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HomeMy WebLinkAbout2018-09-20 Leeward Exh B (Bill 108 re Short-term Vacation Rentals) LEEWARD PLANNING COMMISSION COUNTY OF HAWAI‘I HEARING TRANSCRIPT SEPTEMBER 20, 2018 A regularly advertised hearing on the COUNTY COUNCIL INITIATED AMENDMENT TO CHAPTER 25 OF THE HAWAI‘I COUNTY CODE, RELATING TO SHORT-TERM VACATION RENTALS was called to order at 9:42 a.m. in the West Hawai‘i Civic Center, Community Center, Building G, 74-5044 Ane Keohokālole Highway, Kailua-Kona, Hawai‘i, with Chairman Keith F. Unger presiding. COMMISSIONERS PRESENT: Keith F. Unger, Scott Church, Perry Kealoha, Sonny Shimaoka and Faye Yates ABSENT AND EXCUSED: Nancy Carr Smith and Michael Vitousek ALSO PRESENT: Malia Hall, Esq. (Counsel for the Commission), Michael Yee (Planning Director), Jeff Darrow (Planning Program Manager), Maija Jackson (Planner), Shancy Watanabe (Planner) and Noriko Sauer (Commission Secretary) And approximately 80 people from the public in attendance. INITIATOR: COUNTY COUNCIL (BILL NO. 108, DRAFT 4) An Ordinance amending Chapter 25, Article 1, Article 2, Article 4, and Article 5 of the Hawai‘i County Code 1983 (2016 edition, as amended), relating to short-term vacation rentals. The purpose of this bill is to manage the impacts of these short-term vacation rentals by: 1) defining where this use will be allowed; 2) establishing provisions and standards to regulate this use; and 3) providing an avenue for an existing use deemed to be improper by this ordinance, to apply for a nonconforming use certificate that would allow them to continue to operate in a non-permitted district. The County Council has referred Bill 108, Draft 4 to the Planning Director and the Windward and Leeward Planning Commissions for comment and recommendations. UNGER: Agenda Item No. 2, Initiator County Council, Bill No. 108, Draft 4, an ordinance amending Chapter 25, Article 1, 2, 4 and 5 of the Hawai‘i County Code 1983, 2016 edition, as amended, relating to the short-term vacation rentals. The purpose of this bill is to manage the impacts of the short-term vacation rentals by: 1) defining where this use will be allowed; 2) establishing provisions and standards to regulate this use; and 3) providing an avenue for an existing use deemed to be improper by this ordinance, to apply for a nonconforming use certificate that would allow them to continue to operate in a non-permitted district. The County Council has referred Bill 108, Draft 4 to the Planning Director and the Windward and Leeward Planning Commissions for comment and recommendations. So at this time we are going to get an update presentation from Planning Department staff. They’ve asked that the Commissioners will look at this as a question-and-answer period as we go along. As we’ve been reviewing the testimony and reviewing the ordinance, it’s involved, there 1 EXHIBIT B is a lot of pieces, and I agree that’s probably the best way to approach this presentation. So, as Planning conducts their presentation, go ahead and feel free to ask questions as we go. Ms. Jackson? JACKSON: Thank you, Chair Unger. Good morning, everyone. So the next item on the agenda is Bill 108, Draft 4, related to short-term vacation rentals. This was initiated by the Hawai‘i County Council, and the Council referred the bill to the Planning Director and the Windward and Leeward Planning Commissions for comment and recommendations. The Windward Commission met in early September and they made a few recommendations, which are at the very end of my presentation we can go over. So this bill adds a new section to the Zoning Code and amends other sections of the code related to short-term vacation rentals. The purpose of the bill is to manage the impacts of these short-term vacation rentals by defining where this use will be allowed; establishing provisions and standards to regulate this use; and providing an avenue for an existing use deemed to be improper by this ordinance, to apply for a nonconforming use certificate that would allow them to continue to operate in a non-permitted district. So, what is a short-term vacation rental? Bill 108, Draft 4, does not seek to regulate all vacation rentals that are rented on a short-term basis. The bill defines “short-term vacation rentals” as a dwelling unit of which the owner or operator does not reside on the building site, which has no more than five bedrooms for rent on the building site, and is rented for a period of thirty consecutive days or less. And the Zoning Code defines a “building site” as a parcel of land or lot. So the bill does not cover the rental of a dwelling unit where an operator or owner lives on the property. Some examples of those are dwellings or other buildings where six or more rooms are rented; these are considered hotels, inns or lodges in the Zoning Code, even if they occur within a dwelling. Another example of a type of short-term rental that’s not covered by this bill are dwellings where no more than five bedrooms are rented for a period of 180 days, consecutive days or less, when the owner or an operator resides on the building site; so these are considered hosted short-term rentals and can include bed and breakfast establishments, or renting rooms of a dwelling on a short-term basis to not more than five unrelated people, which is defined as a family in the Zoning Code. And just to note, a bed and breakfast establishment currently in the code allows up to ten guests and the service of continental breakfast meals. And then the last type of rental that’s not regulated by this bill are dwellings that are rented on a long-term basis, which is typically six months or longer. So before I move on, does the Commission have any questions about how Bill 108 is defining short-term vacation rentals? CHURCH: My only question is if the slide were turned off, how many people could possibly recite what a short-term vacation rental is or isn’t? \[Laughter from the audience.\] JACKSON: Yeah, it’s a long definition, but rather than say what is not, I think it’s a lot easier to say what it is, yeah? Okay, so, where are short-term vacation rentals permitted? The bill identifies the following zoning districts and areas where existing and new short-term vacation rentals can operate as a permitted use: Resort-Hotel zoning districts; General Commercial zoning districts; Downtown 2 EXHIBIT B Hilo Commercial District; and Village Commercial zoning districts, with a Use Permit, and as you know, the Use Permits are approved by the Planning Commission; and then all zoning districts within areas designated by the County General Plan as Resort or Resort Node, except that a Use Permit is required in the Single-Family Residential zoning district in those Resort areas. And then outside of these areas listed above, new short-term vacation rentals are not permitted but existing short-term vacation rentals may continue to operate, if the Planning Director issues a nonconforming use certificate. UNGER: I had a question. JACKSON: Yes. UNGER: It appears that those areas that, these vacation rentals, are very well defined and specific. Who, who came up with this list or who generated this outline here? JACKSON: The County Council. UNGER: The County Council did. JACKSON: It’s their bill, so they are the ones that came up with this, this list. UNGER: Okay. And it’s my understanding that the sponsors of the bill are Councilperson Kanuha and Councilperson Eoff, is that correct? JACKSON: That’s correct. UNGER: Can you, can you explain to me what that means if you sponsor the bill? Or can somebody in staff — JACKSON: I think maybe the Director or Corp. Counsel can. I’m not real familiar with the Council sponsorship process. UNGER: Does that mean it’s their idea? Does that mean they wrote it? Does that mean a constituent came to them and ask them to write it? I’m just curious because for me it’s always important to find out where this is coming from. HALL: I think those are all possibilities. I can’t speak to this bill because I didn’t work with Council on it, but those are all possible things. Usually, when you sponsor it, that means that you are bringing it forward. But, yeah, I don’t know exactly how it came to be. YEE: Let me add, at the Windward Planning Commission the Mayor spoke to having it be a priority to address vacation rentals, so I think there was leadership from him to have his staff, Mayor staff, look into it. I think Council Member Eoff and Kanuha were certainly interested and wanting to address it. So there was Mayor staff along with Council staff crafting it, certainly with some consultation with the Planning Department. There were meetings to address what, what made sense to them, and so we tried to provide as much, you know, input possible, but this 3 EXHIBIT B is no way a Planning Department product, you know. Coming back to Planning Commission is part of the process. UNGER: Thank you. JACKSON: So I’ve included this slide of Kailua-Kona because we received a lot of testimony regarding the condos along Ali‘i Drive and whether or not, or how, this bill would apply to those condos operating short-term vacation rentals. So you can see on the left slide that is our General Plan LUPAG Map and the areas that are shown in pink are the Resort and Resort Node areas. So Bill 108 is saying that within those pink areas short-term vacation rentals are permitted, meaning the existing ones can continue and any new one that wants to be established can do so. So there is an area of Resort and Resort Node in Kailua-Kona Town, as you see there, and then there is an area along Ali‘i Drive where it changes over to Medium-Density Urban in the General Plan, and then when you get towards Keauhou, the Resort and Resort Node areas pick up again. So the slide on the right side shows that area between those two Resort Node areas in Kailua-Kona and Keauhou. UNGER: Is brown High-Density Residential? JACKSON: So the brown is, yes, it’s Multi-Family Residential. And so that’s the zoning map on the right side. And the areas in the bright pink on the makai and mauka side of Ali‘i Drive are zoned Resort. So the bill is saying if you have a Resort zoning, you can also do a short-term vacation rentals; that’s a permitted area. CHURCH: Okay, it states here, “The bill requires registration of all new short-term vacation rentals established in zoning districts where the use is permissible.” Okay, so, now, here is somebody who has a condominium in a V-1.25, which is an approved zoning district, they’ve been living in it for some time but now they decided that they are moving back to the mainland and they want to rent it. Is this registration required for a new project or is it required for an individual who has a unit that’s in an authorized zone but decides now to rent it? And this individual could easily have registered, got a new general excise tax license, the transient occupancy tax license, and be totally fair and square with regard to that. Does that now require registration, that individual for that unit? JACKSON: Yeah, so I’ll get to — CHURCH: So it’s not a project, it’s on a unit basis. JACKSON: Yes, it’s — CHURCH: Oh, my goodness. JACKSON: — per dwelling unit, yeah. CHURCH: My goodness gracious. 4 EXHIBIT B JACKSON: Yeah. So going back to the slide, you’ll see there is a discrepancy between areas that short-term vacation rentals would now be permitted and the areas where they would not be. As an example, Casa de Emdeko is in Resort zoning that’s pink, so that condo would allow short-term vacation rentals. And just to the south of there, there are four other condominiums that have been there a long time, maybe since the 70’s – Kona Coast Villas, Kona Isle, Kona by the Sea, Kona Riviera Villas – those are in a RM zoning district, they are not in the General Plan Resort Node or Resort area, so those existing short-term vacation rentals would need to get a nonconforming use certificate under Bill 108. And the Department recognizes that there is some inconsistency here, and what we are looking at is, now that this has come to our attention, looking at the General Plan revision that we are doing now, the current General Plan update, to look at areas along Ali‘i Drive that may be, would be more suitable for Resort designation so that these existing condos could be moved into an area that’s permissible for short-term vacation rentals. UNGER: In other words, actually initiate a rezoning to up-zone, high-density residential to resort? JACKSON: Yeah, so what would happen is during the General Plan update they would change the LUPAG Map to Resort for this area, and then those condos could come in as a whole condo building, not individual units, and rezone the property to Resort. UNGER: \[To an unidentified public member in the audience,\] I’m sorry, ma’am, this is not question and answer for public; public will have an opportunity to testify after the presentation. Thank you. JACKSON: That’s one option, but actually they wouldn’t even need to rezone because the way the bill is written, it says any zoning within the GP Resort or Resort Node. So they can keep their RM zoning; just the General Plan designation would need to be changed. UNGER: Can you explain why – sorry, Commissioner Church, one more question – can you explain why that’s not being dealt with in Bill 108? It seems like we are excepting, exempting certain areas or, I’m sorry, permitting certain areas. If we are permitting certain areas, why don’t we just make it part of this process and permit high-density residential condominium projects governed under the condominium property regime? JACKSON: That wasn’t proposed in the bill, and I think the intent of the bill from what I’ve seen is that Council didn’t want to allow short-term vacation rentals in all Multi-Family Residential zoning, that they wanted to really focus it to resort areas. So that’s where the General Plan is the most appropriate mechanism to identify where those resort areas would be. UNGER: Great, okay, we’ll definitely continue the discussion. And I’m sure the public has lots to weigh in on because 95 percent of the testimony we read has specifically to do with that. So we will be revisiting this topic. Commissioner Church. CHURCH: Yeah, don’t mean to sound obstreperous or anything here, just some questions here. So, now, I just, I’m in my condominium and I decide to move to the mainland, it’s in Resort 5 EXHIBIT B zone, it’s like Kahalu‘u Beach Club, the project that I developed, and it’s Resort zone, so it’s authorized, and, okay, I’ve got to register, so I’m going to go register, the registration process includes submitting the form to the Department with a site plan showing the location of rooms for rent, requisite parking, in addition I need to provide proof of general excise tax, transient occupancy tax, lastly provide verification letters \[inaudible\], you know, first of all how in the world am I ever going to be informed of this, how many, what percentage of the people ever know they have to do that? And this stance is becoming a little cumbersome on an individual basis, to tell you the truth. So far. Now, maybe there is something here that really simplifies it and that would be great. Thank you. JACKSON: Okay, so along the lines of this slide here, there are other areas on the island in West Hawai‘i that we also recognize there’s some inconsistency between some resorts that short-term vacation rentals would be permitted and others where they would not be permitted. So I just wanted to really quickly run down some examples, and this is not a complete list; this was just taking a quick look at our zoning in resort areas. So areas where short-term vacation rentals would be permitted under this bill would be Mauna Kea Resort makai of the highway, Mauna Lani Resort, Waikoloa Beach Resort. Areas where short-term vacation rentals would not be permitted, unless they get a nonconforming use certificate, would be Waikoloa Village, all of Puakō except for a few lots on the north end that are zoned Resort. And then going further south towards Kona, towards Kailua-Kona, you have the Kaūpūlehu, Hualālai, and Kūki‘o Resorts. ʻ But then just south of that you have Manini‘ōwali Resort that’s still under development, and that one would not allow for short-term vacation rentals. Going further south, I showed you the slide in Kailua-Kona along Ali‘i Drive just south of Kona Bay Estates to Kona Hawaiian Resort, and then there is another Resort Node in Keauhou along Ali‘i Drive and just south of Kahalu‘u Beach Park to Kona Country Club. So properties in between that are zoned Resort, those would also be permitted to have short-term vacation rentals. And then on the foot side of that areas between Kailua-Kona and Keauhou, along Ali‘i Drive outside of the Resort and Resort Node areas that are not zoned Hotel would be needing a nonconforming use certificate. UNGER: To clarify – go back to that slide, please – to clarify, everything on the right is in the Resort or Resort Node area also? JACKSON: The areas on the right are not in — UNGER: Are not, okay, okay. JACKSON: — the Resort Node area. UNGER: Thank you. JACKSON: Okay, so, how are existing short-term vacation rentals permitted? When we first got Bill 108 in the Planning Department, there was some confusion about what the Council intended as far as the registration process and how to register existing short-term vacation rentals. So we had some discussion with Council staff, and they said that the intent of Bill 108, Draft 4, was to have all existing and new short-term vacation rentals register with the Planning Department within six months of adoption of the ordinance. In addition to registration, those 6 EXHIBIT B short-term vacation rentals outside of permitted zoning districts will also need to apply for a nonconforming use certificate. And I’ll explain what that is a little bit later. So there was, there are parts of the current bill that do not require registration of certain existing short-term vacation rentals, for example, in the CV zoning district or in the RS district in the Resort and Resort Node areas, and Council staff said that’s not what we intended. So we are making a recommendation, No. 7, to reformat that section of the bill so that all existing short-term vacation rentals are required to register. So, how are new short-term vacation rentals permitted? The bill also requires registration of all new short-term vacation rentals established in zoning districts where the use is permissible, but the bill does not require registration for new short-term vacation rentals that may be established outside of permissible zoning districts, such as, with a Special Permit, in the County Agricultural zoning district in the State Land Use Agricultural district. So that is another consideration that would need to be made, and I believe the Department made a recommendation to, again, require registration of those short-term vacation rentals as well. So the registration process, it includes submitting a form and 250-dollar filing fee to the Planning Department. The applicant would need to submit a site plan showing the location of the rooms for rent and requisite parking pursuant to Section 25-4-51 of the Zoning Code. That section requires one parking space for each rented bedroom in addition to one space for the dwelling unit if rooms are rented individually, or two parking spaces if the dwelling unit is rented as a whole. And I should note here that that section of the code I just cited only applies to single-family dwellings, double-family and duplex; it does not apply to multi-family condo structures. The Zoning Code requirement for multi-family condo structures would still be 1.25 spaces per unit, so that would not change. So the applicant would also need to submit verification that State of Hawai‘i general excise tax and transient accommodation tax licenses are in effect, as well as verification that a letter has been sent to all surrounding owners and lessees within 300 feet of the property, notifying them about the details of the short-term vacation rental operations, such as the number of units being rented, maximum number of guests permitted, number and location of parking spaces, and instructions of how to submit complaints to the Department. And I do also want to mention we have received a lot of testimony about the last item, requiring notification to surrounding property owners. It’s not currently written into the bill, but for condo buildings often times they are managed by one manager and there are, you know, the Commission could consider adding language where just the condo managers notified or somehow distributes that to the owners of that condo; that way a lot of letters aren’t being generated for each individual unit owner. Okay, so, before I move on, are there any questions on registration from the Commission? SHIMAOKA: Maija, my question is obvious. How do you enforce this? \[Laughter from the audience.\] JACKSON: That’s a good question. Which, which part? The whole thing? SHIMAOKA: Pretty much, I mean, who’s to say that now we encourage people to just go rogue and basically do things on their own without registering. 7 EXHIBIT B YEE: During public testimony, or public meetings, on this bill I testified many times that this would have to come with more resources to Planning that would have to enforce most of this, clearly shared the experiences from the other counties and the amount of staffing it took for them. Some of, and it is unique in terms of this bill providing some avenues for a fund within it to help with enforcement, which is not typically how the County likes to do things, so it does show the importance of providing some resource. But we would certainly need more than just what’s provided within this bill to enforce. JACKSON: Okay, continuing on with the registration process. The bill requires that owners of short-term vacation rentals notify the Director of ownership changes or when a short-term vacation rental ceases to operate for any reason. But these provisions are under the “Registration of all short-term vacation rentals” section, so it’s not clear if they apply to short-term vacation rentals permitted via a nonconforming use certificate. So, again, if the Commission were to adopt that recommendation to require registration of all short-term vacation rentals, then that would resolve the issue. Any short-term vacation rental that is not registered within the required deadlines is considered unpermitted and subject to penalties, until the rental becomes properly registered and compliant with the requirements of the bill. So, nonconforming use certificate process, this is another section that’s being proposed within the bill. It allows for owners of existing short-term vacation rentals located outside of a permitted zoning district to apply for a nonconforming use certificate to the Director within 180 days of the effective date of the ordinance. The owner must provide evidence to prove that the rental was in operation prior to the effective date of the ordinance. Evidence can include tax documents, such as State general excise tax filings, transient accommodation tax filings, and federal and state income tax returns. Based on the evidence submitted, the Director shall determine whether to issue a nonconforming use certificate. And then if one is issued, then the current certificate must be displayed on the premises so that it’s clearly visible to the public and to planning inspectors. UNGER: I have a question there. JACKSON: Yes. UNGER: And it affects a minority of property owners, but what about the property owner who has just sold his property on the mainland, bought a lot over here with the intention of developing a short-term vacation rental, or the developer who has developed a subdivision, has put in the CC&Rs that they intend to allow short-term vacation rentals? At some point that needs to be addressed as far as being able to then apply for a nonconforming use certificate based on this proposed use. JACKSON: So the way the bill is designed now, it has a definite date of 180 days from the effective date of the ordinance that if the short-term vacation rental is not established by that point, I’m sorry, the adoption of the ordinance is the cut-off date, so if the short-term vacation rental is not established by the time the ordinance is adopted, then they could not apply for a nonconforming use certificate. 8 EXHIBIT B Okay, so the bill indicates that a nonconforming use certificate may be issued for short-term vacation rentals on land in the State Land Use Agricultural District, provided the lot existed before June 4, 1976. And the reason for this date is that all dwellings on lots created after June 4, 1976, are considered by State law to be farm dwellings, which are to be used to house farm workers rather than vacationers. And we did receive a letter from the State Land Use Commission that should be in your packet that confirm that position on State law. The nonconforming use certificates must be renewed annually on or before the expiration date indicated on the certificate. A 250-dollar filing fee is required with the renewal request. And renewal of the certificate may be denied by the Director for the following reasons: One is the applicant has violated provisions of the bill or other pertinent laws; the owner is delinquent in payment of County taxes, fees, fines, or penalties assessed in relation to the operation of the rental; the owner or reachable person has not been reachable; or if there have been police reports or verified neighbor complaints of noise or other disturbance. And then the bill also says the Director must deny a renewal, if the operation has been abandoned for any reason for a continuous period of twelve calendar months. The Director must provide the decision to deny renewal of a certificate in writing and the owner may appeal the decision to the County Board of Appeals within 30 days of receipt of the decision. So before I move on to the next slide, are there any questions from the Commission on nonconforming use certificates? UNGER: I’m probably skipping ahead, but the penalty, does that also apply to permitted areas? For a homeowner in the permitted area, if they have those complaints, etc., can they lose their permit to operate a short-term vacation rental? JACKSON: Yes. UNGER: So then can also. JACKSON: Yes. UNGER: Okay. JACKSON: And I think that’s up ahead in the good neighbor policy, so — UNGER: Okay, yeah, I did jump. JACKSON: — we’ll cover that in a few minutes. All right. So the bill also includes a provision that requires the Director to assess the effect of the permanent loss of nonconforming short-term vacation rentals when a declared emergency occurs, such as lava inundation. The Director can initiate legislative and administrative opportunities to restore losses in rental capacity within the affected district. So, standards for operation of a short-term vacation rental. These standards in these next few slides apply to all short-term vacation rentals – new, existing, nonconforming. So the bill requires that all vacation rentals have an owner or reachable person that resides within the 9 EXHIBIT B County. This person must be reachable by guests, neighbors and the County on a 24-hour-seven- days-a-week basis. The bill defines “reachable” as being able to respond via telephone to a request for his or her presence within one hour of receiving the request and being physically present at the rental within three hours of receiving a call from a guest, neighbor or County agency. The owner must also notify the Department of any changes to the contact info for the reachable person. All short-term vacation rentals must abide by a good neighbor policy, which requires the owner or reachable person to make sure the activities taking place in the rental conform to the character of the surrounding neighborhood. The policy must be displayed on the premises and included in the rental agreement. The policy includes: quiet hours from 9:00 p.m. to 8:00 a.m.; ensuring that sounds outside of quiet hours do not exceed what is normal for a residential area, prohibiting machines or devices that generate loud noises or sounds; and ensuring that guests park onsite in designated parking areas. Other standards that all short-term vacation rentals must abide by include: displaying on the back of the door a copy of the registration or nonconforming use certificate and the reachable person’s name and phone number; including the registration number or nonconforming use certificate number on all forms of advertising that includes Internet, print, any kind of advertising; and complying with the Sign Code and parking requirements for short-term vacation rentals. And before I move on, does the Commission have any questions on the standards for operations of a short-term vacation rental? SHIMAOKA: I’m just reading some of the testimony. Are we – I mean, probably this is for you, Mike – are we providing any kind of considerations for a grandfather clause? YEE: That would be the nonconforming use certificate. SHIMAOKA: That’s renewable every year, correct? YEE: Correct, unless they cease operation for – I forget how long – a year or something. JACKSON: Okay, so, complaints and enforcement. The bill requires the Director to receive and track complaints regarding the rentals, and provide information about rules, policies and procedures related to short-term vacation rentals to property owners, managers, neighbors, and the general public. The Director is also responsible for adopting rules of practice and procedure to implement the provisions of the bill. To enforce the bill, the inspectors will be able to rely on any advertising offering the property on a short-term vacation rental as evidence that the rental is operating on the property. The burden of proof will be on the owner to establish that a short-term vacation rental is being operated legally or the property is not being used as a short-term vacation rental. And the bill proposes to establish a short-term vacation rental enforcement account, which will be administered by the Planning Director, for the purpose of enforcing the short-term vacation rental law. The account will be funded by fees collected for registration, fees collected for renewal of nonconforming use certificates, and fines collected from enforcement actions. UNGER: In your opinion, is that going to be sufficient to cover the enforcement requirements of this bill? YEE: No. \[Laughter from the audience.\] 10 EXHIBIT B JACKSON: Okay, so that gives a general overall view of what Bill 108 includes. And now I’m going to move on to the Planning Director’s recommendations. YEE: I want to chime in real quick around good neighbor policy procedures. All these changes that were built in the bill, there were hundreds of hours put in by Council staff, Mayor staff, Planning input, there is nothing being suggested that hasn’t been tried somewhere else. You know, looking at best practices was clearly something that staff was looking at. There are many ideas that were proposed that we found weren’t consistent with County code, State code and stuff. And so nothing being proposed hasn’t been tried somewhere else. There are, you know, thousands of examples of cities trying to address this issue, and I think, you know, credit to Council Members Eoff and Kanuha and Mayor staff, they were trying to call the best practices that they could to see what would fit here. And you can go to thousands of cities and every short-term vacation rental bill would be slightly different; yet, you have to really try to tailor it to your local, you know, landscape. And we have the added challenge here where, you know, our landscape is somewhat different between West Hawai‘i, East Hawai‘i, and you are still, you know, Puna, trying to make that fit. So we have an additional challenge here of trying to help provide recommendations to the Council that try to fit all the island. Just wanted to provide that little bit of context for you. UNGER: I really appreciate that comment because I am hoping we are not reinventing the wheel; this is happening elsewhere, and so I’m really glad to hear that. But I would like to take it one step further and say that we stay flexible and we stay adaptive because with the public testimony that’s coming in, clearly there are certain areas that do not fit here that may have fit on the mainland. YEE: Absolutely. I, you know, the condo-hotel issue came up more recently, and that’s what this public process is for. There were many months of going through Planning Committee and this was not highlighted as an issue at that time, you know. So Council Members crafted what they knew at that point and pushed it forward, you know. In this process we’ve learned about this. Clearly, you know, it’s quite obvious, we want to be able to address it. And, you know, as we’ve said, we are trying to provide avenues to those adjustments through General Plan and stuff. And clearly it’s the, you know, responsibility of the Commission to be able to provide recommendations for the Council to look at additional revisions when it goes back to them. JACKSON: So the Planning Director is recommending the Commission send a favorable recommendation of Bill 108, Draft 4, to the Council, with the following suggested revisions, and there are 16 of them. So these recommendations, some of them are like housekeeping recommendations just to make the intent of the bill be implemented better. So I’ll kind of, as I go through, just explain which ones are housekeeping and which ones would actually change the intent of the bill. So Recommendation No. 1 would be to change the title of the bill and references of “short-term vacation rental” to “un-hosted short-term vacation rental.” And that kind of touches on what Commissioner Church, I believe, said is if you hadn’t looked at the slide, how would you know what a short-term vacation rental is. If it’s stated clearly these affect un-hosted short-term 11 EXHIBIT B vacation rentals, these regulations apply to only those. That would be less confusing for the public. It would be very clear. Recommendation No. 2 is to clarify the short-term vacation rental definition to specifically state how the Internal Revenue Code defines the shot-term use of an owner’s primary residence. And if you look at the bill on Page 6, that’s where you have your definition of “short-term vacation rental,” and the last sentence in that definition says, “This definition shall not apply to the short-term use of an owner’s primary residence as defined under the Internal Revenue Code.” So the Director is recommending better defining, or explaining, what the Internal Revenue Code does or does not allow so that it’s easier for the public and for Department enforcement staff to understand. The third recommendation is to add to the short-term vacation rental definition that dwellings where more than five bedrooms are rented are defined in the Zoning Code as inns, lodges or hotels. And, again, that’s just to make it easier for the public and staff to understand what this bill does or does not cover. So this recommendation is a little bit more substantial, recommending removing the requirement for a Use Permit to establish a new short-term vacation rental in the Village Commercial zoning district. Most of the commercially-zoned areas within the small rural towns around the island, such as Honoka‘a, Hawi, Waimea, Pāhoa, Kainaliu and Honomū, they consist of just Village Commercial zoning; there is no other Commercial zoning in those little villages. So land uses within these areas consist of other transient accommodations, such as hotels, inns and B&Bs, along with a lot of service-oriented commercial businesses like restaurants, art galleries and general retail establishments. These businesses rely on customers that are both residents and tourists in order to be successful. So as you know the Use Permit process, the permits are granted by the Planning Commission after a public hearing, there is a filing fee, it takes at least three months to get the application to the Commission, so it’s a little bit longer process. And the Director is seeing that it may be better just to rather than go through a Use Permit process, allow short-term vacation rentals in CV zoning because the use is very similar to the other uses that, the other transient uses that are already there. There’s, the Use Permit process typically looks at, is there adequate infrastructure, are there going to be negative impacts on the surrounding neighborhood or community, and since these rural villages are already developed with other commercial uses, you don’t usually see those impacts and there is already the adequate infrastructure to service those uses. UNGER: A question. JACKSON: Yes. UNGER: If we are looking at narrowing down the permitted areas for these short-term vacation rentals, and commercial properties is one of them, I’m, I’m really surprised that there should be a Use Permit for any property zoned commercial, any, any property zoned commercial, I would think, would be able to do it legally without a Use Permit. What is, what is the thought process behind that? I think we are going to be inundated with, the Planning Department is going to be inundated with paperwork and applications, the Planning Commissions are going to be inundated 12 EXHIBIT B with Use Permit applications, and I’m thinking this is a pretty straightforward, if zoned commercial, it should allow short-term rentals. JACKSON: Yeah, the Director’s recommendation is in agreement with that; it seems appropriate to allow them without a Use Permit in General Commercial and Village Commercial. But one commercial district that’s left out of this bill is the Neighborhood Commercial district. And Neighborhood Commercial is really meant just for like a little convenience store within more like a residential area, so it’s not meant for real heavy commercial businesses. So that’s probably the reason that the Neighborhood Commercial district was left off of this bill as an unpermitted zoning district for short-term vacation rentals. YEE: I would add that there were some robust debates around CV in including or not including CV, and it ended up not being part of the permitted, and again, I guess I’m taking up the cause again to make the recommendation to put it back in because I think it becomes, you are trying to slice a hotel or B&B being okay and the vacation rental is not, was too kind of final align for me to want to go down that path. So, again, there were robust conversations with Council staff, Mayor staff around this, they forwarded the bill as is, and I’m just further making the recommendation to include CV. JACKSON: Okay, Recommendation No. 5 – let’s see here – that is to change the permitted uses section, and what we would suggest doing is deleting the sentence that is there now, “General Plan Resort areas and Resort Node, except that RS districts in the GP Resort areas and Resort Node shall require a Use Permit,” to, changing the language to focus more on the zoning districts rather than the General Plan area. So the new language would be, “All zoning districts, except Open, situated in the General Plan Resort and Resort Node areas, provided that a Use Permit is obtained in the RS zoning district.” And the reason for that is that the Zoning Code is formatted in a way to focus on zoning districts and list the uses that are permitted in each zoning district. The Zoning Code does not typically reference the General Plan areas as where uses are permitted or not permitted. So this language would fulfill the same intent of Bill 108; it just changes the wording a little bit to focus more on the zoning districts. UNGER: Question. JACKSON: Yes. UNGER: Under General Plan Resort and Resort Node areas with residential zoning district, so I’m envisioning Kūki‘o, Hualālai, Mauna Loa \[sic\] residential areas, Mauna Kea residential neighborhoods. Is that the vision here? Is that what that is? JACKSON: So the way the bill is written now, and even the suggested revision would be, the list that I showed you, so Mauna Kea Resort on the makai side is in the Resort area but on the mauka side it is not. UNGER: So my point is I feel that those areas do not need a Use Permit to operate a short-term vacation rental there because they are heavily managed and heavily regulated and heavily 13 EXHIBIT B overseen as it is. So what is the thought process behind having residential owners coming in to the Leeward Planning Commission with a Use Permit and applying? YEE: Not for that specific location because, I don’t have all the details, but I think it’s clear based on feedback we are getting that the intention was to address non-hosted rentals, so if there is management of condo-hotels or other areas, you know, that’s some of the adjustments we would want to make for those situations in condo-hotels. I don’t know this area that you are referring to, well enough to — UNGER: I’m just referring to a single-family residence in Kūki‘o Resort Subdivision that is offering short-term vacation rentals. I imagine they have a property manager and is overseen by the homeowners association, etcetera, etcetera. YEE: I would generally say right now the bill would have them come in for a certificate, nonconforming use certificate. And again, the intention there from the bill is to have management in residential areas. Again, you know, whether, the problems we are having in other areas where they were, you know, being problematic were in residential areas, and so this was the fix. The unintended places that may have heavy management stuff is what we have to consider. JACKSON: Okay, Recommendation No. 6 is to add the following section to the bill, to the bill’s permitted uses section: “Special Permits in the State Land Use Agricultural district shall not be issued to permit short-term vacation rentals in farm dwellings since State law requires farm dwellings to be used to house farm workers rather than vacationers.” And, as I mentioned before, you should have received a letter from the State Land Use Commission that confirms this position that State law allows the Planning Commission to issue Special Permits for any land use that is reasonable and unusual and is consistent with State law, as well as the Zoning Code, related to lands within the Agricultural district, even if the land use is not specifically listed in the Zoning Code as a permitted use for that zoning district. So in this case Bill 108 as it’s drafted now does not specifically say in the Agricultural district short-term vacation rentals are permitted. But there is still the Special Permit mechanism that can be used through the Planning Commission to permit any use on State land. And so this recommendation is basically saying since short-term vacation rentals are un-hosted meaning there is no owner on site that’s actively farming the property, that allowing short-term vacation rentals even through a Special Permit in the Agricultural district would not be consistent with State law. And so that is the reason for wanting to add the section. KEALOHA: Can I — \[checking the microphone\] DARROW: You are on. KEALOHA: Can I just clarify that we are talking about both farm-dwellings as well as additional farm-dwellings? JACKSON: That’s correct. 14 EXHIBIT B Okay, Recommendation No. 7 is to reformat the proposed “Registration” subsection to require that all existing short-term vacation rentals submit a registration form within 180 days of the effective date of the ordinance. And I have talked about this one earlier; this is just to reformat the bill to require all short-term vacation rentals become registered. Recommendation 8 is to just add the word “permanently,” ceases operation, to Section 25-4- XX(b)(4). This is just to provide clarity so that the vacation rental owner only notifies the Director when the operation permanently ceases. And Recommendation 9. Under the “Standards” section, consider removing or clarifying the purpose of Section (2)(C). So this language is on Page 3 under the “Good neighbor policy,” and I’m talking now about Section (2)(C). So currently the language says, “Sound generated by any machine or device that is audible at a distance of fifty feet from the machine or device producing the sound is prohibited.” And the bill, this language is not clear as to what type of device is prohibited, for example, it seems that equipment used to maintain the rental, such as lawnmowers, leaf blowers, would be prohibited. And looking at the good neighbor policy, there is a policy just previous to this one, and I’ll read it, it says, “Sound that is audible beyond the property boundaries during non-quiet hours shall not be more excessive than would be otherwise associated with a residential area.” So the Planning Director feels that this policy is sufficient to address noise, and would either suggest clarifying the purpose of Section (2)(C) or eliminating it. Recommendation 10 is to add a sentence instructing the Director to establish and maintain a list of all short-term vacation rentals that have registered or received a nonconforming use certificate. So in addition to tracking complaints, the Department should be responsible for keeping an up-to-date list of active, permitted rentals throughout the county. And currently Bill 108 only requires the Director to track complaints, so we are just suggesting this be added to also track actual vacation rentals that are registered. Recommendation 11. This is just a housekeeping issue. It says – let’s see, where are we here – the Director shall adopt rules, in accordance with chapter 91 for the purpose of implementing this sections, and the current language says, “implementing the subsection,” and we are suggesting changing it to “implementing the sections of Chapter 25 related to short-term vacation rentals” so that the rules apply to all regulation of the vacation rentals as outlined in this bill. Recommendation 12 would be to reword the language in the nonconforming use certificate section. This is on Page 4 of the bill. And the suggestion is to change it to say, “Agricultural Lands. In the State Land Use Agricultural district, a short-term vacation rental nonconforming use certificate may only be issued for single-family dwellings on lots created before June 4, 1976.” And that’s just to clarify that nonconforming use certificates will not be issued for rentals on lots created after ’76 pursuant to State law, which requires that farm dwellings be used only to house farm workers. Recommendation 13 is to add the following language to the bill: “The renewal request” – this is, this is in the nonconforming use certificate section – “The renewal request and renewal fee was not received on or before the expiration date indicated on the certificate.” So this would be 15 EXHIBIT B adding one more item of why the Director could deny the renewal of a nonconforming use certificate. Recommendation 14. So when we issued your background and recommendation report, originally, the Department was under the understanding that short-term vacation rentals, un-hosted short-term vacation rentals, were classified as an R-1 residential occupancy, and basically the R-1 residential occupancy requires a higher standard of building and fire code compliance, such as fire sprinklers, ADA compliance. The Building Division between when your recommendation was released and now sought the opinion of the International Building Code Commission and they did just recently confirm that the short-term vacation rentals would not be considered an R-1 occupancy, and therefore would not need to meet those requirements. So we are changing this recommendation to basically add something into this bill that says during the registration process the Department would need to check to make sure that at least the structure has gotten the basic – building, electrical, plumbing permits – that you would need for a standard dwelling. And Recommendation 15 would be to increase, create increased fines for violation of this bill. We did speak with Maui and Kaua‘i county planning departments and those directors informed us that because vacation rentals are very profitable businesses, the fines need to be high enough to discourage violation of the vacation rental law. Honolulu and, I believe, Maui are currently moving legislation through their councils to increase their fines to 20,000 dollars, and our fines in our current Zoning Code are, start at 100 dollars per day plus a one-time civil fine of 500 dollars. So there is some recognition that those fines would need to be increased to effectively enforce this bill. The Director did say that one avenue that we could do that in is when we adopt Planning Department Rules of Practice and Procedure to implement the bill, should it be adopted, we can create a fine structure at that time. So that will be something that we will be looking at in the Planning Department. And then the last recommendation from the Planning Director is just a housekeeping recommendation. There are – let’s see – it’s to add the language “short-term vacation rentals” to Article 7, Division 2, Section 25-7-22(a), to include short-term vacation rentals as a permitted use in the CDH district. So you notice under the permitted uses section, it listed CDH, but then when you go into the actual section of the Zoning Code for Downtown Hilo Commercial District for a list of the permitted uses, short-term vacation rentals was not added to that section. So it’s just a housekeeping measure to make sure that the Zoning Code is consistent throughout. So before I move on to the Windward Planning Commission’s recommendations, were there any questions on the Director’s recommendations from the Commission? th Okay, so, as I mentioned, the Windward Planning Commission met on September 6. They discussed a lot of issues, which I’m sure many of them will be re-discussed today by the Leeward Commission. I just wanted to touch on two or three of those issues that were discussed. A few of the Commissioners felt that short-term vacation rentals, because they are businesses, they should pay the entire cost of enforcement. And what I mean by that is any fees and fines paid by the rental operator should be high enough so that the enforcement account can support new enforcement staff positions. They did not want to see money being allocated from the 16 EXHIBIT B general fund, taxpayer money allocated from the general fund, to pay for more enforcement staff positions within the Planning Department; they felt that the businesses, the fees generated by these businesses should self-sustain those enforcement positions. Another idea that was discussed was considering implementing a quota on short-term vacation rentals in a particular community. The City and County of Honolulu has some active legislation going through where they are recommending that in a community planning area, and they have defined community planning areas, that only one percent of dwelling units in those areas be allowed to be used as short-term vacation rentals so that more of the housing can be kept for long-term rentals. UNGER: Just a personal comment. I don’t understand how we can work so hard and diligently towards permitting and regulating short-term vacation rentals, and then, and then practically legislate them out of existence. I’m thinking, I’m thinking considering implementing a quota of STVRs in a particular community that doesn’t fall under a certain number. And at some point that discussion needs to be broached as well. I mean, we are going through a lot of effort to regulate and tax and oversee these STVRs to clean up some of the current issues that are out there, and then at the same time we are trying to limit them in every opportunity. So that’s just a, that’s just a general comment, and I’m sure we are going to get into a lot more of that. CHURCH: Chair Unger, can, can we make a comment or does it have to be questions? Can we make a comment here, too? UNGER: Sure, if I did. \[Laughter from the audience.\] CHURCH: That’s where I thought it was going. First of all, any comments that I make are not to disparage whatsoever. The effort that has been put in by the Planning Department and the people who are behind it, I accept that. And I know that given the direction that it’s taken, people have tried their very best to try to make sense of this. And I know that the County is all struggling with this issue, and that there is a number of motivations that underpin it. But one of those motivations is just money. And everybody in this room, or most people in this room, would probably know somebody that is involved in transient vacation rentals that to some extent is violating the law or not paying their fair share. And, you know, just before we even started, I was talking to one of my fellow commissioners, you know, we sat and we kind of nodded our heads, put us in the room for a day and we’ll tell you how to chase everybody down. So there is a money issue here. But the process here of communicating this to people that live here, operate here, and on the mainland, and then implementing it, and then getting compliance with it, and then enforcing it, is just, seems to be a bureaucratic nightmare. Absolutely, the bureaucratic process shown in its finest form. If I had a recommendation, it would be to try to simplify this thing as much as possible, because I don’t know that as the Planning Department and others struggle to make sense of this whole thing, I don’t know to what extent the people who are actually a part of the industry, who would have to participate in enforcement and implementation, were part of the process. Maybe they were, maybe they weren’t, maybe there should be more. But to me this thing seems, it’s just, it’s not viable, it’s not going to solve the problems that we are trying to solve in my opinion. Here we go. \[Applaud from the audience.\] UNGER: I’ll tell you what. Why don’t we hold further Commission discussion because a process now will be to open it up to public testimony? That’s a really critical, important part of 17 EXHIBIT B this meeting. I’d like to, I’d like for staff to summarize your presentation, and make any last final comments. We’ll get into public testimony after that, and then it will be kicked back to the Planning Commission for more discussion like we just had. JACKSON: Thank you, Chair. I just have one more slide. So the actual recommendations made by the Windward Planning Commission were to change the initial registration fee from 250 dollars to 500, and require annual registration for all short-term vacation rentals, not just those with a nonconforming use certificate. The second recommendation was to change the wording in the “nonconforming use certificate – prior use” section to add that the existing short-term vacation rental operation must not have violated pertinent laws, such as getting the proper building permits for their dwelling when it was built, must not have police reports or verified neighbor complaints, and have paid all property, GET, TAT, and income taxes. If they do not meet this criteria, the Director can deny the issuance of the nonconforming, the initial nonconforming use certificate. And then the third recommendation that the Windward Commission made was to simplify the language in the “enforcement account” section to say, “this account shall be funded by all fees and fines collected pursuant to this section.” So those, after all the discussion, those were the three recommendations that the Windward Commission made. And that concludes my presentation. I’d be happy to answer any questions. UNGER: Great, thank you. Any further questions from Commissioners? \[None.\] Thank you. At this time we would like to open it up to public testimony. I’d like to ask for a five-minute break before we open public testimony. Thank you. RECESSED Chairman Unger called a recess at 10:54 a.m. RECONVENED The meeting reconvened at 11:03 a.m. UNGER: We’d like to open up the hearing for public testimony. If everybody would have your seat, please. Our first testifier will be Mayor Harry Kim. Mr. Kim, will you please, please raise your right hand. Do you swear or affirm to tell the truth before the Planning Commission? KIM: I do. UNGER: Please state your name and area of address. KIM: Harry Kim. \[Mayor Kim stated his Hilo address.\] UNGER: Thank you. Please testify. KIM: Thank you very much. I was just talking to a very nice gentleman just before we started and he voiced his opinion about government taxes spending and where we get money. 18 EXHIBIT B This is my home for almost 80 years. Matter of fact, this year will be 80 years. And I’ve seen Hawai‘i change like most of you have. Even if you’ve been here only short time, you’ve seen the tremendous changes. From the very beginning I’ve had only one purpose in everything I do in regards to jobs or life, and it’s to try to make Hawai‘i a nice place to live. And I know even that is a simple statement, it’s got to be the most difficult thing because people have different ideas of what is a nice place. The Governor gave me, asked me to take a job recently, and that is Mauna Kea. Because, I think some of you may know about a huge controversy of Mauna Kea, and it’s tied into what we are talking about here, a place to live. The Mauna Kea issue probably will be the hardest job I’ve ever taken in my life. So I was trying to resolve that problem, situation. Because the situation is this: The people of Hawai‘i, the people of the first nation, is in their preference and by right what to be called, that this is their home, that this is their land, and even this is their government, not the Hawai‘i government but their government. Everything I do relates to that in part, to try to be fair in everything we do. I know there will be a good group of you that will disagree with what I’m going to say, but I want you to believe this, because it is of truth: From the day I took office, matter of fact, a week before I took office, I met with various people of the cabinet, Mr. Yee being one of them, giving them priorities of what we need to address from the simple things that everyone knows about, the status of the transit system, the status of the wastewater, etcetera, those structural things that we must address and try to address as best as we can. On Mr. Yee’s, the finest department, Public Works, it was this, what we are talking about. The tremendous amount, and this is before I got inaugurated, of people asking us to address what is happening to Hawai‘i, and one of them was the short-term rentals. For those of you who are, you know, in the business of short-term rentals, all I ask for is just try to understand an attitude, and I’m not saying right or wrong. I think there were two issues that was the most, as far as being called upon \[inaudible\] that you have to address, and one of them was in regards to the hiring policies of government, contractor of government, and the second was what is happening to this land and, with that, short-term rentals. For those of you who are old-timers of Hawai‘i, I think you know, I was just explaining to someone what Kona was like just a few years ago. And excuse me for belaboring this, but I think it is important enough. Just a few years ago, if you told anybody in Kona that someday you are going to have a Costco or a Home Depot or the kind of condos or traffic problem you have today, they would ask you what you’ve been drinking. And that’s not that long ago. The east side people would come to Hilo because of the peaceful, tranquil type of fishing village atmosphere in Kailua. Where Ali‘i Drive ended before what we called Kona Lagoon before it was torn down. That’s how old I am – 80 years old this year. This has everything to do in regards to what we are going to discuss today. I don’t expect anyone to change their mind. All I’m asking is understanding of why I’m taking this position. I called his department in June, and said you must develop to regulate the short-term rentals, you would do it as fairly as you can, it is a fault of government that we allowed it to progress to where it is at that time, a year ago, a little over a year ago, but we must develop policies to regulate it. Hawai‘i Island is the last sanctuary of people being able to live here. Maui, Kaua‘i and O‘ahu openly admits, openly admits, no longer, and I mean no longer, would average income or below moderate income by any measurement be able to afford ever a home to live in 19 EXHIBIT B this State. Can you imagine what many of those people feel, especially, if you are of Hawaiian blood and this was your home? Complete feeling of loss of hope, I guess, of what’s going to be happening here. Is it tied in to what I’m going to talk, what I’m talking about? Absolutely. Is this tied in to Mauna Kea? I told the Governor and others: It’s not about the scope, it’s not even about Mauna Kea, the symbolic of the anger that is out there. For those of you who have taken part in and shared this beautiful place called Kohanaiki Park, Beach – if you have time and if you have not been down there, go down there. And there is a sign at the entrance at Kohanaiki and it says this park is a result of a true partnership between community and developer. Why do I know this sign? I wrote it. Because they asked me to write something of what it was. For those of you who have been here a while, you know that is a controversy of development for over 14 years, including Supreme Court, that the locals said you cannot build a hotel here, we will not let you. And for 14 years the battle went on. When I became mayor, the owner, Bill McMorrow, the president, CEO, of Kennedy Wilson, made an appointment to talk about that property, said he has two choices, sell it like the other eight before him, as soon as they found out community opposition and what they were in for, or try to develop something that is acceptable. And I told him the only way you are going to find out what’s acceptable is to literally go before the community with a blank piece of paper and say what can we work out together. That man gave more to this community because I took him for a ride down Kawaihae Road, you are going to turn left on Queen Ka‘ahumanu Highway, and I said I want you to look towards the sea until we reach Kailua, that’s approximately 30 miles, and I want you to ask yourself how many places in this 30 miles can you see a place where you feel welcome, that you can go to the ocean and just sit, swim or relax. At the end of the 30 miles – again, his name is Bill McMorrow, if you want to check it out, owner and president, CEO, of Kennedy Wilson that developed Kohanaiki and now is developing Kona Village, international investment – and he counted five because he counted the national park. The rest, big signs with the one written word that says keep out, this is not for you, this is only for the rich. Everyone that live here in the state know that was happening. And we can understand just a little bit of the frustration, if this was your home, whether it be Alaska or any place else, and see where Maui, Kaua‘i and O‘ahu says no more can you ever own a home in this place called Hawai‘i. If you don’t believe that, check it out – average price of home, 800,000 dollars. A piece of property on Maui, legal, just over 3,000 square feet for a home, boundary, border to border to give you that maximized space. All of that is me and what I think about, and the job that I asked Mike to get away from place called Seattle and come to Hawai‘i, work with me. All the people I asked for to work is to try to feel what we have here. I’m going to do every single thing I can to prevent a war in Mauna Kea that it is headed for because of what I just told you. I called the secretary general of the United Nation. He gave me the privilege of a very private lunch. I said I have a dream of making Hawai‘i with Mauna Kea the beacon of hope for the world of mankind, of relationship. Will you help me on that? And he said if it does, he will. I’m asking for your help in regards to understanding what is here. This is not just about short-term, long-term rentals or hotels or whatever. This is about the anger that’s brewing out there because what is happening to their home. Every person that works for me will tell you I ask for one thing: Fairness. And I’ll summarize what they presented. They have been working on this now for well over a year and a half or so, interrupted only by their countless hours that they had to stop some of the time because of the eruption of almost three and a half months, hurricanes in between, because 20 EXHIBIT B they have, those kind of jobs we don’t have fulltime employees, you just grab what you’ve got. I see one of the comments here by Airbnb – I guess we are, I’m not supposed to say Airbnb, what do you say, Air Bed and Breakfast, but you know what I’m talking about. And looking at this problem a year and a half or so, working on this, to come up with something that is fair. I ask you to believe just one thing on other things I just asked: None of it is to get rid of short-term rentals; what we are trying to do is make a balance of place to live. Hawai‘i is a place of zoning. That’s what prevents a lot of things from happening. It is a place of zoning. If we do not, the plea given, asked of me by many residents was this: None of them that I can remember said outlaw all short-term rentals. Sometimes anger is so bad like Kohanaiki, they want you to stop all developments. There is no disagreement with the gentleman who was talking to me in regards to who pays the bill. What is there to disagree about? What they are asking for is control, that this not belong to only one side of the fence of people making money. Where do they live? We do not want to become Maui, Kaua‘i and O‘ahu. They would tell you under any oath, come up with the proposal to present to you, to present to the Council, that is all encompassing in your thinking, and above all fair as best as you can be, realizing the impossible task of making everybody happy, because that’s not the goal. I am very appreciative of Air Bed and Breakfast. I’ve dealt with many different groups of different interests, but I think this Air Bed and Breakfast is one of the few organizations that I see a true attitude of trying to work out a solution with the people. I got a very unusual proposal of theirs that I read, and they were trying to work with our State Legislature to collect the taxes for us from those that were registered under their organization. And I’m sure it stated good reasons, but, I didn’t talk to them about it, but I know I can’t think of a good reason why not embrace that to work with us to address this. The suggestions in regards to people that were inundated, and in that short three days, we lost 500 homes in Lower Puna, one of them is mine, not a big home but a beautiful place by the ocean. Five hundred. So naturally, we have that kind of problems, and some of them were bed and breakfast. The idea was, can you take a look at that and see if they can be grandfathered in in regards to other places to go. Naturally, this is something we’ve got to look at. Because of zoning, there is a lot of places on Ali‘i Drive that are beyond resort areas. I heard Mike talk about we must address this, but not at this time, as soon as we can because that calls for a General Plan revision. Did I say something wrong? YEE: No. KIM: No? Thank you. When you get this job, you get so much to read and sometimes you don’t even remember correctly, but that’s what I remember. That’s not me telling him that. It is him saying this is what we must do to make it fair because in that Ali‘i Drive area there are a lot of bed and breakfast that must be addressed, and it’s not fair to say as of this date you are illegal. And I trust him. Now he has no choice because we are saying it publicly. This must be addressed for fairness. It calls for a revision of the General Plan, so it doesn’t fit here. But it will be revisited, it will be reviewed to help best we can change things to make is fair. We are of zoning. The biggest concern expressed is that of a lifestyle, what’s happening to all quiet neighborhood. Besides that, everyone here, they have the same General Plan, what is a white picket fence with grandpa, grandma, neighbors or whatever. I was lucky enough that I had that. No white fence but I had a neighbor that were grandpa and grandmas to my own children. That’s kind of things you dream about being lucky. I ask us, like Airbnb – not accusing any of 21 EXHIBIT B you, a lot of people don’t like this term but I don’t mean it negatively – we all have to put down our swords, and be like that person we called Bill, of Kohanaiki, and see what can be worked out. Because I don’t care what is at the end, we still live here, and this is still our home, and I’m sure every single one of you want to have a good relationship with each other. I asked and demanded that whatever proposal they came up with, it be fair. You don’t know how many time I’ve asked them: What the hell is a status of this? After another month passed, another month passed, and here it is over a year and a half. Thank you for listening to an old man rumble. \[Applaud from the audience.\] UNGER: Thank you, Mayor Kim. At this time we would like to open it up to general public testimony. I have a list of 30 people, so I’ll go down it. We have six chairs up here, so I’ll call people up six at a time. The list is pretty extensive. I would request your kōkua here that we limit testimony to three or four minutes. This is not necessarily for the Commissioners’ behalf or County staff’s behalf; this is for your neighbor next to you that also gave up their day that they also may testify. So please, if you could hit the highlights of your testimony and summarize in three minutes, we would appreciate that. I’m going to ask everybody that is going to testify to swear in at one time. After we swear in, when you come up, if you could state your name and address, and then speak directly into the mic, that’s how we get our minutes, speak directly into the mic \[inaudible brief dialogue with Ms. Hall\] yeah, and you don’t need to state your address, just your area of residence, Waimea, Kohala, Kona, and then proceed with your testimony. Thank you. For all members of the public that would like to testify, please raise your right hand. Do you swear or affirm to tell the truth before the Planning Commission? TESTIFIERS: Yes. UNGER: Thank you. The first six people: Walter Welton – and excuse me if I mispronounce, some of the signatures here are difficult to read – Stephanie Donoho, Richard Henderson, Tanya Power, Natalie, and Ted Fraser. Oh, okay, we are missing two people, so I will continue: Kale Gumapac and Pamela Sokach. Larry Jose, Margaret Jose – okay, and we have one more seat – Rick Thomas. THOMPSON: Is that Thomas or Thompson? UNGER: Thompson, sorry. Thank you. Let’s go ahead and start on this side of the room. If you can please state your name and area of residence. Thank you. WELTON: Susan Welton, Kailua-Kona. Chair Unger, Commission, Mayor Harry Kim, I, like Mayor Kim, was born on O‘ahu. I’ve lived here my whole life. I moved to the Big Island in 1980. I’ve seen many, many changes. Some good and some not so good, but the fact is changes happen and they are going to continue to happen. And it’s up to us to determine how we want them to happen and how we are going to deal with them. 22 EXHIBIT B And I have this whole list, but I’m just going to throw it along the wayside and think, and after I’ve heard everything today, the biggest problem here is the vacation rentals in the neighborhoods, I believe. I have a vacation rental in a neighborhood. And it’s a very successful vacation rental because I’m there, I monitor it, I make sure that our guests are complying to the rules of our neighborhood, I make sure that they are quiet, I make sure that they just abide by all the rules. I think it’s very important that if you are going to have a vacation rental on this island, that you have to be the responsible vacation rental owner, and make sure these rules are implemented because the neighbors in so many areas are suffering so much that they don’t have a neighborhood any longer. So I don’t know how you are going to do that, and I don’t know how we are going to do that, but I do have a few suggestions on how to do that. The 9 o’clock quiet, I think, is a little early. I live up from town and I hear music until 10 o’clock at night coming from the town and at 10 o’clock the music stops, and I think 10 o’clock is a fair time to say to the vacation renters, take it inside, keep it quiet. In four years I’ve had one complaint and it was rightly so, and I went over there and I said, “What are you doing? Get inside the house or leave.” And that’s how I think it needs to be. Be available 24/7. Somebody has to be available when something like that happens because they are not going to wait till morning. The neighbors didn’t get to sleep, if I hadn’t been there. I think the fines for people who are not compliant to the rules, the new rules that are happening, they need to be greater. Like they said, 100 dollars isn’t going to do anything for anybody when they are making 10,000 dollars a month; they are not going to care. So the fines have to be higher. I think that for the existing vacation rentals, that when we have to, when we need to register, if we’ve abided by all the rules, then I think that we should definitely get a permit. It should not be subjective to the person looking at it. And Airbnb has offered to pay taxes, to collect the taxes. I think that is so wonderful. They need to. There are too many people out there having their vacation rentals and they are not paying the taxes, and that’s wrong. It’s just so, it’s just so wrong. I use HomeAway a lot because they do collect the taxes. Makes it easier for me, it’s nice, it’s clean. And I think Airbnb would be helpful, if they also collected the taxes. So I think that’s something you can work on. And also, you can collect the data on who is running a vacation rental and they are not in the state, you know, who says that it’s their primary residence and it’s not their primary residence. There is data out there. It’s easy to get. So I stand behind you. I hope you all, I know, will do your job, and hopefully, we will come to a conclusion and all will be well. Thank you. UNGER: Thank you. DONOHO: Aloha, Chair Unger, Mayor Kim, Members of the Commission. Thank you for your time. I first want to commend and echo what Planning Director Yee said. My name is Stephanie Donoho. I’m from the Hāmākua District. I am representing the Kohala Coast Resort 23 EXHIBIT B Association today, but previously I was the tourism specialist in the Department of Research and Development first under Mayor Kim’s administration previously and then under Mayor Kenoi’s administration. This process has been a long time in the making. There has been a lot of work that has gone into it. And while sometimes we can get caught in a minutiae of how do we administer something, the fact that we need to have something in place is evident from anyone that you speak to. So I’m here to say we are in full support, the Kohala Coast Resort Association is in full support, of this moving forward. But I also want to share because of my previous role as a tourism specialist, also as the former executive director for the Visitor Aloha Society, or VASH, who helps visitors who have crisis, I’m on the board of directors for the Safety and Security Professionals Association of Hawai‘i, there are a lot of issues related to this bill that we need to address. The first of those is that I completely understand the need to have regulations for all of our vacation rentals, but the fact that we are putting a different process in place for hosted versus un-hosted vacation rentals, I have a challenge with. Even if we just could know who is hosting a vacation rental in their home. I’m not worried about registration fees; what I’m worried about is when Mayor Kim or Hawai‘i Tourism Authority or Talmadge Magno as head of Civil Defense will say things like how many visitors do we have on island right now? There is not a clear way of getting that information, that data. Hawai‘i Tourism Authority has a list of vacation rentals that they took from Airbnb and VRBO and platforms. But a vacation rental can be posted on multiple platforms, and right now we don’t have a clear understanding of who our vacationers are, how many are there at any one time. And so when we have emergencies, as we’ve had with the lava flow, as we’ve had with recent hurricanes, the resorts that I represent get a letter from Civil Defense that say tell us your current occupancy, how many rooms do you have available, how many people are you hosting. We have had a huge segment of our population currently as vacation rentals that they are not getting outreach. There is no one saying to them who are you, what do you need. So that does need to be cleared up. I believe that every vacation rental should at least be registered. Secondly, I think that this helps protect affordable workforce housing. I know that it is the decision of a private property owner whether they choose to rent their house long-term to a resident or they choose to rent it as a vacation rental. I understand a lot of those decisions are based on the economics. But we have big challenges with affordable workforce housing. The resorts I represent employ more than 5,000 people and it’s hard for those people to find places to live. I also think that it’s important in terms, as I said, of the safety and security, the equitability. The resorts that I represent are, they have OSHA inspections, they are told when they are not in compliance with something. Yet, we’ve had testifiers at previous hearings who talk about their tree houses that they are renting on Airbnb that I wonder how did they ever get a building permit, and I doubt that they did. So they need to have some equitability in terms of this. The resorts that I represent along the Kohala Coast collectively pay more than 20 million in GET annually, 20 million in TAT annually and ten million in property taxes annually, and employ more than 5,000 Hawai‘i Island residents. So we just ask you to please consider continuing to move forward with all of the hard work and effort that has gone into this bill, and recognize it won’t be perfect out of the gate, there will be things that need to be addressed as time goes on, but it is long past time for us to get this done. Thank you so much. 24 EXHIBIT B NATALIE: Aloha — UNGER: Aloha. NATALIE: — Chair Unger, Mayor Kim, Commissioners. My name is Natalie and I’m from Kona, and I’m sharing a maybe slightly different perspective than we’ve heard so far. I’m an employee of a local management company along with 30 other employees of my company. I’m also here representing my husband who is a small business owner. And all of our livelihoods and our families rely on the vacation rental industry to continue to enjoy living life in Kona, and so it is important to us that the industry is able to grow as it has, and at least sustain. And so my concern kind of falls in line with what Chair Unger mentioned earlier, which is that there is this sense that this, all this hard work is going toward regulating when it may in fact kind of prevent or inhibit this industry and the growth, or at least sustaining what we’ve got at this point. And so I’m just here to ask that we consider that – it seems that the aim of the bill is to protect the local community, and from where I sit, my husband and my fellow coworkers, it may only be at our detriment, if we prevent future vacation rentals from coming to enter existence – so what I’m asking is to consider, when it comes to the nonconforming piece, that there may be some communities where perhaps the local CC&Rs are already addressing and allowing for short-term vacation rental, nonconforming licenses could be applied for beyond just what are grandfathered. If we only allow the properties that are in those nonconforming areas to be grandfathered in, then the growth in those areas will cease and many of the people I’ve mentioned will be affected, and personally. So that’s what I’m asking for to be considered as you guys move forward. I absolutely believe that regulation is important; I just would like to see it done in a way where it protects the local folks like myself that are employed in this industry. So, thank you for your time. R. THOMPSON: Aloha. My name is Rick Thompson and I live in Kailua-Kona. I specifically want to address the nonconforming permit. And first of all let me just begin by saying that I’m not in favor of trying to take livelihood away from anybody, but I’m here to tell you that my peace and joy in my home has been taken away from me because of managers and owners that are not living up to the standards that are here, and that’s not to paint everybody here with that brush. So I’d just like to say just a few things. Number one is this, is that people that are in running these businesses currently in either agriculture or, zone A or RA, are currently running illegal businesses; they are currently illegal. And if anybody can tell me I’m wrong about that, I’m open to hear it, but as I understand the law, they are currently illegal. So by now offering them the opportunity to have a nonconforming permit, we are going to reward them for having broken the law, and I don’t believe that that’s right. Number two is that every house, if you go to our tax department for property tax, it gives all of the details on every house that’s here in terms of square footage, how many bedrooms it has and all that kind of thing. Well, some people, I can only speak for the one next door to me, is misrepresenting the number of bedrooms, and they are now saying that every mop closet and 25 EXHIBIT B nook and cranny is a bedroom. And so at the very least there should be, should be not allow to be able to rent more bedrooms than what the County says that you have bedrooms, and it shouldn’t be more than two people per room. I think that is only reasonable. The next thing I’d like to point out is that I live in an area that is for single-family residences. And unless I’m wrong, a single-family residence is either people that are related by blood or not more than three unrelated people. The one next door to me often has three, four different families. It is, it is zoned, or represented on the taxes that a three-bedroom house, and there are as many as 14 people that are in this house. That’s not right. So why don’t we say, fine, if you are going to do this, but you have to conform to what is a single-family residence. On top of that there is a health problem with our septic systems. When you apply for your building permits, you are required to build a septic system or cesspool or whatever happens to be based on the number of bedrooms that you have. So now when you got people who have done cesspools or septic systems for two bedrooms, three bedrooms, then they are, in packing 14 people we are overtaxing the system. Very important. It’s been mentioned to be paying property, be paying TAT and Excise tax, but there is hardly any talk about property taxes. And I know that my neighbor is still, even though he’s not lived there for five years, has been renting out this home, still gets his 180,000-dollar exemption and is not paying the proper property tax. How much money is staying on the table for County use because of people that are taking advantage of property tax? Last thing is that, is that the, they talked about the character of our neighborhoods. Well, all I can tell you is, is that it’s going to be all different kinds of things. I live in a subdivision with 17 lots and there is only one child, and that’s only a temporary situation, that lives in that whole subdivision of 17 houses. And we get up to seven, eight screaming children. These things are not right and we need to be protected of our homes. So I just close by saying neighborhoods are for neighbors, not for small hotels; they should go to either hotels or go to the areas that have been designated as areas that are in compliance for short-term rentals. Thank you very much. \[Applaud from the audience.\] HENDERSON: Good morning. Mayor Harry, thank you for your journey through time. It’s a, a lot has changed, I agree. Planning Director Yee, Chair Unger, Council, Commission Members, my name is Richard Henderson and I’m here today to testify and give comment on the Bill 108, Draft 4. I’ve listened to a lot of what’s been explained and I’ve heard additional things that have come forth, like making changes to the General Plan in order for this bill to actually have to work, and I’ve heard a lot of stuff, and it’s all centered on regulation. And I’m here to say that we have enough regulation, and that this bill needs to go back to the drawing board and it needs to get revamped and reworked, probably the General Plan needs to be changed first, and then put this bill together in a proper way so it makes sense to everybody concerned. Thank you very much. \[Applaud from the audience.\] POWER: Good morning. My name is Tanya Power. I’m from Kailua-Kona. And I gave you written testimony, so I’m going to just highlight it so they don’t get off track for my time. I am, I live in Kahakai Estates, which is a residential subdivision, which does allow short-term vacation rentals. We, they’ve always allowed it, we knew it when we bought in there. But I’m here 26 EXHIBIT B actually to advocate to you exempt condominiums from Bill 108. There are so much regulation in this bill and it’s just gone off, kind of gone off on a tangent. There’s numerous condominium projects, more than are on the slide: Kona Isle, Aka Ala, Kona by the Sea, Kona Riviera, Malia Kai, Kona Pacific, Kona Mansions, Maluhia Kai, Kona Westwind, Kona Eastwind, and Ikena Lalo. They are just a few that this bill hasn’t taken into consideration and will have some unintended consequences. Some of these projects have been doing vacation renting since the 1970’s and are outside the Resort and Resort Node. Owners have purchased these condos with the intent to use the condo for several weeks or months out of the year and can rent the units to vacationers when they are not in residence to help defray some of their carrying costs. In truth, most of these condo owners cannot even conceive that we are sitting here today with this bill in front of us that would radically change the way they’ve always managed their homes in Hawai‘i. Except for the few homeowners that are here testifying today, the normal Tom, Dick or Harry that owns their house here, they have no idea we are messing with their livelihoods to maintain their Hawai‘i home and their private property rights. So, additionally to the condos being exempt, the AOAOs, the HOAs, homeowners associations, they self-govern themselves for noise and generally have property managers – and they have to have one by law, if they are off island – that pay their GE and TAT for these units. So the condominiums and these subdivisions that already allow STRs. So being self-governed and they already pay taxes, I think that these condominiums, condominiums across the board, should be exempt, and residential subdivisions that already have CC&Rs on the books that control them should be exempt from this bill. If affordable housing is the goal for this administration, Bill 108 is not the answer. Reinstating zoning and permits allowing for ‘ohana building will keep families together, provide more housing, makes it more affordable because you already have the land, and it makes living in Hawai‘i a reality. But it is very difficult to get extra dwellings built on a piece of land owned by your family – I know firsthand. Thank you. \[Applaud from the audience.\] UNGER: Thank you. Charla Thompson, Mary Stupi, Corinne De Soto, Jeff King, Egen Moe, Sharon Diedrichs, Susan Dmytrenko – sorry if I pronounced that wrong. Thank you. We can start on the right. Please state your name and area of residence. STUPI: My name is Mary Stupi. I live in Kailua-Kona. And I have pretty much just one big issue. I understand that people want short-term rentals. That’s fine. AUDIENCE: Can’t here you \[inaudible\]. STUPI: Sorry. I understand that short-term rentals aren’t going to go away. I come from a neighborhood where we had seven residences at one point, and now we are down to seven rentals. And the dwindling of the community into short-term rentals versus people that actually own their homes and live there is nothing; it leaves two people that live there as fulltime residents to babysit the rest of the residences. But I’m over that. What I can’t get over is the fact that some of these people don’t pay taxes. They are not paying their, they are not paying their property taxes correctly; they claim they are residents, they are not residents. And nothing is being done in regards to the enforcement. So I understand you want to have rules and 27 EXHIBIT B everything, but if we don’t have a way to enforce it, then why don’t we just throw the rules away. Right now, the State of Hawai‘i loses a ton of money, a ton of money, it’s not small amounts of money, a ton of money to people that just don’t pay their taxes. And that’s what concerns me. We are going to have this nice legislation and everything, and all those people that are compliant and do pay their taxes are going to sit there and put in their permits, they are going to get the okay, and they are going to go out and they are going to have, you know, a compliant place; that the people that aren’t are, continue to not pay taxes and continue to not register these. And when complaints are made, which I have known people have come in and said these people are non-residents, they come back, they are still resident on their property taxes. So I don’t know what’s going on, but I hope that at the end of the day we at least benefit from having short-term rentals as community, that we start collecting the taxes. The other issue is Queensland, New Zealand; you probably have never been there, but let me tell you about their rental situation. Businesses buy houses to house their employees, because everybody is on Airbnb and every available space is now a short-term rental. That address your limit on short-term rentals right there. If you want to look it up, go right ahead. They have, that’s their issue there. So if we are looking at freeing up space for kids to buy a house here, own a house here, we are not addressing that with the short-term rental. In regards to someone building an ‘ohana on their, on their thing to give a short, or a longer term rental, look at the money. If you are making more money on a short-term rental with less stress, you are going to go with the short-term rental; you are not going to go for a long-term rental. Maybe looking into the benefits of easiness of people will be making more money on a long-term rental versus a short-term rental. Because if you look at the money, that’s where the people are going to go. C. THOMPSON: My name is Charla Thompson. I live in Kona and I’ve lived here 33 years, and I remember Kona the way it used to be, too. So as a way to disclosure, how many people on this Commission are either property managers or realtors? Can I ask that? UNGER: I’d rather not have a question-and-answer period — C. THOMPSON: Okay — UNGER: — if you just stick to your testimony. C. THOMPSON: — it’s not a question-and-answer period. I’m just wondering who I’m talking to because it would be, it would be helpful for me to know whom I’m addressing. UNGER: Yeah, that’s fine — C. THOMPSON: Okay, not allowed, okay, that’s fine. I looked up zoning en.wikipedia, and it defines zoning this way: “The primary purpose of zoning is to segregate uses that are thought to be incompatible. In practice, zoning also is used to prevent new development from interfering with existing uses and to preserve the character of a community.” Our city planners created zones to allow for businesses thrive together and to protect residential neighborhoods from the hazards and interruptions they would bring to family neighborhoods. Resort districts were created to accommodate the lifestyle of vacationers, realizing the mistake it would be to mix 28 EXHIBIT B these areas with residential zones. Residential zones were meant for families to grow safely and thrive. So, where has the ethic of our island gravitated to? Putting profit before the welfare of our families. So if these commercial businesses and mini resorts are allowed to invade our single-family residential neighborhoods, they must realize: 1) It’s a privilege to be there; and then, 2) their neighbors are paying the highest price – the loss of their place of restoration. These small hotels should have a near zero impact on their neighbors. Those of us who live and work in our homes need to be protected from hours of loud pool noise, stereos turned up throughout the day, or from feeling the stresses of not being able to escape their disturbances 24/7. We need to be protected from sleep deprivation. The impacts of the short-term vacation rentals are extreme. These tourists are having a great time, without regard to the neighbors who are living whose lives they are disrupting, some who have actually told me that they are paying top dollar for that privilege. They don’t even want to be in the resort area; they would rather be in my quiet neighborhood. In many areas, active steps are being taken to control abuses of short-term rentals. Maui has much stronger languages and fines than our Bill 108. San Diego has done a great job. Take a look at what they are doing, you guys. They spelled it out step by step. So for example, they have substantial fines to encourage the change of poor behavior affecting the neighbors. Noise violations are dealt with firmly and remedies are available to the City via the police to address and enforce violations, including the issuance of individual administrative citations in the amount of up to 1,000 dollars to each short-term rental guest and host. So I suggest we extend the citations of fines to include our short-term rental more restrictive noise and parking codes implemented in this bill. So I submit these limitations and suggestions: One hour per day of abusive noise that spikes 50 decibels at property line during non-quiet hours; the occupants should refrain from issues that, breaking the law and CC&Rs, if they are more stringent, that were meant to provide the character of that neighborhood, just as an actual resident in that neighborhood is required to do; those things should be posted; and the other things like single-family, they should remain single-family, that’s already been addressed. Thank you very much. I’ve given you guys links to find, to see what San Diego has been doing. It’s amazing, and they’ve laid it all out as to how to regulate and how to actually pull this off financially. \[Applaud from the audience.\] DE SOTO: Hi, thanks for the opportunity. My name is Corinne De Soto and I live in Kealakekua in South Kona. And maybe I’m outing myself here but I live on a coffee farm, Ag land. My husband and I have a, we run a farm, you know, we sell coffee, we net about 2,000 dollars a year in the sale of our coffee. We also have a permitted guest house, not a farm dwelling, an accessory dwelling unit. We’ve been paying TAT and GET taxes on that for last year that we’ve been operating under Airbnb. As far as I can tell, that doesn’t feel illegal – maybe I’m wrong. But my concern is that, you know – I’m a very responsible host, I’m a super host on Airbnb, that platform is incredible, and in terms of being able to set very clear guideline, I live, you know, 50 feet from the vacation rental, I never hear my guests at all other than the movement of chairs and 29 EXHIBIT B some low talking, because I’ve established what they are allowed to do there and not allowed to do there. And the income that we make from that vacation rental allows us to pay our mortgage and stay on that land, you know, because we don’t have multi-generation old family living on one piece of property any more to maintain Ag land as ag land. So I have some concerns about the unclear language in the bill in terms of Ag land and, you know, people who are able to, or the lack of ability to get a special use permit for a future vacation rental. And furthermore, just allowing people more options in agricultural zone so they continue to operate as agricultural zone, because every single one of my neighbors – I live in a tract of two to six-acre properties – they are not farming, they maybe have people that come and pick, and they just sell it to Greenwell, but that’s all they are doing. You know, we are actively trying to increase food diversity here, sell fruit to our local cooperative, Food Basket, and, you know, we made 20 dollars on Jaboticaba last week, which took two hours to harvest, and that doesn’t count for all of the pruning and all the other work that went for the rest of the year. So I actually really urge you to consider the use of vacation rentals, appropriate and responsible hosting of vacation rentals in ag land so that we can continue to support agriculture and young small family such as myself who have to pay for preschool and our working members of this community to continue to do what we do. So please consider addressing that in the bill. Thank you. \[Applaud from the audience.\] KING: Good morning. My name is Jeff King and I live in Kona Isle, one of the condos that falls into the area that’s between the two Resort Nodes in Kailua-Kona. I’m glad this issue is now being considered now, because I wanted to just emphasize that this complex that I live in, it was built, intended to be a, you know, short-term rental. They are only 524 square feet, they are all identical, single parking space; we are not taking away from long-term housing options. This has traditionally been used in this way. We pay our taxes, and ethically everyone should be as well. They should be registered. And just please consider, you know, some sort of plan adjustment or whatever that would help us in the event that 108 goes in because we just don’t want to end up in a situation where people are going to lose their ability to rent those properties that they’ve invested in. So, thank you. \[Applaud from the audience.\] UNGER: Thank you. MOE: Good morning, Chair Unger, Commission, Mayor. My name is Egen Moe and I currently reside on the Island of O‘ahu. I did live here in West Hawai‘i for about 15 years. My daughter was born here, Kealakekua, a lot of family, so I too have seen the change. Currently, I do work for a builder. We have two projects on the island – pardon me – one in the Mauna Lani Resort and also one in Keauhou. One of the things that Mayor Kim talked about earlier was fairness in this approach and, you know, it would seem that a lot of the concerns are more zeroed in on residential communities and the impact that the unregulated vacation rental is having on those areas, and it’s, it’s clear to see why, it’s easy to see where, you know, the pain is coming from. It’s just, you know, looking at this bill, hearing comments, hearing even some of the questions from the Commission, it would seem that there is a lot of work that will need to be done. For instance, you know, why would you pass a bill, if you still need to update your zoning maps; you would think that you would do that first before putting a bill in place. You know, just, and I can give more and more and more 30 EXHIBIT B examples, but, you know, I think this is something that has gone on for decades, you have an opportunity to take the time to work out a lot of the questions and maybe inconsistencies and details before putting it into play. You are going to, you know, probably invest a lot of additional resource beyond what you’ve already done, and could potentially make it worse, if you come up with a plan that you can’t communicate or execute or police, and that’s just going to take both sides and aggregate it further in my opinion. So, again, I understand it’s a hot-bun topic, and appreciate the opportunity to throw in my two cents. Thank you. \[Applaud from the audience.\] DIEDRICHS: Hi, my name is Sharon Diedrichs and I live in Kailua-Kona at Kona by the Sea. Thank you very much for this opportunity to speak to the Planning Department, to Michael Yee and to Mayor Kim, and the Planning Commission and the Council. And I just want to tell you how much I appreciate all the work that has gone into this subject. We all have been frustrated by it for a long time and we’d love to see some new laws come out of this that are very workable. I really understand this to be about the residential single-family home communities. I used to live in Komohana Kai and there were always vacation rentals going on there, although the CC&Rs always indicated that they were not supposed to do that. And so I now live at Kona by the Sea and I’ve been there for five years, and I just don’t see quite why this is being, isn’t being exempted as far as the zoning is concerned. This is, Kona by the Sea is a condo-hotel of 85 privately owned condo units, which currently consist of 65 units in the Aston rental pool and 20 units either lived in fulltime by owners or not rented out. Those 20 are the ones that are going to be very surprised by this because they can’t even get into this program, if this passes as is. It is zoned RM-1.5, and so if this bill passes, they won’t be allowed into the short-term rental vacations \[sic\]. This doesn’t really make sense. It’s absolutely a hotel, a running hotel, with a front desk for guest check-ins and request, 24-hour security, secure elevators, ample parking, daily cleaning service, sometimes noisy kids in the pool – and we don’t seem to mind that too much, we all know that we were going into this – there is a manager and a guest services manager also, and it has been this way since its inception in 1980. So I have already given everybody, I believe, here the HPR report from April 30, 1982, that was submitted by Hasegawa Komuten, and he was going into partnership with André Tatibouet, a hotelier from O‘ahu and who coined the term condo-hotel as his designation, which is commonly used today. He immediately changed the name to Aston, so basically this has been the name of this property, the business that runs the property since 1982. We even get our electric bills in the other name for the property sometimes from the one that Tatibouet owns. So this is, there is a special notation in these documents accepted by the Real Estate Commission in 1982 that shows the developer registered with the Securities and Exchange Commission, an arrangement to enable purchasers to elect to join Kona By The Sea Partners, which operates a rental program for residential apartments committed to the rental program. This option to join the short-term vacation rental program pool has always been available to us since we purchased our units. For those who live there, when we decide we need to spend more time on the mainland or move there to care for family and seek medical attention. We want to be able to rent out our property, but this bill will take the right away from us just because our zoning doesn’t fit this bill. Kona by the Sea has been operated as a condo-hotel for 36 years. 31 EXHIBIT B And I notice that, it’s my humble recommendation to the Commission and Council Members that they could possibly consider a special designation for this bill for properties like Kona by the Sea, condo complexes and condo-hotels along Ali‘i Drive and especially on the makai side, so that their property will align with their intent to serve the tourist community, as well as those who own and live there. The other recommendation would be, as in No. 3 recommendation, Page 10, you could add condo-hotel to the inns, lodges and hotels. Thank you very much for your time. \[Applaud from the audience.\] UNGER: Chad Watanabe, Randall Shirley, Ed Rapoza, Marni Shirley, Ranae Bamsey, Janice Palma-Glennie. Greg Gerard. That’s fine, you can sit here and that mic will reach over there. You may start with your name and area of residence. GERARD: My name is – Is this on? UNGER: Yes. GERARD: My name is Greg Gerard. I live in Captain Cook, have been there for 30 years, operated a vacation rental for last about 22 years. Ove the course of that time I’ve earned probably, probably a million dollars in that process, which is very helpful to me. I pay probably, if you look at 14 percent for TAT and GET, I paid every nickel and have records for that, that’s around at 140,000 dollars, so you can pay your other expenses that you have, plus the Hawai‘i state tax and the federal tax. You know, I joined the Marine Corps when I was a young man to fight communism, so my primary interest in being here is freedom. But freedom with responsibility. And my concern is that you are messing with something with this totally convoluted representation of the bill that will do harm to the County of Hawai‘i. It’ll do harm to the people of Hawai‘i. You know, we’ve got elder people who are helping with housekeeping, with repairs, things like that. You have no idea the kind of economic consequence you are bringing, if you impose this harsh, un-thought-out bill with huge consequences. So basically, I’m interested in freedom, I’m interested in responsibility. What laws are you not enforcing now that you are willing to throw in this, in this mess you are calling this bill? What are you not doing now to solve the problems? Further, I mean the gentleman that spoke before talked about zoning. You are premature to throw this whole thing out. Start with zoning. You cry crocodile tears about young families that can’t afford house. I’m a Realtor and I’ve been in the finance industry of banking and so forth for 20 years before that. That’s my primary understanding. And commercial lending as well. I understand how businesses work. But your zoning exclude young people almost with an effort to do so. And take, instead of worrying about, so much, about the scope, why don’t you coordinate with OHA, Hawaiian Home Lands, State of Hawai‘i? We’ve got, look at all these land we’ve got. I mean, it’s irresponsible that we have not solved this young people housing issue, this affordable housing issue, with proper zoning and cooperation with the other elements that surround us. It’s just irresponsible, and I just, it’s not all on you guys, and you are a piece of the puzzle, the machinery works in a certain way, it’s lead by a selected group of leads. But we’ve got to get down to the fact that we can provide housing for 32 EXHIBIT B young people who grow up here, want to stay here. And be fair. But, you know what fair is? Fair is abiding by the rule of law. What’s the rule of law? The constitution and the bill of rights. When you start treading on that, I don’t care how you feel about it, you know, whether you feel like your neighborhood is your neighborhood, which to a certain degree you do, but your personal property rights, as an owner in the neighborhood, as long as you operate respectfully and responsibly, are your personal property rights. So I just implore you to really do a good job with this new zoning situation, and solve the problems we really have for local people. Let free enterprise work its course. You need the money. You start stifling tourism, it’s going to be a big consequence, and you’re going to hurt your people. Thank you. \[Applaud from the audience.\] R. SHIRLEY: Aloha, Planning Council \[sic\], Mayor Kim, staff. My name is Randall Shirley and I live with my husband in Kailua-Kona. It is our fulltime home. I’m a registered voter and I believe in community involvement. I currently serve on the board of directors at the Aloha Theatre. My husband and I share a part of our personal residence with visitors. They are not always vacationers; we sometimes have travel, people who are traveling on business from other islands, sometimes from the mainland. So I have a real problem with the term “vacation rental” because that’s not what I do. Currently, we have a couple staying with us from London. We welcome people into our home in the true spirit of aloha. And home sharing – which actually is what Airbnb started out to be before it became this whole house thing – home sharing sometimes called hosted rentals allows us to afford our home and to contribute to the economy here in West Hawai‘i. I previously talked about this at the County Council and I now encourage you to continue leaving home-sharers out of this equation and free of regulation, as I don’t believe it’s needed. All of our neighbors know what we do; they know that we host visitors and several of our neighbors have approached us directly about hosting their visitors, which speaks quite highly of the concept of having a place in their neighborhood where they can put their overflow ‘ohana when they come to the island. The fact that hosted rentals have onsite hosts immediately and markedly differentiates us from un-hosted rentals. We’ve never had a noise complaint. We’ve never had a parking complaint. On a side when we bought our home, the people we bought it from had eight vehicles. They had two parking spots. Their cars were parked out into the cul-de-sac and down the street. We have parking for ourselves and our visitors, and the neighbors are greatly appreciative of that. Our visitors respect our home and our neighborhood. And many say that we are, and our local knowledge and character, were among the best parts of their trip to Hawai‘i, including visits to other islands. On the flipside I’m also a neighbor, and within easy walking distance of our house are four un-hosted whole house rentals. We share our backyard boundary with one of them. It advertises on VRBO as sleeping 24. Yeah, you can imagine. It generates the kind of noise and neighborhood disturbance that so many other residents here today and at the previous Council meetings complained about. But over the past few months – this has been quite fascinating, and I don’t know whether it’s been because of these potential regulations being in the news or if it’s been Madam Pele’s swipe at tourism on our island – we’ve noticed some decline in the amount of noise generated by this home. Nonetheless, I believe that short-term rentals that require regulation are homes like these, homes that are destroying neighborhoods. We are neighbors in our neighborhood. Yes, we have visitors who come and stay with us, but we know all of the other owners and renters, fulltime renters who are in our neighborhood, and I think that’s a good thing. 33 EXHIBIT B The question of Agricultural zoning is obviously far outside of my expertise. But I do believe overall there are reasonable and limited number of whole-house rentals is a net benefit to our island, provided they are willing to abide by neighborly rules. I also believe that the only thing that needs to be adjusted in Bill 108 is a mechanism that would create some kind of quota, some kind of way of managing, so that there is a fair and balanced situation. Ultimately, I urge the Planning Commission to be thoughtful on this issue and what you send forth to the County commissioners with regards to hosted rentals and any other regulations because ultimately if it starts to apply to hosted rentals, it’s the aunties, it’s the cousins, it’s the brothers, a lot of us have people that stay in our homes for short periods and long periods of time. I hope that you’ll move forward thoughtfully and I thank you very much. \[Applaud from the audience.\] RAPOZA: Aloha, my name is Ed Rapoza. Chairman Unger, Commissioners, Mayor Kim. My name is Ed Rapoza. I’ve, Kailua-Kona, I’ve, because Mayor Kim mentioned how long he’s lived on the island, I’d like to mention that I’ve been a resident of Kona for 58 years, and my family has been in the Kona area since the late 1800s. And, yes, we have seen a lot of changes. Many of them positive, which is why I’m able to raise my family here today. I’m in the real estate industry, and have been, in Kona, since 1987. My issues with Bill 108 are, some are, some of the items in 108 are inconsistent with the Zoning Code. For example, Bill 108 only allows for Commercial General, and now I believe CV has been added to it but if you get a Use Permit. I would encourage the Planning Director to look up the Zoning Code. In CN, you already have a division that allows for boarding facilities, rooming or lodging houses. Sounds like a vacation rental to me. So, and on CV, CV zoning has the same category, so my advocation is you should allow vacation rentals in all Commercial zones, not just CG, without further \[inaudible\] Use Permit to come to this body for approval when you already are allowing it in the Zoning Code. Furthermore, the Resort Nodes, if you are wanting to encourage these vacation rentals to be in Resort Nodes, then you need to allow them to be in the Resort Nodes without further permits. For example, Mayor Kim was mentioning 30 miles of resorts along the coastline, of which we know Hualālai Resort, Mauna Lani, Mauna Kea and the likes; much of those properties are zoned Residential, and so you are going to flood this body for Use Permits for Residential zoning in what we all know to be employment sectors of this island, tax-base sectors of this island, that are freely doing vacation rentals now. There is no affordable housing in any of those places, and they self-regulate themselves. And I’m not sure what the comment was about the oceanfront, but all of those, all of those resorts, every one of them, have public access. Every single one. I’m not aware of any gated community there, including Kūki‘o, that doesn’t have public access. So Kohanaiki is a beautiful park, I agree, but also it has public access because ocean access is required anyway. Lastly, I have a solution for the condominiums. So the Resort Nodes I would suggest that all of the residential properties should also be allowed to do vacation rentals in the Resort Node without further permits. I have a solution for all the Ali‘i Drive issues that you are now running up against. Mayor Kim appointed me as one of the 15 members for the Kona Community Development Plan. Bill 108, I can’t speak for the rest of the entire community of the Big Island, but I can speak for Kona, I was one of the Steering Committee Members representing landowners. Kona Community Development Plan outlines – and it was unprecedented amount of input that went into this 34 EXHIBIT B document, County recently got sued over this document for not following it – there is an urban expansion line in this document that says where the urban growth should be. I believe that you should increase Resort Node to that area. I’ll close by saying affordable housing is an acute issue. Every mayor, every council member, every politician always says they want to address affordable housing. This is not the way to do it. Addressing affordable housing was addressed in the Kona Community Development Plan in Kona, not necessarily for the whole island. Chapter 11 in the Zoning Code has no incentives for building affordable housing; it only tells you what regulations you should follow. I would encourage the Planning Department to look at Chapter 11, and no one has ever proposed, the Council has not proposed any changes to Chapter 11 to include incentives to build and zone and fast track affordable housing. If we want affordable housing, we have to get the supply of housing up; that’s a supply and demand issue. And the reason we don’t have affordable housing is because of zoning. No one zoning \[inaudible due to applaud from the audience.\] M. SHIRLEY: Hello, my name is Marni Shirley. I live in Kona. I did submit written testimony. It was delivered yesterday. So I’ll just paraphrase some of it. Again, this bill is intended to deal with the homes in neighborhoods and Agricultural districts, but, you know, personally, I can see a lot of issues for me. I own a vacation rental, and I think that a lot of the requirements for compliance are going to be excessively burdensome to condo owners. We are not going to be able to comply. If we can’t comply and offer our condos as an alternate source of housing to hotels, then you are going to see a falloff in tourism because there’s not going to be places for people to stay, and obviously tourism is a large part of the community here, and the income here. Some of the areas where I see difficulty in complying with parts of the bill as written have to do with maintaining the certification for, one of the items says that the registration form will require certification that the requisite amount of parking pursuant to Section 25-4-51 is available. I see that the problem is that not all condominium complexes meet this requirement for parking spaces. I do recall somebody mentioning that that pertains to residential rather than condominiums, but there is still, as a comment, that it was 1.25 parking spaces per every unit in a condo, and I know that many condominiums do not have 1.25 spaces. Another part of the registration form says that we need to submit a site plan showing the location of the rooms for rent and the requisite parking. Again, a lot of condominiums do not have dedicated spaces. I can’t tell you exactly which space my guest is going to park in. Then the requirement for registration that says verification that notification letters have been sent to all owners and lessees of record of all lots, of which any portion is within 300 feet of any point along the perimeter of boundary of the short-term vacation rental property. Well, the problem I have with that is it’s excessively burdensome for condominium unit owners. First of all, the majority of people are not even going to know how to find all of the required addresses, and they may have to hire consultants to do so. In the case of my unit at Kona Reef, I would have to send letters to 130 owners at Kona Reef, 200 owners at Ali‘i Cove, 40 owners at Hale Kona Kai, and then a handful of other property owners, which would be a total of about 375 letters. I did the 35 EXHIBIT B math, and if about 150 other condominium owners of those 375, and I would bet that there are at least 150 of them in short-term rental, if they also had to notify the similar number of people, the math comes out to 56,000 pieces of certified mail just for that area. So obviously, that’s something that needs to be addressed. Regarding the registration deadline, we have many condo owners that live off island and some live out of the country, and, as others have mentioned, they don’t know what’s going on with this bill. They won’t know when it gets passed. And they have been actively renting their properties and they’ve been conforming and paying their taxes for years if not decades. How will the County notify all these people that there is a new law that they have to comply with? It seems like they may well be in violation. And while some people are talking about increasing penalty fees, the fee of 100 dollars a day for somebody who may not get wind of this bill for years, would be extreme. So there needs to be some type of an exemption for people who have been doing everything legally, paying their taxes. But they may need to have their penalties waived for late registration of conforming use. So that I think needs to be a consideration. I would just in closing like to say that one of the purposes of the bill is to limit the conversion of the island’s much needed residential housing, and most of these condominiums they are already in short-term. This is not residential housing. They are conforming. And, thank you for your time. \[Applaud from the audience.\] BAMSEY: Aloha, my name is Mrs. Bamsey. I live in the Waikoloa Village. I own a 1,400-square foot home, pretty common in that area, and it is a residentially zoned area. The house next to me is listing five accommodations in a single-family zoned home next to me. That means that each night there are five car loads of tourists going into that house. I cannot even tell you how many people are going into that house. And that’s one of my concerns of how these are going to be enforced, because I have talked to Planning and Zoning about this, I have shown them the listings online, and I have also shown them pictures of the hundreds of rental vehicles in the house, and that’s been going on for a year and a half since the people bought the home and nothing has been done. They are listed on 40 websites, including Booking.com, Hotels.com, etcetera, etcetera. And the house is on a cesspool and you can imagine how many people are contributing to that system there. They check in between 5:00 p.m. and 1:00 a.m. in the morning and they check out between 5:00 a.m. and 9:00 a.m. in the morning. The safety and security issues have been countless. I cannot even begin to tell you how much problems we have had. People have actually entered my home, thinking they are in the hotel next door. They’ve also been peering through my windows when I have driven home, and I see – I won’t tell you everything I’ve seen – but the other day also someone was peering in my bedroom window, touching my bedroom window, and when I got up to open it and said what is going on, they said, oh, I’m just trying to find such and such hotel. It’s the neighboring house. This is a problem in our neighborhood. I have a letter here from the owner of the property who was on the other side of it. They owned their home for I believe 15 years in Waikoloa Village, and they wrote this: “The property has been one nightmare after another to us. We are leaving and have sold our home.” They’ve actually forced people out of their house and they are trying to do the same thing to my family as well. 36 EXHIBIT B Bill 108 as currently written is not in balance. It is being promoted as regulation on short-term rentals by our lawmakers, but anyone who reads Bill 108 can see it places tourists and investors over local families and working residents. There are countless problems, but I’ll focus on two in general. The first is basic economics and the second is the structure and capacity in zoning of our residential homes. According to the current writing, someone is permitted to run transient accommodations for a one-time, not a yearly fee, but a one-time fee that can be recouped in one day of business, and you’ll never have to pay the fee again. This creates an outrageously profitable and desirable business model for investors, including a continual unbalance of foreign ownership. It does not fund account necessary that’s going to be placed on the Planning and Zoning as they have already stated today. It also encourages slam loads in our residential areas, if you have, as listed in this bill, you can have five accommodations listed in ten people. What that does is it allows either ten people in a party house, which is more people who are suitable to go to restaurants or resorts or conference centers, not residential homes, or mini-hotels. With one to two-night stays of five sets of unrelated couples, five car-loads of guests cause traffic and sanitation and parking issues. Or what’s going on next to me, a hostel which allows in your writing of this bill ten individuals to be in a short-term rental where privacy, security and many worse problems are being allowed. I would love to see more plain writing – sorry, I’ll just be quick here – so I’d like to see more plain writing in the bill, like, no more than two spaces can be listed and you can’t smoke next to someone else’s home and things like that. Also, for all of you who are running a respectable Airbnb, think of what this is going to do for basic supply and demand; if you are renting one room out of your home and someone else can rent five, what’s that going to do to what you can do in your small rental that you are trying to use to fill your mortgage. \[Applaud from the audience.\] PALMA-GLENNIE: Aloha, Commissioners. Mahalo to everyone who has worked so – oh, Janice Palma-Glennie, I’m a resident of Kailua-Kona. Mahalo to everyone who has worked so hard to make this a good bill and also for the Mayor’s heartfelt testimony. I couldn’t agree less with Mayor Kim about Kohanaiki, but I agree wholeheartedly regarding Hawai‘i’s dire and increasing housing inequality and how vacation rentals are adding to the tragic divide. Something needs to be done today, and it’s this body’s kuleana to do it. I’d like to say that I was also an original Steering Committee member of the Kona CDP, as well as sitting on the current Action Committee, though I don’t speak for that group today. Kona’s urban area is huge compared to other areas around the state, county, country and world, and it seems completely incongruous to smart growth planning, if that humongous planned area should every be changed to Resort zoning. Bill 108 has been well-vetted at council level and takes varying views and State law into consideration. Though it could be stronger and needs tweaking, as especially the gal next to me was just talking about, it’s imperative to get a rule on the books immediately as this situation continues to spiral out of control. Going back to the drawing board or simplify or anything else is to kill it, which we fear is the goal of some people. Mayor Kim’s comments regarding the housing hopelessness on other islands as a result of non-management of the situation should give everyone here a pause, especially Commissioners. 37 EXHIBIT B Kona’s rental real estate industry leadership sounds like car manufacturers in days gone by. They claimed the sky would fall, if seatbelts were required despite the good they would do. Our elected and appointed representatives have been hammered by those whose true concern isn’t the sky, but to make money on the backs of residents who want nothing to do with the vacation rental scene and who want to be protected from it. Bill 108 will help protect the broader resident population while respecting existing, conforming bed and breakfasts and other hosted vacation rentals. Residents the majority of whom do not take part in the vacation rental business nor would they want to, need ironclad assurances that their properties and quality of life are being protected. They also need to know that there will be enough affordable, long-term housing for residents and their keiki. As proposed, it seems fair to confine vacation rentals to resort-owned areas and fair that a person can rent rooms in their home to help make ends meet as long as they’re living on that property, i.e. a homeowner-hosted rental. This is a critical caveat that helps protect surrounding homeowners and properties. Having a property manager on site is not enough and a good neighbor policy is only as good as the County’s enforcement of it. As far as hours, 9:00 p.m. is a good shutdown time for noise in residential neighborhoods, and 9:00 a.m. better than 8:00 for mornings; it is residential areas after all. And 50-foot restriction on traveling noise also seems doable. As with many other residents, we have negative experiences with tourists landing in our neighborhood, which we consider a refuge from the transient holiday-makers that swarm over our island. Strangers are coming and going, partying day and night, drivers lost in rental cars, intrusions on our property; those are activities that are more acceptable in resort areas that cater to those unfamiliar with and often not caring about local surroundings and their neighbors. It’s not okay in residential areas that are unprepared for those intrusions, or Ag lands, Rural lands. We’ve also had the challenge of helping friends or relatives find long-term housing when speculators are converting long-term rentals willy-nilly to short-term ones. It’s scary to see how quickly the situation has tilted and how it’s driving the price of homes and rentals far beyond what many residents could ever dream of affording, as Mayor Kim mentioned. This legislation will help. My huge concern is that if this bill is held up, it will make it more difficult to hold speculators and others not following the law accountable while allowing more vacation rentals to be created. We also hope that this bill will be backed up with sufficient enforcement funding, with good ideas proposed by Windward planners, and that enforcement should not rest on the backs of residents required to snitch on their neighbors. The health and livability of residential neighborhoods is in your hands. Mahalo for passing the strongest Bill 108 that you possibly can for working – this is my last sentence – to help preserve the irreplaceable, indescribable and unquantifiable qualities of our island neighborhoods, qualities that both residents and visitors depend upon for healthy, happy, balanced lives and life experiences. Mahalo. \[Applaud from the audience.\] UNGER: I think we have our last tier of testifiers, and then after that we’ll take a short break for lunch and reconvene after that. 38 EXHIBIT B GERARD: Mr. Chairman, I’ll make a comment about the facilities. UNGER: Sure. GERARD: Two-thirds of the room is set up for a handful of people, which is kind of consistent with the way that our government works often. Look at the Licensing and Registration business. You’ve got a massive amount of people back here in a small facility, cramped in, standing up. I wouldn’t do that to anybody. I mean I just don’t think it’s hospitable. UNGER: Thank you. Suzanne Kilner, Dan Bowles, James Matzuka, Larry Jose, Margaret Jose. Are there any other members of the public that wish to testify that have – if you would come and sign up first, please. HALL: He says he signed up. What is your name? KLASSEN: Ted Klassen. UNGER: Are you there \[on the list\]? Thank you. Great, thank you. You can start on the right, please. KILNER: Aloha, my name is Suzanne Kilner, and my husband and I own a vacation rental in the resort area of Mauna Lani where we live, and we are also the owners of a licensed Hawai‘i real estate brokerage that specializes in vacation rentals. The vast majority of our vacation rental homes are in the Resort Node within Mauna Lani and the Mauna Kea area, so I was very happy to hear today about the changes that the Planning Department is already planning for things like including above the highway of Mauna Kea Resort area as well for some of the cleanup of the, the housekeeping things you are looking at doing for the Mauna Lani Resort. For all of our homeowners we do submit Hawai‘i State taxes on their behalf, so tonight will be a big night of submitting my monthly taxes. And it’s, for many of I think the real estate companies that are here that do look after vacation rentals, I’d hope that we’ll do our fair share in terms of submitting taxes and making sure our owners do that. It’s a shame, if people aren’t paying their fair share with respect to property taxes, which is something that we don’t have as much visibility into our owners, as it typically goes directly to them. With respect to some of the other things that people have mentioned, I think leveraging for efficiency the HOAs to submit, which they are already required to gather information with respect to the ownership and whether they are on island and who their on-island contact is, revising some of the requirements so that if the homes are in a HOA-managed area, that owners, other owners within those communities who have questions with respect to the number of vacation rentals, etcetera, should be able to just get that from the HOAs, and it would probably save a lot of trees and a lot of documents being sent around. I think other people have suggested. I think that there does need to be some clarity for some areas that are in agriculture like Kohala by the Sea, like Kohala Ranch, and some of those other areas where there are existing vacation rentals where there’s not farming. And I know that that may be difficult from a zoning 39 EXHIBIT B perspective because some are active farm lands and some are not. So, it’s confusing when you read through that to find, to understand whether you are onside or offside for those particular aspects. Other than that, there has been a tremendous amount of work, that’s clear and obvious, that’s gone into this by a number of different people. And so we thank you for the efforts. And I know there is going to be a lot more work before all gets finalized as well. So thank you for the time and the opportunity to speak. BOWLES: I actually didn’t come prepared to speak today. My name is Dan Bowles. I live in the Kohala Estates, Kohala Ranch area. And some of this touches me in a lot of different ways. I actually, I’m the guy that runs the Kohala Ranch Water Company as well. First, I have three acres in Kohala Estates, which I’ve condominiumized with the intention of, my son has passed away, but to give each child a piece of land when I leave. In order to maintain and hold on to the land I had already designed and built, or designed and permitted a home, to go on on my back CPR until we realized the bank had mixed up the leans between the two CPRs, and now we are in this mess of trying to untangle that. Otherwise, I’d already have an existing home built with the intention of having two vacation rentals five years ago. I’m still in that process, so the grandfathering process bothers me. I’m stuck right now. Should, for that area, I don’t know, you know, you grade the ag lands, what is it, A, B, C, D, E, F, some of those I think need to be looked, and I’m sure we fall in to the bottom of that list. You know, we charge eight dollars per 1,000 for water. My current water bill runs 350 for mine, three-bedroom two-bath home, and we are at the lower end in Kohala Estates. So agriculture really is not a viable resource for our area. Now, you know, maybe in North Kohala, different, different situation. I also happen to, my wife and I, this year purchased a unit down at Ali‘i Villas, which is in the, happens to fall in the resort site, so I guess we win there in that sense, and bought it with the intention that the kids and my grandkids can come down and have a place where they can swim in the pool, my son-in-law likes to fish, which also touches, now over into the affordable housing issue. Because, my daughter is 28 years old, I have two grandkids, her fiancé who was also born and raised here, are currently living in a warehouse apartment in my, up in my parents’ place. So back to what the other gentleman had said earlier, he was here 58 years here in Kona, I’m 58 years old and 58 years here in Hawai‘i as well, with a kid and grandkids that, affordable housing is going to be a tough issue for them unless because of the family we are going to need to assist, and which we have been planning for, I have, since I was old enough to start working and having kids. Others are not as fortunate. And I don’t see a lot more self-help going on around the island. There is some in Kohala, I don’t know, I guess there is maybe some in Waikoloa. My kids would like to live in Waimea, but, you know, although her fiancé has some Hawaiian blood, he doesn’t have enough quantum to qualify to get into the Hawaiian Home site. But they would like to live in Waimea. So I don’t know what’s available up in Waimea. But I would say, back to the short-term rental, I think, you know, if I were to get through my liens, I’m not sure I would build that house now on the backside, if, if vacation rentals are not allowed. I was counting on that, because I go off into retirement, as a way to hang on to the property for the kids, for our retirement, and be able to remain here. So I don’t know that I would even consider building that long-term; it wouldn’t be feasible, you know, I have to throw 40 EXHIBIT B up a, what, half a million-dollar home and rent it out for 1,800 bucks or 2,000 dollars a month, I don’t think that’s going to work. So I think other alternatives need to be sought. Anyway, I will give up the mic. L. JOSE: Good afternoon, everyone. This is my story. We have two parcels in Hōlualoa that is zoned Agriculture — HALL: Sir, sorry, could you please, could you please state your name for the record? L. JOSE: Oh, my name is Larry Jose. HALL: Thank you. L. JOSE: I’m sorry. Anyway, we have two parcels of land in Hōlualoa that came from my great-grandfather. Now we’ve planted coffee and we’ve lived there over 30 years. My neighbor who recently bought a place moved into the farm dwelling and made a short-term rental out of the big house. The big house has a large porch, which is only 20 feet away from my fence, my hog wire fence. And when people check in on the rental, they come to the house, and after they get settled in, they leave on this Christmas lights and really strong porch lights, and then they go out. They go out, and that light lights up our house worse than a full moon, I mean it’s so bright we can’t even sleep. Then they come home in the wee hours of the morning and they start talking and laughing and they wake up the whole house where I’ve got to go to the window and yell to shut the F up. That usually stops it for a while. Then, then we have right now a light war going on where I have set up big flood lights facing that residence and see how they like, you know, when they cannot sleep when it’s more bright than the moon. You know, in summary, and, you know, on our agriculture land we use machinery and we start at 7:00 in the morning. We have coffee pickers; they start usually earlier. And we have mowers, we have chippers that chip branches, chainsaws, weed whackers, and of the likes, you know, farm equipment. And now, we have the light war, now it’s going to be the noise war. And you know what? In summary there is no compromise for short-term rentals on agriculture land. Thank you very much. \[Applaud from the audience.\] M. JOSE: My name is Margaret Jose. My great-grandmother was Keakookalani Liholiho. Alexander Liholiho was my great cousin. My mother was Mary Kahulamu. My ahupua‘a comes from Kahalu‘u. I lived in Kahalu‘u where the Longhouse used be, used to be known as Kona Lagoon. I’ve seen Kailua to Keauhou Bay, you know, blossom with all these rentals. Before when I used to walk down the street or go play ball, I would say, “Hi, neighbor, how are you?” Now you don’t see that; all you see is rentals. I don’t mind the condos, I don’t mind the hotels, but where I live now is Ag. Ag should stay ag. I mean I have dogs, I have chickens, I have goats, I have sheep. My neighbors, I spoke to them. This subdivision I live in, Hōlualoa Homesteads right above the Imin Center, people go up, it’s only a 20-foot road. The neighbor next to me only has a half acre, but according to what I see on the Tax Key Map, there’s three homes and one is supposed to be a farm home for the workers. The owner before used to have coffee. Now it’s turned into a rental. The owner of the home lives in the farm home and he rents out the main house. Last, for these past three nights I’ve been kept up three nights in a row. People drinking, yelling, screaming, making noise. My son, my grandson had to go to school 41 EXHIBIT B early in the morning. He stayed up all night, didn’t have sleep. None of us. You can see it in my face. Then I called the Realtor, the one that’s renting out the house, I said, please do something for us, you know, can you tell them, shut off their lights, be quiet at a certain time. Because all my neighbors below us, we talk to one another. And then, you know, he expected me to go up there and tell them please stop with the noise. And then they have, this morning and yesterday, they fly one drone around my house less than 100 feet, looking into my property, snooping on us. That is not neighborly. That’s really bad. Plus, not only that, where this house is located, there is only a 20-foot road that goes up to the subdivision. They don’t have any fire hydrants or anything like that. Everything is on catchment and they pump the water up. And there is like 30 homes that live off one tank of water; so if there was a fire, there would be a big problem. Now, in that area is also known as a watershed area, and with all these extra people that come, and right now there’s like six people in the house, and I’m not sure if he is legal to be renting out to these people. They come and go, like this week they are going to stay until Friday, and I have to deal with that. And furthermore, my family come from Kahalu‘u. We have an old graveyard down on the beach across St. Peter’s Church, that’s been there hundreds and hundreds of years. Now they want to build a highway through there, they want to take all of roads, you know, take off graves that’s been there. People around get B&B grumbling about the headstones, they want us to remove it. But we are in grandfather’s laws and, you know, I ask what’s been there before – like I said, I used to go to the beach, walk to the beach, gather food, come home. Now I have to deal with these issues, you know. And I spoke to all my neighbors that live around me and they are totally against it, you know. How it’s going to affect me is, you know, this neighbor move in, they rent out, and then, you know, they want me to be quiet in the morning. I get farm workers, they pick coffee, they’ve got to come up at 7:00 in the morning. I want to go mowing. Do I have to wait around for these people? You know, they inconvenience me in my way of life. I’ve been here 60 years. And I hate to say – Mr. Kim is right – if we don’t fix it, Honolulu is screwed up, Maui screwed up, don’t screw up Hawai‘i. We are the last one on this chain of islands. Keep Hawai‘i Hawai‘i. That’s all I have to say. \[Applaud from the audience.\] KLASSEN: Aloha, my name is Ted Klassen and I’m in Kailua-Kona. I’m here as a professional partner in a professional management company, and the, it saddens me to even hear these reports because we are active, we make sure we take care of our guests and the properties, and it’s very frustrating to hear these types of issues. And I guess what I’m here to say is that there is a couple of laws that are already in place under the transient accommodation tax law that talk about on-island contact, and I think a lot of companies or people are using that loophole to be an on-island contact, and what happens is people that are not professionals are managing homes, and that’s where you end up with these issues; no one is responding, no one is taking care of, and it’s because of this. The other loophole that I’ve seen or the other issue is Chapter 467, which is the real estate law. Anybody that manages more than one home is supposed to be governed under that law. It seems that that’s not being addressed in any of this, and to me that would help further the enforcement. Right now if somebody is not managing a home correctly, you can report the people, if they are under the real estate act to the board, you can take somebody’s license away or do something with that. If you’ve got something to lose, there’s some issues there. Currently, no one even talks about Chapter 467 of the real estate laws and the people are using the TAT loophole of an on-island contact to represent properties. If those two pieces were 42 EXHIBIT B enforced, we would eliminate a lot of the things that have already been talked about. That’s basically the points I’d like to make, and thank you for listening. MATZUKA: Hi, my name is Jim Matzuka. I’m a nobody, I’m not important at all, okay? I moved here in 2000. I bought a house on the ocean, a beach house, in 2005. It took me two years to get a permit to tear down most of it and rebuild it. I put my lifesavings into it, and unfortunately, had bad luck because the real estate market turned in 2008-2009. I couldn’t afford the house I built. My wife came up one day so we could survive and not claim bankruptcy, to use our house for a vacation rental, and that’s what we did. And that got us through some very rough times. We still are vacation-rentaling it to this day because we can’t afford to live there; my payments are so high. The real estate market tanked and I was making my money in the real estate business at the time. If it wasn’t for that, I would’ve went bankrupt, you would’ve had a foreclosure on the street. I don’t understand why anybody would want to limit vacation rental in a vacation town. It doesn’t make any sense to me. Another thing is, I’m involved in real estate in the mainland for years, for decades, and several condominium associations wanted to pay us no-rental rules because landlords sometimes don’t take care of the properties as good as homeowners, and many of the condos did that. I remember trying to buy two condos, I couldn’t buy them because they had this rental ordinance, and I couldn’t buy it and rent them out, so I didn’t. The two condos foreclosed, were boarded up for about a year and a half to two years, the association lost 5,000 dollars each on these condos, and by the time they foreclosed, they lost a lot more, which was wiped out in the foreclosure. See, things work on supply and demand. If you change the laws here where you can’t rent these vacation rentals out, you are taking away a good part of the market here that buys property. You are going to cause property values to drop. It’s as simple as that. And that’s what happened in Illinoi in that subdivision I was talking about. I wish you would consider these things. Another thing, the stories I heard were terrible, but don’t we have laws on the books about disturbing the peace? Aren’t there laws on the books now to take care of some of these problems? For the people who don’t behave? It seems like we always try to pay us some big massive new law to take care of things that are taken care of under laws already. But I really plead with you that you reconsider this. It doesn’t make any sense in tourist towns. I understand in agriculture but not in tourist areas. And you are going to kill the market. You are going to cause problems for me, but you are going to cause problems for other people in the future that have trouble, you know, paying their bills. It’s a way to, you know, it saved me, let’s put it that way. Please reconsider this. Even if you grandfather it in, it’s not as bad, grandfathering in alleviates some of the problem but not all of it; you are still cutting buyers out of the market. Please consider that and what you are doing to property values. Thank you very much. \[Applaud from the audience.\] UNGER: Thank you. Mahalo. We have one more testifier signed up: Pamela Small. And if there is anybody else in the audience that would like to testify, please come forward. Come, sign the list, please. SMALL: Aloha, my name is Pamela Small. Please excuse me, if I seem a little bit discombobulated; I just literally ran over from getting chemo, so I finished about 20 minutes ago. 43 EXHIBIT B So I own a vacation rental on ag land, and the development was created before 1976, and I’m hosted, so this bill currently does not apply to me, but it will, because I have read your proposal and I do know that you will be coming after me next. So I have a few things I’d like to point out. Currently, because of the Hawai‘i Taxpayer Bill of Rights, your proposals to ask for our federal tax returns and our Hawai‘i tax returns and our GE Tax license returns and our TA Tax returns, TAT tax returns, are not legal under the Hawai‘i Taxpayer Bill of Rights and the federal Taxpayer Bill of Rights. You might want to take a look at that document, or those documents. And asking for commercial building codes for vacation rentals means that you might need to change vacation rentals to commercial zoning, and asking for only vacation rentals to be commercially, up to commercial building standards is putting vacation rentals into a completely different category than residential homes or other types of buildings. So that doesn’t seem like it’s really fair of a board. And tax licenses and, you know, GE Tax licenses and TAT tax licenses are currently required by law to be listed on all advertisements, on VRBO and Airbnb already. So you could actually have somebody, an employee or somebody, check to see what’s legal and what’s not legal already. It’s not that hard to just go through all the listings and say, hey, does this one have the licenses on there already. And you can see who is legal and who is not. And I’ve suggested that at every single Council meeting and it’s been soundly ignored. I don’t have anything else listed because I just ran over here. But, you know, I would really like it if there was consultation between people who’ve actually had legal upstanding vacation rentals and the Council and the Planning Committee. I would be happy to do it. There are a lot of people who have legal vacation rentals who would be happy to consult, because obviously regulation has to take place, but it can’t just be willy-nilly. But I would like it if there would be fair regulation that took place for people who are legal and for those people, because there are, there are illegals out there, you know, we can’t, we can’t pretend that there aren’t. But it would be nice if there was consultation to get true fair laws that took place. \[Applaud from the audience.\] PRATTAS: Is this on? UNGER: Yeah. PRATTAS: Stathie Prattas. I live in the Captain Cook area. And I’d just like to add my voice to a number of the voices you’ve heard before. One is, I agree with the chairperson that the vacation rental bill should not apply to anything in the Commercial zoning. I don’t know why Neighborhood Commercial got left out. The current uses under the Zoning Code would allow for transient accommodations, so not getting that, so I’ll highly recommend you at least add that category to the zoning bill. I think it is absurd that resort residential should require special licenses. It just makes no sense. I do feel bad for the people that have had difficulties with neighbors. I have had difficulties with 44 EXHIBIT B neighbors. I’ve been a Realtor since 1985 here on the Big Island. I’ve been a property manager since 1987. I’ve had the police-call to many properties, I’ve taken many people to court. Not one of them has been a vacationer; they are residents, long-term residents. So there is a lot of laws that you’ve heard people say there is already laws on the books that are not being enforced. One of the provisions that I think absurd is why would you have quiet hours for a vacation rental and not for every property in the county? As I mentioned, and the other gentleman’s talking about ag chipping and everything, you know, if it’s good for the goose, it’s good for the gander. If you are going to have quiet hours, let’s have it apply at least to all residential zones. So that doesn’t make sense. You’ve heard people say that, you know, people are evading paying their fair share property taxes. I brought this up numerous times; there are 6,000 homes on the Bid Island that pay the 100-dollar minimum tax. That’s not even, that’s, what is that, eight dollars a month? You can’t even get a Netflix account for that. So, hey, let’s everybody pay our fair share. You know, our taxes keep going up, up, up and up, the salaries keep going up, up and up, the cost of county government, especially on the west side of the Big Island where there is terrible discrepancy on real property taxes, almost makes it impossible to have an affordable rental. You know, if you try to apply the affordable rental class and do the math, there is no economic incentive to do that. And so this bill needs major tweaking. I’ve heard a promise that, oh, we’ll take care of it in the General Plan. Well, how many years would that take, and why should people be economically disparaged while the process goes on for who knows how long? So I would say that, you know, take care of it in the bill now, the General Plan can get tweaked later, which in itself I hate to say is a mess. You’ve got 30 subdivisions that area gated with multimillion-dollar homes on one-acre Ag lots. I guarantee you there is no agriculture going on there. The only thing they are raising is millionaires. And so there is a lot of absurd aspects, but you’ve got a lot of work on your hands. This bill needs major tweaking and I wish you good luck with it. \[Applaud from the audience.\] UNGER: Thank you. Are there any other members of the public that wish to testify today? Seeing none, I need a motion from the Commissioners to close public testimony. SHIMAOKA: I motion. CHURCH: Second. UNGER: We have a motion by Commissioner Shimaoka, second by Commission Church? All in favor? COMMISSIONERS: Aye. UNGER: Oppose? \[None.\] Motion passes, public testimony is closed. I’m going to request a half an hour break for lunch, stretch, use the restrooms. When we reconvene, the Commission will begin our deliberation. 45 EXHIBIT B RECESSED Chairman Unger called a recess for lunch at 1:00 p.m. RECONVENED The meeting reconvened at 1:35 p.m. UNGER: The process at this point now is to open the floor up to Commissioners for dialogue and to involve the Planning Director, Planning staff. Normally, and that’s a, that’s a slight change of protocol; normally, at this point of the agenda item we’d be calling for a motion, motions would be made, etcetera, roll call. To clarify, what we are going to be doing is making recommendations to the County Council on Bill 108. This is not a deciding body, this is not a final ordinance, etcetera, etcetera, final decision; this is all about discussion and pushing this ordinance discussion forward. So I’m really looking forward to this period after hearing testimony, after reading testimony to open the floor up to Commissioners. And I guess Commissioner Church and I kind of jumped the gun a little bit earlier, which is fine to just get some, but I think that’s the dialogue we are looking for to start a general discussion, including the Planning Department and those issues that continue to surface or that Commissioners bring up. The idea is to focus on maybe some of the top two or three most important issues that have surfaced, and at the end of the process our goal is to come up with recommendations as a final product of this meeting. So that’s going to be the, that’s going to be, and that’s going to be by way of motion, so that’s going to take some crafting after this discussion. But anyways, that’s how the process, as I see it, moving forward. HALL: I’m just making a suggestion of, if you guys want to look over what the Planning Director has submitted first and either accept or deny those, and then you can go into individually things you want to add or, you know, to those suggestions, may be easier. UNGER: You mean the — HALL: The recommended — UNGER: — recommendation. HALL: Yeah. UNGER: Sure. I mean I guess that’s probably a good outline for us to start with, and I’m sure the discussion will lead from there. So why don’t we do that? And then the Planning Director can chime in at any point as we hit these points. So at that point if we can all turn to Recommendation No. 1, and start that discussion. And I think, by all means we are not limiting our discussion to these recommendations. Certainly, we have the latitude of coming up with our own recommendations, or at least having the discussion. But again, I think that’s a good outline to start with. So with that, let’s go and open up the discussion with Item 1 unless somebody has an opening comment. KEALOHA: Yeah, I had some general questions that I was hoping could be cleared up prior. In the bill itself, you know, when they exclude dwellings or buildings of six or more rooms are rented, these are considered hotels and inns or lodges in the Zoning Code, are those being registered and enforced currently? All of them? 46 EXHIBIT B YEE: I don’t know what you mean by registered. They certainly wouldn’t register under vacation rental, but they are — KEALOHA: But are they registered as hotels? Is that a requirement and is that enforced currently? YEE: That would – Maija is shaking her head. I’m not sure why you are shaking your head. JACKSON: Yeah, so if – hotels and inns and lodges are not required to register now. In some zoning districts inns and lodges require a Use Permit, so in those situations they come to the Planning Commission, and then the Planning Commission issues those Use Permits. But there is no registration requirement right now for those three uses. UNGER: And in fact, I don’t think there is a registration requirement for any vacation rental, is that correct? JACKSON: That’s correct. UNGER: Okay, okay, so that’s a significant proposal and a significant part of Bill 108. KEALOHA: So my next question would be about hosted vacation rentals. Why are they being excluded? YEE: That was asked at Windward more than once. The simple is the Council and the probably Mayor staff in crafting this was trying to craft a bill that would pass. Trying to bite off on too much would endanger the bill of reaching possibly too much opposition, would be my guess. And again, in trying to craft the bill, you know, there is a talk about scrapping the bill, going back to the drawing board, you know, because there’s some imperfections about it. Boy, if, if all bills of State, you know, County were written to perfection to address everything and we waited for that to come, nothing would ever get passed, I mean, I’m not trying to make light of that. You also need to be smart about passing ordinances and changes that you try to accomplish what you are really out to try to accomplish, too. So there is this balance. And if we went into it knowingly some things were being left out – we didn’t know about the condo-hotel until very recently, it wasn’t brought up during the original committee. Had they come up, boy, we would have been on this much sooner. So now the Council will have a task of having to address it. I cover, yeah, not requiring even just registration of hosted rentals, you heard Stephanie Donoho testify about wanting to just get them to register so we know of them, and that comes from a tourism point of view of what they need it for; it wasn’t necessarily from other points of view that we really needed to have it right now. I think we, clearly, the Council knows there is a Part 2 to this that has to address hosted rentals eventually, and other part were addressing where vacation rental should go that aren’t currently permitted, such as prior to the lava event more areas in, let’s say, the Volcano area. The areas now that we know because they were inundated in Puna where they wouldn’t be allowed. 47 EXHIBIT B UNGER: Are you referring to hosted short-term vacation rentals? YEE: No, un-hosted, too. So they are not addressed. I mean they wouldn’t be allowed, yet we know they need a certain amount of them. And so we didn’t try to, they didn’t try to bite off all of that right now to create these special zoning areas or whatever for them. So the growth, so people brought up, where is the growth going to be besides Resort and stuff. That needs to be addressed. And clearly, I think Council and Mayor staff opted to wait to Part 2 of this to address that; they wanted to get a hold of the current stuff. I can only share what I think their intentions were. CHURCH: Okay, we are just kind of talking here. One thing that was interesting to me, listening to all this testimony today, was how much of it, well, there are really two things: One is the Bill 108, and the other had to do with so many times the enforcement of existing laws that dealt with zoning, abuse of zoning, people not paying taxation, I mean, it was incredible to me how often these things were fringed with those kinds of issues. And I can remember, I was the chairman of the Tax Board of Appeals for a couple of years, and I’ve brought this, we’ve talked about this to the Tax people, how much abuse there was that became obvious, that there was not enough enforcement going on. So one thing that should be loud and clear to the County, not Planning, I’m not, let’s not point a finger to Planning, it’s just, the enforcement. We are setting forth a whole new set of regulations, which we’ll have trouble enforcing, come on, you know you will. And you know that there will be a long term of not getting compliance with it. So it’s another set of rules that have to be enforced, complied with, and so forth. I think this is, at the end, so I think the broad issue is that. Now, I wondered also if somebody is going to catalogue. A lot of really good things came up that are simple to remedy. I’ll give you an example. The notice to within 300 feet, I mean, come on, that’s crazy. And there were other issues that had to do with a person change, they sell their home, so now you’d better do it or you can be in violation, now you are going to get fined. So there are implementation aspects to this, which I didn’t catalogue, but somebody should that could, you could ferret these things out and simplify it a lot and get rid of some of the things that just are not going to work. And there were a lot of them that came out. Again, I didn’t catalogue them, but I’m sure that some of, somebody did, and it’ll be neat to see those. A last thing I would say is that, because, I could, oh, this is my recommendation, you know, no, my recommendation is that it needs some more work, that’s all. And you are going to give it some more work. And you are a good group of people. I love you guys. They are good. You are good. But it needs some more work. And I wish it were possible, I don’t know if that happened, but some different people, somebody from Planning, somebody from Council, somebody from brokerage, somebody from resort management, somebody from resort, to take this thing and just take that bill, it’s only eleven pages, the last two of which are just a, you have a bunch of different zoning things, and go down that thing, not by everybody’s rec- but go through it and read it paragraph by paragraph, and people who really want to provide some operational input, some practical input, and I bet you’ll get some more ideas out of this rather than just shepherding this thing over to Council and have them stamp it. We wouldn’t do that anyway, but that’s the kind of the feeling I get. If we are sitting here and going, what’s my recommendation, well, this is my recommendation, no, I’ve not read enough of this thing to give 48 EXHIBIT B you the most insightful recommendations that I could. If I were a part of a committee, it’s been eight hours in one day having read and reviewed this bloody damn thing, I’d have representatives of the kinds of people from ag, all these different types of people, and get some really good input, rather than just us listening. So I hope that wasn’t just a lousy diatribe; I didn’t mean it to be, and forgive me if it sounded that way. UNGER: No, I think that’s part of this process and I, we certainly don’t need to start at Recommendation No. 1. And if anybody does have some general observations as Commissioner Church, please feel free to chime in. SHIMAOKA: Yeah, it goes back to my original question. I think one of the things that would be a great concern of mine is, all these guys that are doing it right, what we tend to do is we tend to now make them think why do it right when you guys cannot across the board come to some kind of enforcement procedures, you know. Because one of the things that I think Mike was talking to you about is on the enforcement side of that. Has there been an intentional effort on just kind of like going out there and just looking? How many violators do we have? How many people that are out there that are not doing it the way that’s prescribed by the Charter? I don’t know if that’s possible. YEE: There are some folks, some watchdogs, that I would say estimated at thousands. Just, okay, that’s their estimate. How they came about it, I wouldn’t know. Enforcement, there was a lot of discussion at the Planning Committee level around enforcement, and a lot of it was kind of trying to have people understand the chicken-and-egg thing here. People wanted to know what exactly how we were going to enforce it, exactly what we would require at application. And those things really happen at the rules and procedure level. So often I was testifying saying the Council has to craft a bill to tell us what their intent is, and then when we get into rules and procedures, we will have to change them, we will have a public hearing with the Planning Department on those rules and changes, and that’s where a lot of folks can drill down into more specific things. From the side of enforcement I testified many times saying unless you give me the resources, we are going to fall short and we’ve heard all the stories from the other counties over what is taking for them. Again, the issue is to pass the bill first, and then I have to trust in the process that the Council gives me the resources: 1) they are building some of it into the bill, but, 2) there I’m going to need more money beyond that. And, you know, how much, don’t know; after we get going, it will get a little better, but certainly I will ask for what I think is reasonable coming out of the gate on this. Clearly, in terms of inspectors being able to go online and to look and try to look for folks doing things and see if it’s consistent with what, if they’ve registered, is certainly part of it. We know of contractors that do that kind of work, so that will become a resource we want to use. SHIMAOKA: Do we have a current estimate on just how much revenue the vacation rentals would bring in in a particular year? YEE: I don’t have that figure offhand. I don’t think Planning staff had spent time thinking about that. 49 EXHIBIT B SHIMAOKA: But the reason I asked the question is, based on the amount of revenue would determine just kind of what kind of budget that you get. YEE: Correct. Well, I think we know there are at least a couple thousand for sure that are operating legally, and at 250 apiece, right? That gives you some idea. UNGER: Commissioner Yates. YATES: Yeah, I just want to say that, for me, you know, I am appalled first of all; I never ever guess that these vacation rentals were not, you know, registered. I always thought that they were and to find out that they are not, it’s like, ugh, I don’t believe it. And then talking about, you know, taxes being raised, or being paid, and things like that, and then it of course comes down to the homeowners having to pay so much more because we need to support our county, and yet, you know, we know, I’m, I am 99 percent certain that some of these, you know, short-term rentals are not paying their share that they should be paying. And so it’s a big concern to me to think that all of this is going on, and only now we are looking into it. YEE: Yeah, part of the difficulty is, you know, within government you have the taxing entity, the people who collect the taxes for the County, they worry about that. You know, from Planning we worry about what’s being zoned, right? In the end everybody wants to live somewhere and do business and make sure what’s next to them is, you know, consistent with kind of what good zoning would be. Because, let’s say, you being in a residential area you don’t want a, necessarily, a gas station right next door to you, right? Hence, why you have zoning. In this case the question is what’s the right amount for a vacation rental, right? That’s what the basic question here is today. So trying to align zoning, because we worry about use, aligning collection of taxes with RPT is another area, aligning with Economic Development Department because they worry about tourism, you have to bring all that into alignment into a bill. And then every party was certainly being consulted from the Council, Mayor staff on this. There is a lot of compromises that happened along the way. YATES: So, did, you know, along the way like you said, I mean I’m sure this has been years in the making, going on, have people not been coming forth and complaining and, you know, about these things, or have they just been overlooked? That only now, you know, we’re hearing from a lot of people about how inconvenienced they are in the residential areas. I think, I think the biggest concern appears to be the residential areas where, you know, the hotel condo areas or those things they kind of assume that, you know, people will be there to vacation. YEE: We, the Planning Department itself certainly received a fair amount of complaints. Certainly, the Mayor’s Office and other departments might have heard, but from the Planning Department, yes, we receive complaints. I would also sit there and say we have a backlog for our four inspectors of over a month. So unless something is a threat to a resource, it takes a while, and by the time you are investigating whether or not there were more than five unrelated people in a vacation rental, the clock has ticked away on that, right? And that was just, again, if given the resources and changes, we can adjust that. But, yes, there was some frustration around that. Frankly, I get a lot more rooster complaints than I do vacation rental complaints, right? 50 EXHIBIT B I’m not, again, trying to make light of it. It’s, again, we have a one-month backlog, and that’s just a fact for what my four inspectors have to try to clear. CHURCH: This is the last comment I would have, and that is that, in the positive note, what I didn’t hear in general was that people didn’t accept and realize that in principle regulation of the short-term vacation rental industry needs to occur. I think, I heard that people understand that. The second thing, though, was that, hey, this thing needs some tweaking, and needs some serious tweaking, and then this thing could work, if you get the funding that you need, Michael. UNGER: Is there anything we can do in the form of our recommendation in regard to enforcement? Because we’ve heard enforcement from testimony, and that’s almost the driving force for Bill 108. Is there anything we can do to help recommend? YEE: On the enforcement Windward requested a higher registration fee. I’m not saying yea or nay to that, but that’s certainly one area that would ensure more funding for me, but kind of self-serving, if I sit there and say raise the fee, right? And so, but, clearly, they saw that was one avenue. Again, enforcement has to be more addressed in rules and procedures than at this level. But clearly stating something to the Council certainly would be beneficial for, again, for them to hear. I want to talk about Ag lots really quick because it came up several times. And Maija did address it. Some folks may not have heard it. Basically, unless you are on Ag land prior to June 1976, you are not permitted to be running a fulltime vacation rental because all that had to be tied to faming activity. So, now, if you are a hosted rental on an Ag land, you are okay for now, but, understand the State has been clear, State Land Use has been clear; they do not like some of the things that are occurring on Ag land around overnight accommodations, okay? So, we are still saying folks can apply for Special Permit on Ag land and we’ll address that as we get there. But clearly right now, if – and this really affected the Puna area – if you are on Ag land, you did a vacation rental after 1976, you signed a farm dwelling unit agreement, and if you are operating a 24/7 vacation rental, you could clearly be out of compliance, right? And there is no getting out of that at this point on this bill. I also caution, folks want to open up a lot on Ag land. Yes, again, when we eventually look at where we want to grow short-term vacation rentals, we could take a look at it then. That’s one issue that other islands don’t have; we have a lot of more land than the other islands obviously. And so, could we open it up? That’s the discussion we should have down the road in terms of opening it up more on Ag land. But there is a little bit of protectionism around Ag land right now I think from the Council. KEALOHA: Would that mindset change the exemption for Kūki‘o for instance where they are one-acre Ag lots? YEE: Expertise from, from my staff? JACKSON: I’m sorry, did you say Kūki‘o as in Kūki‘o Resort? KEALOHA: Correct. You know, the subdivision is one-acre Ag lots, right? 51 EXHIBIT B JACKSON: I don’t, I don’t think those are Ag lots. Are those Ag lots? Those are — UNIDENTIFIED PUBLIC MEMBER: Hōkūli‘a maybe. JACKSON: Oh, Hōkūli‘a. KEALOHA: Hōkūli‘a as well. JACKSON: Yeah, those are Ag lots. Yeah, okay. KEALOHA: So that, would that become, you know, would that, because I know there is certain exempted areas, right, that they will continue to allow. JACKSON: Will continue to allow what? KEALOHA: Vacation rental. JACKSON: Oh, okay, so Hōkūli‘a is zoned Agricultural, it’s in the State Land Use Agricultural District, it does, I believe, for some reason have a little bit of Resort designation in a small area of the development. So based on this bill, short-term vacation rentals would be permitted in that one small area, but the majority of the subdivision they would, if there’s existing vacation rentals, they would have to get a nonconforming use certificate and — KEALOHA: And they run into the State law. JACKSON: Yeah, right. DARROW: I was just going to say that I believe the subdivision — HALL: You need to use the microphone, sir. DARROW: I just wanted to mention that we, you know, like Maija said, that we are looking at the nonconforming current use, but I believe Hōkūli‘a was subdivided after ’76, so those lots are not pre-’76, so any future, again, that’s going to be the big question is vacation rentals on Ag land. KEALOHA: So I guess when I summarize this whole thing, I see two separate fundamental issues: One is registration, and the other is zoning and use violations. And I feel to simplify the process, you know, there’s two ways of generating revenue: One is by increasing the amount you charge, and the other is by charging more people. If you are more comprehensive in who’s registering, these will be hotels and lodges, as well as those that are hosted. You increase the pool of who’s at least being registered and identified and paying fair share. And then as to how you manage the zoning laws and approvals, you know, that’s, to me it seems to be a better way of simplifying the process in two steps. YEE: I don’t disagree. 52 EXHIBIT B YATES: And another thing that I had. In the process while you are trying, when you start to get all these people to register, or hopefully, and hopefully, they’ll just come out and register, so, who’s going to carry the cost of whatever expenses that I need to get people registered, to get people hired to do all of that, where does the money come from before they even start to pay? YEE: Basically my budget, Planning Department budget. So as I launch into, by the time this bill really enacts, it’s going to be, you know, maybe late next year, right, but for now I start requesting funds for my budget and stuff, and it’s part of the budget fight I always have. YATES: So budget comes from like the general budget? Comes from property taxes? Where does all that come from? YEE: Well, there’s sources of revenue that the County and the Mayor decide upon, you know. And I don’t care where it comes from; I just want to have budget to do it. And I’m a small budget compared to the rest of the County. YATES: Yeah, for us, for many of us, you know, the concern is property taxes, yeah? Because if it comes out of the property taxes, then we have to pay more property tax, so. YEE: Correct, well, that would need Council approval to increase taxes. Let me get to just a couple of more things. I only have a couple left here. Use Permit for residential areas in the Resort Nodes and why did they, why did the bill call out for that. I think clearly, it was residential neighborhood integrity, just making sure that who’s operating has to come forth to show that they are abiding by good neighbor stuff, so I think that was the intention. That was a heavy debate in crafting it amongst the Mayor staff and Council around whether to include that or not. That’s where they landed. Notification. I testified a few times around, we don’t right now require notification for things that are in permitted areas, right? So if you are permitted, why do you have to provide notification? Not, not typically what we require. So this was a change in doing this. I testified that this would be a change that, well, I wasn’t supportive of it, they still included it. I understand their intention in that people are really worried about the residential neighborhoods that they are going into and they are wanting to make sure the notice goes out, but we also said when notification goes out, a lot of times that gives the public an expectation that they can provide comment to, you know, if they have a conflict or whatever, support, and in this case you are notifying people to just notify them, and they have no necessarily any input into this situation. So, again, I understand why they were doing it, but that really, the expectations that are created in a couple ways here, it certainly puts Planning Department in a weird position that we haven’t been in before. I’ll hold it from there, stop there. UNGER: Back in notification, I think part of that issue was the actual physical means of notification, putting hundreds of stamped envelopes in the mail and mail it, and reading one testifier, which I though was a good idea, we go online. We are all registered now, we are all, we’ve all applied, we’ve all registered, now there is a central loading platform that if somebody wonders who’s making the noise down the road, they go online and type in the address, and up 53 EXHIBIT B pops all this information. And it seems like that’s a natural progression of where we need to be heading on this. YEE: Advocating that we get the software we need to register vacation rentals would be marvelous. There are definitely registration platforms for government for vacation rentals that have been created over the years. Some of them are very robust and I would love to have the resources to have that. That would make it more transparent to the public, and certainly make registration on the part of Planning much easier. You said something about notification, oh, just that people are concerned about how to notify and how to, again, it’s not a simple, something I really want to have, but yeah, people would have to go to RPT, get a list and then they would go; it’s not a super, super hard thing to do, but again, it’s another step they would have to do. But it’s not totally onerous. We also could certainly, if it was a condo, let’s say if they stay in place in the bill, yeah, we’d like to probably write something that you can inform the condo managers that are having to inform everybody within the facility and stuff. So we can clean that up in the rules and procedures, if it stays in the bill. UNGER: Great. If we can shift to our outline of recommendations. The Planning Director made 15 recommend- 16 recommendations, a lot are housekeeping but a lot did have some substance. I didn’t see anything until Recommendation 5, but if anybody sees anything before Recommendation 5, please, the floor is open for discussion. \[No comments from the Commissioners.\] I think, at Recommendation 5, we’ve talked about this already and you just mentioned it, “General Plan Resort and Resort Node areas, provided that a Use Permit is obtained in the Residential zoning district ….” Again, I think you will get some pushback from this Commission on that because, again, the testifiers here, several testifiers, were saying we are going to be inundated with Use Permits, paperwork, applications. This is probably one area that is self-governing, as we’ve all been down there, it’s a pretty well-run operation. And I just, I just question the need of Use Permit. Sounds like you guys have hashed this out, and came to the other conclusion, but I, if we are looking to simplify this and try to minimize complications and paperwork and admin work, I just think you are layering unnecessary paperwork on probably an already-overburdened department when this thing passes. YEE: I wouldn’t describe that everything that’s in this bill was hashed out between all interests. So I think it’s certainly important for this Commission, especially since you represent the leeward side to put in what makes sense for your interest here. And I highly encourage that because some things have come out that just frankly in a lot of dozens of conversations, right, we never talked about; it just wasn’t thought of in that, from that perspective. And that’s the perspective and that’s the reason for this Commission. UNGER: Great — 54 EXHIBIT B KEALOHA: I guess my perspective on that would be, you know, it seems you’ve got two options here: You either need nothing or you need a Use Permit, or special use permit of some kind. Well, I’m still stuck on this registration, or licensing, point where there should be a stepping-in point. So even if you are not required a special use permit or Use Permit, you should be required to register and/or be licensed to operate in the county. YEE: Right now, definitely our recommendation is for everybody to register, except for the, you know, hosted rentals that’s, what we are not addressing, but if you are a non-hosted rental, you are expected to register under this, except for Ag, am I correct? JACKSON: The intent of the bill was to have every non-hosted short-term vacation rental register. UNGER: Right, right, so that covers that; everybody will register whether they need to apply for a permit or not is in discussion, but what’s not in discussion, and I think we are all in agreement of, is that every operating short-term rental will have to apply and pay their application fee. JACKSON: I think what I heard from Commissioner Kealoha, though, was that you thought all vacation rentals should register: B&Bs, hosted, un-hosted — KEALOHA: Should all be registered, correct. UNGER: That’s not happening. CHURCH: Well, you will notice that in the recommendations they didn't include some of the just mentioned matters. I’ll give you one: On Page 5, No. 17, “All STVR’s must abide by a good neighbor policy … policy must be displayed … from 9:00 p.m. to 8:00 a.m. ….” Okay, that’s really small, that’s minutiae. But the condo association I’m familiar with, their quiet policy is from 10:00. There is no recommendation to say, hey, wait a minute, maybe this is the wrong time. But what about the 300-foot deal? Stuff like that. There is a whole bunch of them that came out in testimony. They are minutiae that are not in the recommendations, but I would recommend that be deleted or changed. UNGER: And so what we are going to do is follow this outline to — CHURCH: But those aren’t in there — UNGER: No, follow this outline, and then continue the discussion. CHURCH: Okay. UNGER: Absolutely. This is just an outline to get us started. That brings us up to Recommendation 5, which we just discussed. Is there anything further in Recommendations to Recommendation 14? 55 EXHIBIT B HALL: Just for clarification, are you recommending then to take out the last piece that basically says, “provided that a Use Permit is obtained?” Is that what your suggestion is, or? UNGER: Yes, what I was thinking about doing is maybe making a one-run through this, and then pause, and come up with a recommendation, and then continue, pause, come up with a recommendation, and then at the end of the process, list the recommendations and get a motion and approve, is the process I’m envisioning. Recommendation 2-14, does anybody have any discussion up to Recommendation 14? I’ll talk Recommendation 14 while you guys look. Really happy, ecstatic, that Recommendation No. 14 was adjusted. Ninety-five percent of the testimony that was coming in, and I agree, this would put them out of business. So I’m glad we are now talking about classifying these vacation rental homes as R-3 versus bringing them up to commercial grade to R-1. So for me it’s no longer even an issue or a discussion point, and I’d like to move forward from there. Recommendation 15, and then finally 16. Any comment? YEE: Just really quickly on 14. I didn’t give my kudos to staff earlier, like Maija and Jeff. There are a lot of hours put behind trying to evaluate this bill that hit their desk. And even on like Recommendation 14, there were so much going on with Public Works, with Fire Department on it. Lots, lots of effort to contact a lot of other counties, the ICC and stuff, to get opinions on this to make sure we were crafting something that was legal. I think we showed a lot of care in our county to ensure that what we are recommending on this No. 14 was consistent with all the building codes out there, and that, it was not an easy task. Hence, why it kind of came in late, this kind of final, final change on it. So appreciation to staff for having all those conversations. HALL: And just one quick note, sorry, it’s not R-3, either, because R-3s are for permanent accommodations, so it doesn’t actually, it’s not R-1 or R-3. It’s not, R-3 is in the Building Code for permanent, permanent, yeah, permanent. So, it’s, I guess, I mean I would leave that out to the Building Department, but from looking at the definitions in the Building Code, I don’t think they would fit under R-1 or R-3. I think it needs to have its own; basically, they need to develop their own. But the more recent code, we are still under the 2006 code, if we adopt a more recent code, it deals more with short-term vacation rentals. Back in 2006 they didn’t even, you know, have an idea about what this was going to be. UNGER: After this first layer of discussion, I would like to call everybody’s attention back to Recommendation 5, and I would like to propose a recommendation to this recommendation, and that reads, “Change Section 25-4-XX(a)(1)(C) as follows: All zoning districts, except Open, situated in the General Plan Resort and Resort Node areas.” And that would be removing the next sentence, the continuation of the sentence, “provided that a Use Permit is obtained in the RS zoning district.” So I would encourage you guys to look at that, and have that discussion to see if that’s something that you would agree as part of our recommendation. \[No comments from the Commissioners.\] 56 EXHIBIT B Hearing nothing, I’d like to move the discussion forward. I think an important part of our discussion should focus on the issue that seems to stand out, as far as the majority of testimony, in regard to not allowing short-term rentals in, or condotels, as they’ve been described, excluding them in this ordinance. And we’ve heard arguments on both sides in regard to including or not including, a reason, and I would like to have further discussion with the Planning Department on the reason why this area is not included. But, for all intents and purposes, these are operating, in many cases, hotels. Just because of their zoning they are not included in this. The bill is leaning towards, kind of kicking this down the road a little bit, not addressing it at this point; rather addressing it in the General Plan amendments that are ongoing and will continue on going, and the discussion on that side is that, hey, we’ll deal with it at a later date with changing or rezoning these properties. And so I’d like to open up the discussion. I certainly have some opinions, but I’d like to open up the discussion with the Commissioners and I’d like to hear your opinion on that. YEE: Quickly let me chime in that clearly the intent was to, you know, restrict the short-term vacation rentals in residential zones, so these condo-hotels got caught up because they were in the residential zone. In the quick work since we learned of this issue, there was a lot of discussion amongst Planning staff in terms of what’s the avenue here, you know, do we try to make an adjustment, you know, is there new language to the bill, we, you know, our best thing that we forwarded on to answering questions with the Council staff was the best avenue right now besides changing the bill itself, and I’m not saying we can’t, but just if we weren’t changing the bill, there was the avenue around the General Plan. Now, of course, the General Plan is in the middle of an update, so you can’t, you know, make a change to it right now, but the General Plan is being updated, and could that be initiated, you know, barring another lava event, you know; that was supposed to occur next year that we adopted a new General Plan. Again, we won’t have to go through rezone, change it on the General Plan, and then, boom, it would, they would be legal. There’s also some procedural things of could we look at condo-hotels being more hosted-rental because you have fulltime management, and again, this came in so late we were juggling what could or couldn’t happen by the time we were heading today’s meeting. I think there’s still a lot of room to talk about it, to see. I think you have the challenge of what’s your recommendation is going to be to Council. You know, clearly there wasn’t a magic bullet that we could think of within last several days of pondering this. UNGER: I’m a big proponent of trying to fit this in to Bill 108. I think it’s unfair to the property owners that are on these condotels that are caught in this mix, and I do believe it’s irresponsible to tell them, you know, don’t warry about it, we’re going to deal with it in a General Plan review, which will involve a rezoning of a property to hotel, commercial, I mean, I think we all understand that could be a five, six, ten-year process, that’s a huge process, and in the meantime these property owners are nonconforming uses. So, I thought about it, and it sounds like you have, too, I’d like to propose language. YEE: Yes, I think, given the short timeline of having to come here today with a specific recommendation that we couldn’t vet out, would have been dangerous on Planning standpoint. It just, there wasn’t enough time to vet everything that we had, so I had to play conservative not come out with a recommendation today of exactly what the language could have been to make adjustments. You know, given more time, given direction, you know, could we try to get to that 57 EXHIBIT B point? Possibly. I mean that certainly, you know, if that’s what you instruct us to look at, we would certainly do that. UNGER: Absolutely. I think that should be part of the discussion. But, what about wording such as this: All high-density residential zone properties further defined by a condominium project of six or more units organized under HRS 514A, Condominium Property Regimes, or the update version HRS 5148 \[sic\]. So your concern was that these are located in high-density residential areas, which would bring in duplexes, which would bring in fourplexes, not governed under the condominium law that I just referred to. This would be an opportunity to isolate those condotels on, specifically, on high-density residentially zoned properties that are governed and managed by HRS 514A Condominium Property Regimes. These condominium projects are organized under chapters that belong to the Association of Apartments, with the board of directors, abide by any or all registrations, secure fidelity bonds, pay maintenance fees, and answer to the Real Estate Commission of the State Department of Commerce and Consumer Affairs. By law they are already required to have an active governing body or association, so it really isolates this group, this condotel, the units that we were talking about, and be able to isolate them and include them in Bill 108. JACKSON: I think staff would have one request: If you can change that to the high-density residential — UNGER: Right, I think that’s — JACKSON: — to Multi-Family Residential — UNGER: Right, I think that’s what — JACKSON: — because we don’t have high-density residential — UNGER: Multi-Family Residential? JACKSON: Multi-Family, yeah. YEE: Could I — UNGER: I’m just throwing that out, so I’d love comment from the Planning Department on that’s even, is that, have you considered that or is that something you would look at? YEE: No, but we can certainly — UNGER: Oh, that’s a short answer. \[Laughter.\] YEE: I’m looking at Corporation Counsel Amy Self if she has any value to add to this. Just, I’m just asking; I’m not asking you to come up. Then, meanwhile, Jeff has a comment. 58 EXHIBIT B DARROW: So we were actually just talking about this. The reason why in the bill it eliminates hotels, inns, lodges and similar types of uses is because vacation-rentals are limited to five bedrooms, okay? Once you have a condo-hotel, it’s a hotel; it’s not a vacation rental. So again, you are, we are starting to get into another area of permitted use. So when, now, each of these separate owners that own these units in these condos, those, when they are in a multiple-family condo unit and each owner owns separate ownership, and, you know, they either rent it out or they live there. But in these condo-hotels, you’ve got, it’s like a hotel, you’ve got Aston Hotels managing it, someone comes in and wants to rent a room and, just like a hotel. The problem that we are running in with these right now, and again, the possible solution that we talked about, was there’s two options: We can bring the General Plan Resort Node down through there and then they are allowed, they are permitted in those zonings, or we change the zoning to Resort and so they are permitted through zoning. The problem is is right now where these condo-hotels are, they are in an area identified as Medium-Density Urban, which allows for these condo units and not hotels, so that’s why the other option is the General Plan Resort. When we see this mix of hotel, or Resort, and RM, we were like, well, how did this guy next door get zoned Resort and I’m RM? Back in ’89 before the 2005 General Plan change, there were Resort Nodes throughout Ali‘i Drive and that’s where you see these Resort zonings at this time. But anyway, that’s the short of it is that’s, the issue we are dealing with condotels is that they are actually more like a hotel, and we are trying to keep focus on the smaller vacation rentals. KEALOHA: Am I correct in assuming that for those people in those condo units that aren’t doing vacation rental would not want the up-zoning, because property taxes would increase? DARROW: We – if I can chime in, sorry – if the General Plan just changes, then that’s not going to change the zoning. KEALOHA: Okay. DARROW: Yeah, it is just going to be, yeah, if they purposely go out and change their zoning from RM to Resort — KEALOHA: That would trigger — DARROW: I mean, it may be the same, but it may change. UNGER: Thank you. Commissioners, are there any other topics that you would like to bring up at this point, or any comment? CHURCH: Did we finish all the recommendations, 16? UNGER: Yes. CHURCH: We’ve already done that? UNGER: Yeah, so it’s -. 59 EXHIBIT B CHURCH: All right. Okay, I want to go back to the \[inaudible\]. HALL: Please speak into the microphone. UNGER: Go ahead, Mr. Darrow, if you’re going to continue. DARROW: Just real quickly. We had talked earlier about the Use Permit process, so I needed to clarify. In these Resort Nodes where the single-family dwellings are required Use Permits, I think we were all confused whether or not they all had to come in now for a Use Permit. What, the clarification showed that if they are currently operating, they are currently operating “legally,” then they would come in for a nonconforming use certificate, okay? Only the new ones that propose to do a vacation rental in the General Plan Resort Node in a single-family dwelling would require the Use Permit. So it’s only the new ones. So just so we are clear on that. UNGER: Okay, yeah, I wasn’t, I wasn’t clear on that, so thank you. Okay. CHURCH: Okay, this registration process. The easier we make it for people register, the easier it’s going to be for them to comply, and you’re going to do better. The harder it is, the less compliance you’re going to get. So, the registration process include submitting a form to the Department, with “a site plan showing the location of the rooms for rent and requisite parking.” Now, why do we have to show parking? I own, say, I own a condo in the Kona by the Sea, so now what, and by the way, some of it don’t identify parking per se; you might identify a stall on a condo map, but in fact, for a use standpoint, you can, first come first serve. So I don’t know why we, somebody would have to identify their parking stall in there. I would think that they could identify their unit. Now I would wonder how many people in a 25-year old project would find it easy to get a site plan. Yeah, I know where to get one and how easy it is to get one, but I bet people would go, oh, where is site plan stuff, I don’t have a site plan. Maybe it’s at the front desk or whatever. So I would say we would simplify that, just make it easy for people; what you want is their name, their unit number, their address and stuff like that. Let’s make it simple. Now, I thought, found kind of amusing when one of the testifiers went through the numerical thing of having 150 people in a condominium, each having to identify 150 people outside of whatever notice, and you are, 150 squared is 22,500, so, it would take 350, so the number of notifications to identify 300 feet is, to me, you’ve got to eliminate that, that is really nuts. So the registration process, again, somebody re-look at thing, just make, focus on what you really want and need, not to fill out the three pages of paper work. And you’ll do better. Because I’m, in principle I’m, most people are supportive of it. The easier you make it, the more compliance that you’re going to get. Okay, here is, this is one, too, this is a good one. The bill requires to have an owner, to have an owner reachable, have an owner reachable, have an owner, what is “have an owner,” you mean to identify one? You mean to have somebody accept the responsibility for being -. Because you define reachable as “being able to respond via telephone” – to respond, why, a lot of people respond by telephone, but not a lot of people want to respond. So it’s just a simple clarification, 60 EXHIBIT B which you really want to do is identify the person, know that the person has been identified, has been notified and accepts that they are to be called by somebody, not just a name. So just simply add some language, just make it, clarify a little bit as to who this person is. Do they have to sign a form? Do they have to accept it? Hopefully not. But the language here I think is not quite clear. The good neighbor policy. I don’t know. Check around and do a survey. I think that 10:00 to, 10:00 to, rather than 9:00. Everything I’ve been around anyways is generally 10:00. That’s when people close the door and say shut up. So you might want to check it, and if 10:00 is better, then use 10:00; if it’s not, stay with 9:00. This, this, if you, you have a, there is an annual re-registration requirement. Every year you are supposed to do this, okay. But then you say that if I’m no longer in it, I’ve got to notify you that, too. Wait a minute now. If I’m not notifying you that I’m not in the business any more, why have I got to notify you that I am in the business? Okay? Because that’s an annual registration requirement, then I’ve got to tell you if I’m not in the business any more. So my only question is, unless you are looking for more money, and you may be and that might be fine, but if I don’t notify you that I’m not doing a short-term vacation rental anymore, then why do I have to tell you that I am because I’ve already told you once? Okay, so, there’s just some, just ridiculous stuff I know I’m bringing up, but the stuff here that annoys people and makes it more difficult for them. So somebody just re-look at and tweak a little bit and make it easy, and I think you’re going to be more successful with it. UNGER: Can we go to the question-and-answer page of, and the title is “In what Zoning Districts will Short Term Vacation Rentals be a permitted use.” I think that was brought up by multiple testifiers as to why and where, and there were some proposals based on expanding the permitted areas in particular in Kona based on I think it was an Urban Expansion plan as called out in the Community Development Plan. I think, and we’ve had this discussion before, that if we are, if we are pushing to register and permit these short-term rentals, then we have to be careful that we are not so limiting where they can go that the industry essentially stagnates or starts to disappear. I think they are an important part of our economy and that has been, that I think is indisputable. And so the question is in this bill, is this, is the, are these permitted areas too limited? And I think, for example, going down the list, the first one that vacation rentals are permitted uses or will be permitted: Hawai‘i County Code, Chapter 25 Resort-Hotel (V), General Commercial (CG), and Downtown Hilo Commercial (CDH) Districts. So that’s set, correct? That’s where they are permitted. So there was discussion and some feedback from County, and there was some testimony, about all Commercial property should be permitted. Can we open up that point for discussion? Because in the last section, “Hawai‘i County Code, Chapter 25 Village Commercial,” for example, “(CV) Districts shall require the approval of a Use Permit.” Is that still a fact? Is that still part of this process? I thought it was changed. Or is that still a fact? JACKSON: That’s still in Bill 108, Draft 4 — UNGER: Oh, okay, it is. 61 EXHIBIT B JACKSON: — but the Director is recommending removing the requirement for a Use Permit in the CV district. UNGER: Okay, well, I’d like to reconfirm that recommendation, and recommend that that does be removed from the CV districts. So, hopefully, somebody is taking notes of these possible recommendations, no? KEALOHA: That’s part of the existing — HALL: Well, that one’s still, it’s already a recommendation. KEALOHA: — recommendation. UNGER: Oh, is that in there already? HALL: Yeah. UNGER: Okay, okay. YEE: So there was discussion about CN, correct? That’s Commercial Neighborhood, and as Maija had said in the presentation, you know, that’s usually, you know, within a neighborhood for like a little convenient store and stuff, and we would not want to see those kinds of uses be then taken over by just a vacation rental. So that’s why it was left out, I believe, at this point. And that’s one reason why CV was needing a Use Permit there were folks crafting the bill that was trying to ensure vacation rentals didn’t dominate in commercial areas. Again, my recommendation is to include CV. But, you know, I think I was okay with not including CN at this point. UNGER: Okay, okay, so CV in, Neighborhood Commercial right now would be a permitted activ- with a permit or not included at all? JACKSON: Not included — UNGER: Okay, okay. UNGER: Any further discussion? I’d like to call a five-minute recess while we work on a recommendation. RECESSED Chairman Unger called a recess at 2:38 p.m. RECONVENED The meeting reconvened at 2:46 p.m. UNGER: The hearing is called back to order. Commissioners, are there any further discussion on Agenda Item No. 2, Bill 108? 62 EXHIBIT B YEE: I was having a conversation in the audience during the break and I would be remiss if I didn’t try my best to convey a point of view from her. And whether or not this is a fact or not, I don’t know off the top of my head, but the point being made was there was out of all these condo-hotels being described, she wanted to be sure that we understood there was only one true condo-hotel that we’ve been looking at that’s owned by one, you know, entity that then, you know, rents these units out. And other condo-hotels that possibly being brought forth were condo units that maybe operate but they still have single ownership within \[inaudible\], and she just wanted to be sure the Commission was clear on that difference. UNGER: Yeah, great, and that is a good clarification, and I know I misspoke several times, so that’s a good educational point. And one of the recommendations we are going to be making is to re-look at trying to come up with a proper description of these parcels so that they can be included as a permitted use. So, if there are no more comments from Commissioners or Planning, I’d like to ask for a motion. SHIMAOKA: I motion that we close the discussion. UNGER: Yeah, we’re going to go ahead and open up, we’re going to have a motion now. CHURCH: I’d like to make a motion, Chair Unger. I move that a favorable recommendation be forwarded to the County Council on Bill No. 108, Draft 4, based on the Planning Director’s recommendation and suggested revisions, which shall be adopted, subject to additional recommendations of the Leeward Planning Commission as follows: 1) that significantly expressed concern for adequate enforcement is funded adequately to ensure compliance; 2) to re-examine details of the registration process to a potential simplification, and consequently easier and more complete compliance; 3) identify updated software that is adequate to properly administer the bill; 4) continue to research ways to include high-density residential projects into permitted short-term vacation rental use; and 5) under Section 25-4 (a)(1)(C), to delete the following inclusion at the end of the second sentence, which ended in “Resort Node areas,” and delete “provided that a use permit is obtained in the RS zoning district.” SHIMAOKA: I second. UNGER: We have a motion by Commissioner Church, second by Commissioner Shimaoka. Roll call. Oh, any discussion? KEALOHA: Yeah, I think I support the notion of simplifying the process; however, in doing so, I feel like there should be more comprehensive registration requirements. UNGER: So noted. Hearing no more discussion, roll call. JACKSON: Commissioner Church? CHURCH: Aye. JACKSON: Commissioner Shimaoka? 63 EXHIBIT B SHIMAOKA: Aye. JACKSON: Commissioner Kealoha? KEALOHA: Nay. JACKSON: Commissioner Yates? YATES: Aye. JACKSON: And Chair Unger? UNGER: Aye. JACKSON: Okay, the motion carries, four to one. The discussion ended at 2:50 p.m. Respectfully submitted, Noriko Sauer, Secretary Leeward Planning Commission 64 EXHIBIT B