Vacation Rental News

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Vacation Rentals were in the news again last week as more testimony was heard by the Maui County Planning Commission. The planning commission has been reviewing a new bill to regulate vacation rentals and bed and breakfasts on Maui. Current legislation restricts vacation rentals to resort areas. Vacation rentals outside of the resorts are supposed to apply for a permit. However, the process to apply for vacation rentals is incredibly cumbersome. The slow process and an overall policy of non enforcement has allowed vacation rentals to develop as a significant industry outside of resort areas. Under the direction of Mayor Charmaine Tavares, the planning department enacted a new enforcement policy earlier this year. The new policy shut down some non-permitted vacation rental properties immediately and gave others until the end of the year to cease operations. The planning department has drafted a new bill that would legislate vacation rentals. This new bill does not offer many changes over the existing legislation governing rentals. The majority of the non permitted vacation rentals on the island would remain illegal under the new bill. Testimony has been heard both for and against the bill over two different planning commission sessions. The first was held October 9th with the second session held last Tuesday the 23rd. Much of the testimony was against the new bills citing the adverse economic impact it would have on individual property owners and communities such as the North Shore, Upcountry and East Maui. These areas have seen vacation rentals develop as a significant economic engine for small town economies.

One of the focal points for discussion on last Tuesday’s meeting was the operation of vacation rentals and bed and breakfasts on agricultural land. There are a significant number of vacation rentals in Haiku and Kula on agriculturally zoned land. These areas have become popular destinations due to their quite surroundings, natural beauty and proximity to surf and windsurfing breaks. The new bill would allow for people to operate vacation rentals or bed and breakfasts on agriculturally zoned properties that generate annual gross receipts of $35,000 on agricultural activities. The proposed bill received public support from the president of the Maui County Farm Bureau. However, not all members of the farm bill supported the bill. The Maui Coffee Growers Association spoke up against the bill. The Maui Coffee Growers Association and others farmers argued that the gross receipts numbers are unrealistic. They argued that the opportunity to vacation rent offered a means to augment the limited income that you can derive from farming two acres. The Coffee Growers Association gave a much lower number of $2500 as a realistic number. Others have testified that not all agriculturally zoned properties are equal. There are number of ag zoned properties that are substandard for agriculture due to slope, wind, or sea spray. These locations make it difficult to have any sort of agricultural returns. Based on the proceedings of last Tuesday’s meeting, it appears as if the debate on the current bills will continue. Some of the feedback from commissioners would suggest that there is some hope that a compromise bill might be drafted that would allow more of today’s vacation rental owners to continue operations under better regulations and a more manageable application process.

The vacation rental issue was also heard in the courts as Maui County responded to an injunction filed by the Maui Vacation Rental Association. The MVRA filed an injunction to stop the county shut down of the island’s non-permitted vacation rentals. It is clear that the process for legislating vacation rentals is going to take a significant amount of time. It is likely going to be mid year of 2008 at the earliest before a new bill goes into effect. The MVRA’s injunction would allow vacation rental operators to continue their business during this process. As mentioned previously, current county enforcement would shut many of these vacation rentals down by the end of the year. The basis of the MVRA injunction was that the MVRA had a verbal and written agreement with the county that the planning department would follow a non-enforcement policy on its vacation rental laws. These agreements date back to a previous planning director and a different mayor. The previous planning director’s policy of non enforcement was due to the cumbersome application process and pending legislation on vacation rentals. Neither the application process has been improved nor has there been any headway made with a new vacation rental bill over a period spanning many years. The county’s response to the suit vehemently denied the presence of any sort of written agreement. County attorneys also challenged the suit on a number of other technical points. These points ranged from the ability of a group like the MVRA to file suit, to previous court rulings regarding zoning enforcement. It will be up to the courts to decide which sides arguments have more merit.

We will continue to provide updates on the MVRA lawsuit and the planning commission review of the vacation rental bill on the Maui Real Estate Blog.

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