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HomeMy WebLinkAboutCOM 0739.398 2016-2018 P/CoLa1àI COMµ.73q OFFICE OF HAWAIIAN AFFAIRS Administrative Testimony Q, c3 Testimony of Kamana`opono Crabbe, Ph.D Ka Pouhana, Chief Executive Officer °N, o-�: County of Hawai`i County Council Bill 108 Draft 6 A c ti AN ORDINANCE AMENDING 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 November 20, 2018 9:00 a.m. West Hawaii Civic Center The Administration of the Office of Hawaiian Affairs (OHA) offers the following COMMENTS on Bill 108 Draft 6, which seeks to regulate short-term vacation rental operations in Hawaii County. OHA appreciates the Council's recognition of the need to better regulate short-term vacation rental and transient vacation rental uses of housing units • in Hawai'i County, and urges the Council to carefully consider the unaddressed concerns and suggestions made in the attached previous testimonies on this measure, including in particular those concerns identified below. 1. Strong enforcement mechanisms are critical to the success of any regulatory framework for short-term vacation rentals in Hawaii County. OHA strongly urges the Council to consider the enforcement concerns and suggestions raised in OHA's previous testimonies on this measure, including in particular the • suggested language in the September 20, 2018 testimony to the Leeward Planning Commission. Major concerns highlighted in these past testimonies include the following: • Current maximum fines under the county zoning code may do little to encourage compliance with any new short-term vacation rental regulations. The zoning code's maximum fine of $500, with an additional maximum $500 per day fine for every day in which a violation can be proven, could easily be considered an acceptable risk or cost of doing business for illegal short-term vacation rentals generating $120 to $1,000 or more per night. Given the continual difficulties and expenses other counties have encountered in successfully enforcing their laws on just a handful of illegal vacation rental operations, a much higher penalty schedule will be necessary to sufficiently deter illegal short-term vacation rental operations. Recommended language for a new section HCC § 25-4- .4 to provide for such a penalty schedule is offered in the attached September 20, 2018 testimony.' Comm. ✓" "1 D Ref. To:` 1'�/1Couno Ref. Date N°V 2 0 1U18 1. e � t+ $ yi • High compliance monitoring and enforcement costs require broad and flexible funding sources for enforcement. As demonstrated in other jurisdictions, the enforcement of any short-term rental regulation, particularly against well-financed real estate speculators, can often involve costly litigation that quickly depletes enforcement funds and strains administrative resources. Monitoring and inspection costs can likewise entail considerable expenses, particularly in the case of Hawai'i Island's expansive geography. Accordingly, to better ensure that all enforcement funding opportunities can be taken advantage of, the proposed enforcement account in Bill 108 Draft 6 should be allowed to receive funding from as broad a range of sources as possible — including state and county appropriations, grants, and donations. Suggested language to enable the enforcement account in HCC § 25-4-_.3 to receive funding from such a broad range of funding sources is also offered in the attached September 20, 2018 testimony." • Definition loopholes exploited in other jurisdictions should be closed. Notably, transient vacation rental operators in other counties have openly exploited their respective counties' vacation rental definitions, by executing 30-plus day rental contracts, AND providing for a prorated discount for stays that do not extend for the full 30 days. This has allowed operators to effectively enter into rental agreements for less than 30 days, while avoiding vacation rental laws and ordinances that apply only to agreements for 30 days or less. Accordingly, the attached September 20, 2018• testimony offers language for the definition of"short-term vacation rental" in HCC § 25-1-5 that can ensure this particular loophole cannot be exploited in Hawai'i County."' 2. Additional provisions and safeguards may mitigate the potential impact of short- term and transient vacation rental uses on housing opportunities for county, residents. Given the potential impacts of short-term and other transient vacation rental uses of Hawai'i County's housing supply and community character, OHA further urges the Council to consider the following suggestions, also raised in OHA's previous testimonies. • Affordable and workforce housing projects should be explicitly reserved for residential use. In light of the significant state and county incentives and concessions offered to developers of affordable and workforce housing projects, explicit prohibitions should be enacted to ensure that designated affordable and workforce housing units are used to provide actual residential housing opportunities for county residents, and not as short-term vacation rental investment properties. The September 20, 2018 testimony accordingly offers language for amending paragraph (a)(1) of HCC § 25-4-_., to explicitly prohibit short-term vacation rental uses of dwelling units set aside for workforce or affordable housing."' • A permitting requirement and review process for new short-term vacation rentals should be established, to mitigate any impacts that short-term vacation rental , 4 operations may have on housing costs and other community interests. Finally, OHA strongly recommends the inclusion of a permitting process for new short-term rental operations with substantive standards of review that consider potential impacts to housing prices; community welfare, safety, and health; and the potential for community conflict. Given that Bill 108 Draft 6 would allow short-term vacation rental operations to be established in regions located throughout Hawai'i Island, such a process can help to prevent a proliferation of short-term rental uses that unduly impact county residents' housing opportunities, and preserve the character and lifestyles of rural, Native Hawaiian communities. The September 20, 2018 testimony accordingly offers language for an amended paragraph (2) of subsection (b) of HCC § 25-4-_., to provide for such a process.`' Mahalo nui for the opportunity to testify on this matter. Recommended language for a new section HCC § 25-4-_.4: "Section 25-4- .4. Enforcement;civil fines. If any short-term vacation rental is found to be in violation of the provisions of sections 25-4- . or 25-4- .1, enforcement shall be pursuant to section 24-2-45; provided that if a person is found to be operating a short-term vacation rental without a permit, certificate, or registration as required by these sections, an order issued to the person pursuant to section 24-2-45 may further require the person to pay administrative costs in addition to a civil fine of: (i) For a person who has not had a notice of violation issued for the operation of a short-term vacation rental without a permit, certificate, or registration within the last five years, no more than $1,000 per day or the offered rental rate, whichever is greater,for each day that the rental property was advertised, offered, or operated as a short-term vacation rental without a required permit, certificate, or registration; (ii) For a person who has had a single notice of violation issued for the operation of a short-term vacation rental without a permit, certificate, or registration within the last five years, no more than $2,000 per day or the offered rental rate,whichever is greater,for each day that the rental property was advertised, offered, or operated as a short-term vacation rental without a required permit, certificate, or registration; (iii) For a person who has had two or more notices of violation issued for the operation of a short-term vacation rental without a permit, certificate, or registration within the last five years, no more than $5,000 per day or twice the offered rental rate,whichever is greater,for each day that the rental property was advertised, offered,or operated as a short-term vacation rental without a required permit, certificate, or registration." Recommended language for HCC§ 25-4-_.3(c), based on the current language of Bill 108 Draft 6: "(c) This account shall be funded by appropriations, grants, awards, donations, gifts, or other moneys derived from public or private sources;fees collected in connection with: one-time registration fees for short-term vacation rentals pursuant to section 25-4- .(b); nonconforming use certificate renewal application fees pursuant to section 25-4- .1.(e); administrative costs and fines collected pursuant to section 25- 4- .3; and interest, dividends, or other income from the aforementioned sources." Recommended language for the definition of"short-term vacation rental" in HCC § 25-1-5, based on the current language of Bill 108 Draft 6: ""Short-term vacation rental" means a dwelling unit of which the owner or operator does not reside on the building site as its principle use, that has no more than five bedrooms for rent on the building site, and is rented for periods of thirty consecutive days or less, provided that any rental agreement for a period longer than thirty consecutive days that contains any provision contemplating an actual stay of thirty consecutive days or less shall be considered a rental agreement for thirty consecutive days or less.This definition shall not apply to the short-term use of an owner's primary residence as defined under section 121 of the Internal Revenue Code." iv Recommended language for HCC § 25-4-_.(a), based on the current language of Bill 108 Draft 6: "(a) Short-term vacation rental;where permitted, specific prohibitions. (1) Short-term vacation rentals shall be permitted in the: (A) V, CG, and CV districts; (B) Residential and commercial zoning districts, situated in the General Plan Resort and Resort Node areas; (C) RM district, for multiple family dwellings within a condominium • property regime as defined and governed by chapters 514A or 514B, Hawai'i Revised Statutes, provided further that no short-term vacation rental use shall be permitted for dwelling units dedicated to or set aside as workforce or affordable housing, and that any permit, certificate, or registration required by this Chapter for a short- term vacation rental use shall only be issued to a natural person. (2) Private covenants prohibiting use of any unit as a short-term vacation rental shall not be invalidated by this chapter. (3) Special permits in the state land use agricultural district shall not be issued to permit short-term vacation rentals in farm dwellings, pursuant to paragraph 205- 4.5(a)(4), Hawai'i Revised Statutes." Recommended language for HCC § 25-4-_.(b)(2), based on the current language of Bill 108 Draft 6: • "(2) Any new short-term vacation rental established in a zoning district after the effective date of this section, where such use is permissible pursuant to this section, shall Obtain a short-term vacation rental permit and register with the director prior to use of such rental.The director shall hold at least one public hearing in the community in which the short-term vacation rental will be located, to accept public comments on the short-term vacation rental permit application. The director may shall compile and publish comments submitted on the short-term vacation rental permit application, and may: (A) Approve the permit application; (B) Approve the permit application with conditions to mitigate concerns expressed during the public hearing; (C) Deny the permit application due to potential impacts to community welfare, safety, and health; inconsistency or conflicts with the community development plan;or a significant potential for substantial community conflict;with the basis for the denial, including relevant concerns expressed during the public hearing, provided to the applicant in writing.An applicant • whose permit is denied may submit another permit application three hundred and sixty-five days after the denial. If the short-term vacation rental permit application is granted, the short-term vacation rental shall register with the director and pay a one-time fee of$500."