Musings: Abuse Chronicles

Have you ever wondered how, exactly, the North Shore of Kauai has been transformed from an enclave of small beach homes to a resort destination crowded with multi-million commercial properties operating under apparently fraudulent vacation rental permits? Here's a story that chronicles that evolution:

Once upon a time — June 16, 1972 to be exact — Miki Kaipaka got a building permit valued at $21,000 to construct a 1,456-square-foot house with three bedrooms and two baths on the Wainiha River.

Twenty years later, Peter Vollman bought the house for $490,000. It was advertised in the MLS listing as:

“AFFORDABLE OCEANFRONT, JUST REDUCED FROM $750K TO MEET RECESSION MARKET!! MUST SEE TO BELIEVE THIS DELIGHTFULLY LIVEABLE WITH OUTRAGEOUS VIEWS! OWNER FINANCING! FIREPLACE!

In 2002, Vollman Limited Partnerships sold the house for $600,000 to Craig and Karen Mills. Though county records show permits had been issued only for a fence and minor hurricane repairs in 1993, the sales listing indicated that other changes had been made (emphasis added):

Oceanfront 3bd/2ba home completely renovated enjoy spacious living room w/sliding glass windows & private deck. Fireplace, A/C, 6 ft wood fence, elec gate. Big ocean views.

Over the next three years, the house went through an even more dramatic transformation, though again, county records show no building permits were issued for any of the work. When Victoria Anne Leadley bought it for $1.475 million in 2005, it was described in the sales listing as having three bedrooms, three baths and a 560-square-foot lanai:

Remarks: Sometimes oceanfront, this home was completely rebuilt--inside and out--with the very best of everything. Travertine floors (including the lanai), marble baths, fantastic kitchen with granite countertops and stainless steel appliances. Two master suites, each with double lavatories and oversize doorless walk-in shower. A truly luxurious property in a unique location. Wonderful artist neighbors on both sides. On the Wainiha River with a spit of sand between you and the ocean. A dock for your kayak, and a large lanai for enjoying it all! Furnishings are separate from sale.

Private Remarks: Call for viewing instructions. House is in vacation rental. This is not the house you remember. The new floor plan, renovations, and decor will astonish you and your clients. Plan to spend a bit of time sitting on the lanai to appreciate the ever-changing view.

Today the house is again for sale — for $2.579 million. So why, you may ask, has it increased so substantially in value, even though the market is down? Well, it's got a bona fide vacation rental permit now. And as Realtor Jane Abramo discloses in her current listing, it has some new structures, too, though again, no record could be found of any permits: 

Remarks: Kauai Paradise House. This lovely home is a must see. This is a very successful and fully permitted vacation rental. TVNC-1266. All vacation rental reservations, preferential VRBO status, plus separate targeted website are being sold with the property. Recent upgrades include a new 200 square foot front lanai, expanded 600 square foot covered back lanai with travertine tile, 150 square foot deck above the river, a brand new roof, fresh paint inside and outside, new fencing and tropical landscaping. This meticulously renovated private oceanfront retreat on the North Shore of Kauai in Wainiha is perfect for short or long-term getaways for family or friends seeking luxurious accommodations with majestic views. Discover the relaxing elegance of Kauai, where hectic modern life is a remote memory and tropical splendor is your reality. Lovingly refurbished on a private, fenced lot nestled at the edge of the breath-taking Pacific, Kauai Paradise House boasts its own exclusive beach, panoramic views, elegant Tommy Bahama furniture, opulent travertine tile floors, 3 suites with 3 marble bathrooms (1 in each bedroom for the ultimate in intimacy), gourmet stainless-steel and granite kitchen with bar seating, built in convection oven and microwave, plus trash compactor. A vaulted-ceiling soars over the great room with wrap around sofas and hidden armoire entertainment center. The living room and separate dining area lead out to a covered lanai for the BBQ with couches for intimate conversations, and seating and table for alfresco dining, lush tropical backyard landscaping with coconut, ginger, avocado and palm trees, a secluded sun deck, and your own boat dock. Soak in unparalleled views of the river, the sandbar and the deep blue of the Pacific Ocean from every room. There's nothing left to do but take possession. All showings subject to 48 hour notice if the home is occupied by vacation guests.

As an aside, the “exclusive beach” that Jane is falsely hawking — all beaches in Hawaii are public, which she surely must know — just so happens to be the same little sand spit where the county bulldozed fishing shacks belonging to Native Hawaiians three years ago. 

Though the house was being used as a vacation rental when Leadley bought it in 2005, the county did not pass a law authorizing TVRs until 2008. In order to qualify for a permit, a house had to be in compliance with federal flood rules and the county Special Management Area law. Owners were also required to prove they had a General Excise license, and had been paying taxes on the rental. Furthermore, all building permits had to be up to date, and the property was supposed to be inspected to ensure that everything was kosher.

However, that property's TVR application included no records of “occupancy and tax documents, including all relevant State of Hawai‘i general excise tax filings, all relevant transient accommodation tax filings, federal and/or State of Hawai‘i income tax returns for the relevant time period, reservation lists, and receipts showing payment,” as required under the county ordinance.

Instead, an unsigned lease was submitted as “evidence” of rental history, even though the document clearly states, “This lease is not valid unless signed by tenant and agent.” Leadley also submitted a signed and notarized affidavit swearing that building permits were issued for all the structures on the property, and “there were no expansions, alterations, improvements or uses contrary to State and County land use and planning laws.”

And though the county TVR log shows an inspection date of March 18, 2009, no inspection report was included in the file.

Yet somehow, Leadley got her TVR permit. Former deputy planning director Imai Aiu approved her application, using the same form letter that appears in numerous other TVR files.

Curiously, though an inspection report was included in Leadley's most recent renewal application, it was blank.

Now, bear in mind that this house is still served by a cesspool, and it also sits in the flood plain. Under federal law, if a house is significantly altered, it must be brought into compliance with the 1981 federal flood standards. But since no building permits were issued for the complete re-do — not even the bogus “unsubstantial improvement” permits that I exposed previously on PIKO — it still does not meet flood standards.

Yet the property has a TVR permit for life, so long as the subsequent owners continue to send in their renewal applications — a benefit that added a cool $1 million to the value of the house.

It's worked out great for Leadley, and the realtors. But about what the community, the natural environment? Are either well-served by having a non-conforming commercial use too close to the ocean and a river? And what about the unsuspecting tourists who rent it, including the Canadian man who recently jumped to his death off that unpermitted deck?

After I first reported the lack of building permits for the property, I sent an email to planning director Mike Dahilig asking what actions his department was going to take. He replied, “I have cc-ed [county spokeswoman] Beth Tokioka on this e-mail and she will be heading our response.” Beth replied, “The Planning Department is investigating the situation and has no conclusions to report at this time.”

Since then, I had a chance to dig into the TVR file, where I found these additional irregularities. Perhaps it's time for county Prosecutor Justin Kollar to launch his own investigation. Because it sure seems like something fraudulent is happening here. And as I will show in upcoming posts, this is not an isolated incident.