Vacation Rental and Bed and Breakfast Update

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This year has been turbulent for the owners of many bed and breakfasts and vacation rentals on the island of Maui. Over the last ten years, Maui has seen growing demand for vacation rentals outside of its traditional resorts. Vacationers have sought rentals in areas like the North Shore, Upcountry and East Maui. The demand for non traditional accommodations has been met by Maui residents as they have rented rooms and cottages to vacationers. This has become a growing industry and a significant economic engine for rural Maui economies. While Maui requires that rentals and bed and breakfasts be permitted, the current process for permitting is extremely cumbersome and expensive. Previous county officials have recognized the flaws in the process and allowed rentals to operate without a permit as long as they operated without complaint. A change in the mayor in late 2006 was followed by a change in county policy in 2007. The county planning department reversed course and adopted an active enforcement policy that shut down some rentals immediately and allowing others to operate until the end of the year. The county cited affordable housing concerns and the preservation of neighborhoods as the drivers for the policy change. Critics cited the adverse economic impact on individuals and the economies of rural Maui.

Concurrent with the change in enforcement policy, the county planning department began drafting new legislation that would regulate vacation rentals and bed and breakfasts. Many vacation rental and B and B owners, hoped that they might see new policy that would provide better regulation and a more improved application processes. However, a review of the draft legislation reveals a more restrictive policy that would prohibit rentals in most areas of the island outside of resorts. The county planning commission has been reviewing the proposed legislation. Bed and Breakfast owners in the North Shore and Upcountry area received encouraging news on Tuesday. The initial draft legislation stipulated that bed and breakfasts were to be a reward to active farmers. A bed and breakfast owner in agriculturally zoned lands needed to show farm receipts of $35,000 or more annually. Many owners protested that this number was far too high for two acre plots particularly in areas where topographic features and water limitations restricted farming potential. The planning commission agreed that the $35,000 was far too restrictive. The planning commission passed a motion that the number should be lowered to $2000. This removes one of the most significant hurdles for bed and breakfasts on ag land.

Also of note at the Tuesday planning commission meeting were the results of a special meeting of the Hana Advisory committee. The Hana area was particularly vulnerable to the shut down of vacation rentals and bed and breakfasts. The area has one condo complex and a high end hotel to accommodate visitors. Not only are these insufficient for vacationers, they also left many kama’aina without a place to stay for festivals, sporting events and even visits to family members. The Hana advisory committee came out strongly in favor of continuing vacation rentals at least in the core business area of Hana.

Check out today’s Maui News Article on the Planning Commission Meeting for additional information.

While the planning commission meeting provided good news for proponents of vacation rentals and bed and breakfasts, the January 1st deadline that would shut the doors of many vacation rentals is rapidly approaching. The Maui Vacation Rental Association is trying to bide time for owners of B and Bs and rentals as the planning commission works on its legislation. They have filed an injunction with the court to stop the January 1 shut down. This injunction was heard for the first time by the courts on Monday. The Judges initial reaction was that the MVRA should receive relief from the county shut down. However, the judge requested additional information on the current county laws and processes. He postponed next Monday’s hearing on the injunction until December 19th.

Check out today’s Maui News article on the court hearing for additional information. We will continue to follow the Vacation Rental Issue on the Maui Real Estate Blog.

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