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HomeMy WebLinkAboutCOM 0739.251 2016-2018 110 vu ion cotes 1�a r DC7 ce Z C OFFICE OF HAWAIIAN AFFAIRS Administrative Testimony o-< Testimony of Kamana`opono Crabbe, Ph.Drn Ka Pouhana, Chief Executive Officer +o A' Hawaii County Council Planning Committee Bill 108 (Draft 3) AMENDS CHAPTER 25, ARTICLE 1, ARTICLE 2, ARTICLE 4, AND ARTICLE 5, OF THE HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO SHORT-TERM VACATION RENTALS July 10, 2018 10:30 a.m. Hawaii County Building The Administration of the Office of Hawaiian Affairs (OHA) offers the following COMMENTS on the proposed third draft of Bill 108, which seeks to establish a regulatory framework for short-term vacation rentals (STRs) in Hawaii County. OHA previously offered suggested amendments to the substantially similar second draft of this bill, which can be found in the attached testimony from June 5, 2018; OHA now offers the following additional comments for consideration by the Committee. 1. Prior recommended amendments and proposals for further consideration OHA strongly urges the Committee to consider the policy recommendations and suggested language previously submitted on this measure, and, should it choose to move this measure forward, to request that the Planning Commission and Planning Department consider incorporating them in further revisions to this bill. These include: (1) Ensuring meaningful financial liability for violations substantially above the $500 maximum administrative fine that is currently contemplated in this measure's reference to Hawaii County Code § 25-2-35, including increasing fines for repeated violations and daily fines for continuing violations. As OHA previously noted, a potential $500 fine could easily be considered a cost of doing business or an otherwise nominal liability for operators advertising short-term rental units at $100 to $1,000 or more per night. While OHA's previously suggested language included base and daily fines of $1,000 - $5,000, OHA notes that both O'ahu and Maui counties are also considering proposed base fines of$20,000 for unlawful transient accommodation operations, with Maui also considering daily fines of $10,000 for ongoing violations. Comm. No.1bq.i 'I Ref. To:. P(PC Ref. Datem-----.77-0118— . ., (2) Stronger and "proven effective" enforcement mechanisms that can help avoid the blatant, widespread, and ongoing noncompliance found in other counties, including: clear definitions; a robust range of enforcement funding sources such as collected fines, state and county appropriations, grants, and donations; explicit processes for receiving and investigating complaints and evidence, establishing violations, and collecting fines; explicit authorization for the broad use of enforcement funds including but not limited to professional training for enforcement staff, citizen training on evidence gathering on known illegal STR operations, the publication of notices of violations and collected fines, the maintenance of complaint intake and investigation programs and staff, the publication of educational and informational materials, and any other activities that can facilitate enforcement and compliance with county transient accommodations laws; conditions in all registration, permits, and certificates allowing for site inspections and review of tax records; disgorgement of profits from unlawful STR operations; non-monetary penalties including the denial of all business- and building- related county permits; publication of complaints and fines for deterrence purposes; and the maintenance of a publicly-accessible website with updated information on existing lawful STRs and applications for STR uses. (3) Limiting STR owners and operators to "natural persons," thereby prohibiting the operation of short-term vacation rentals by corporate entities more likely to be engaged in real estate speculation,,and preventing owners and operators from enjoying legal insulation for regulatory violations or tortious conduct. The number of STR units that may be operated by any individual may also be limited to further discourage speculation and prevent the mass conversion of housing units into transient accommodations. (4) Explicit restrictions on and penalties for the use of affordable and workforce housing for STR purposes, to ensure these much-needed residential housing units serve their intended purpose. (5) Establishing a permit requirement for all STR operations, including existing operations and STRs located in permitted districts, with a community notice and input process, and approval/denial criteria allowing for the denial of a permit application for potential impacts to community welfare, safety, and health; inconsistency with community plans; or a significant potential for community conflict. (6) For existing uses, require explicit burdens of proof for establishing prior compliance with all legal requirements including but not limited to county and state tax laws. (7) Prohibiting the practice used to skirt transient accommodations laws in other jurisdictions through 30-day rental agreements which explicitly contemplate actual stays of less than 30 days, by expressly considering such agreements as short-term and not long-term rental agreements. Specific language for incorporating such provisions are in the attached testimony. 2. Technical consultation with other planning departments, other jursidictions, and OHA Second, OHA respectfully recommends that the Committee, should it choose to move this measure forward, request that the Planning Commission and Planning Department look to other jurisdictions and to provide a comprehensive consideration of policy options, regulatory approaches, and refined bill language, to ensure that this measure can most effectively and clearly reflect the intent of the Council and the interests of the County in regulating short-term vacation rentals. For example, OHA notes that the definition of "short-term vacation rental" only appears intended to regulate situations where "the owner or operator does not reside on the building site," and further excludes from regulation "the short-term use of an owner's primary residence as defined under the Internal Revenue Code." Given the current definition of "short-term vacation rental," it is unclear whether an owner or operator may be excepted from regulation if they reside only seasonally, i.e. not as their primary residence, in a dwelling unit that is otherwise rented for 30 days or less. In other words, it is unclear whether the legislation intends to exclude from regulation operators who do not reside on-site as their primary residence, or while a dwelling unit is being rented short-term. Moreover, it is also unclear whether an owner or operator who resides on site, either seasonally or as their primary residence, should instead be considered a bed and breakfast operator.' OHA respectfully suggests that continued ambiguity in the short- term vacation rental definition and the intended regulatory coverage in both this bill and in existing ordinances may result in potential confusion for the public, as well as enforcement challenges for the county. With regards to the prior example, OHA does note that Honolulu County's Department of Planning and Permitting is currently considering how to address the situation of homeowners renting out their residences on a temporary basis, and for limited amounts of time—such as during a planned month-long vacation — through a permit application that would exempt them from transient vacation rental regulations; such an OHA notes that the current definition of"bed and breakfast establishment"would already appear to apply to any"single-family dwellings and/or guest houses . . . in which overnight accommodations are provided . . . for compensation . . . for periods of less than thirty days," regardless of whether an operator lives on site (although subsequent bed and breakfast standards would appear to require such operators to reside in the unit as a principle use). See HCC§§ 25-1-5, 25-4-7. approach may allow for broader definitions that mitigate the potential for unintended loopholes, while reducing the regulatory impact on bona fide residential homeowners. Accordingly, should it choose to move this measure forward, the Committee may wish to request that the Planning Commission and Planning Department reach out to and work with other county planning agencies, other agencies and stakeholders, as well as OHA itself, in crafting a set of policy options for the Committee's and Council's further consideration, to include regulatory approaches and refined language that ensures consistency, clarity, and enforceability in any future short-term vacation rental ordinance. 3. Conclusion In conclusion, OHA appreciates the substantial effort that has been invested in this important step towards regulating and mitigating the substantial and growing impact of the transient accommodations industry on Hawai'i's communities and limited housing supply. OHA respectfully urges the careful and continued consideration of the recommendations submitted in this and prior testimonies on this measure, as well as that of other organizations and stakeholders seeking to protect and uphold the long-term interests and needs of Native Hawaiians and all county residents. Mahalo nui for the opportunity to testify on this matter.