , you better start implementing a "good neighbour policy ASAP " (that was their words)

8: Some condo complexes do not have a record of their final permits (the county is looking at several ways to overcome this - SEE ATTACHED PHOTO BELOW - thank you Mike Drutar for the photo and all your work on this).

9: When enforcement starts, who gets the "fine"? The homeowner gets the fine, not the rental agent. Realtors - pay attention to my next comment!

Realtors will not get fined by the county, but the Realtor may be turned in for ethic violations if they are knowingly renting out an illegal vacation rental. The Planning Department enforcement agents, may also be passing on MLS listings to the DCCA , where Realtors are advertising on the MLS that this property would be a "Great Vacation Rental", when in fact, it is not in a conforming area, and it has no permits, another ethics violation !

10: County Planning acknowledged that the Island has a need "Vacation Destination Zones" like Volcano and other places, they encourage homeowners to get with their council members and work on this, and on re-aligning Resort Nodes on the maps. Hawaii Information Service just updated their map overlays to better reflect these areas (see attached photo) . I encourage you to get with your Realtor and ask them to send you a new map overlay of your property.

11: 1976 Law on Agricultural Zoning, that battle was fought back in the 70s, before internet - lol (i'm actually not sure what year the actual law took effect) but there is nothing that can be done at a county level now, it has been a State law for a long time, With that said, if you have been doing your rentals on ag land designated after 1976, you have always been operating illegally, hosted or not. This ordinance is not designed to go after that, just know that you will not get an NCU permit.

On the good side of this, they are now re-evaluating what constitutes the formation of the TMK or subdivision on a case by case basis, one example was that if a park had been created within a subdivision after the cut off date, this did not make the subdivision a new subdivision on that date, again there is no exact rule on it, but what you may want to evaluate, did the boundaries change when updates were done? Again, a case by case basis.

One note, State Ag and County Ag are 2 different things, so again, back to the conversation above on maps, check with county planning department first, also your Realtor can get you a copy of the map for your property, but can not advise you on it, check with county.

Wrapping this up, they also spoke a little on enforcement and said they will be hiring 2 enforcement officers soon and they are also having an internal meeting on "enforcement" I believe he said next week? And when asked about being able to process these applications on time, Planning Department was pretty clear that they don't have a choice, it has to be done on time. They are working weekends and holidays (im guessing the 4th) to process these, also Kona side has way more applications, so the Hilo side is assisting the Kona side in processing applications.

A little about the author: Lance Owens (RS) is currently the acting "Past President" for West Hawaii Association of Realtors, a Director on the State Board "Hawaii Association of Realtors" an RPAC Trustee for WHAR, and as Acting President last year for WHAR, he followed the Government Affairs Committee (GAC) closely as they navigated through the then Bill 108 . You will see he has many articles on the subject, just follow the link below for previous posts, forms and information.

Lance Owens (RS) LUVA Real Estate on Bill 108 or now known as Ordinance 18-114

Here is an example of the new Map Overlays from HIS

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MEMO ON "PRIMARY RESIDENCE"

 

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Suggestions on property without Finaled Permits 

 

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Aloha, and have a great day 

Lance Owens (RS)

(808) 936-8383

Lance@KonaHomeTeam.com

www.KonaHomeTeam.com

LUVA Real Estate 

75-240 Nani Kailua Dr #8 , Kailua Kona, HI. 96740 (Pines Plaza

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