Musings: The Big Hotel

No homestays will be allowed on agricultural land or in guest houses under an ordinance that moves to the full Kauai County Council next week.

The Council's planning committee also endorsed language that requires homeowners to live on site, and imposed a cap that limits the planning department to reviewing 10 applications for 2015 and 2016. 

But many more will be considered initially because planners said they already have “30 [applications] at our door.” 

“We'll start counting new applications once that law takes effect,” Planning Director Mike Dahilig said. Property owners with applications already in the works will be given the choice of whether they want to be reviewed under the old or new law, he said.

“Is that legal?” Councilwoman JoAnn Yukimura asked.

“It's a blend of law and policy – remember you make the law,” said Deputy County Attorney Ian Jung, noting the Council can specify in the ordinance when things take effect.

Deputy Planning Director Kaaina Hull said planners will be recommending the planning commission deny applications that are actually TVRs. But they still have the right to apply under the current law. The new law would stop many of them from applying, though likely not completely weed out the scammers.

“We've seen a lot of fakes, and people are creative,” Mike said. “This is a reaction to the creative thinking of people that we have enforced on. This will help us in our enforcement of shutting down these illegal TVRs from cheating the system once and for all.”

Councilman Mel Rapozo said the ordinance needs to honor current laws that prohibit homestays and lock out units on ag land. “We pretend those state laws don't exist, and we worry about the financial hardships” of the operators, he said.

Under the bill approved by the committee, property owners will have to seek a special permit to operate a home stay on ag land, as required by state law.

Only Councilman Gary Hooser voted against the bill, including the amendment that prohibited visitors from staying in guest houses. Mel, however, said the operations should be "self-contained. We don't want to see these multiple structures." Mike supported the amendment, saying the county had experienced problems with TVR owners renting out guest houses separately from the main house, creating a multifamily dwelling.

Gary also argued that the county should be “minimizing or eliminating the financial damage” to people who were running illegal homestays/B&Bs for years and are now shut down pending permit approval. 

But Mike said the county can't legally allow longtime operators to remain open while shutting down those that just opened.

And in response to a question from Councilman KipuKai Kualii about lessons learned from the county's vacation rental law, community advocate Caren Diamond noted, “I think the TVR bill is kind of the laughing stock of the state because we're the only county who took people who were doing illegal uses and gave them priority. And that's exactly opposite how other counties want to do it, and how the state Legislature recommends doing it and we really don't want to see that happen with homestays.”

Councilman Ross Kagawa asked how long homestay permits are valid.

“They run with the land,” Mike said.

“Forever?” asked Ross.

Yes, forever, just like the TVR permits. They're an extremely valuable entitlement that can significantly increase the value of a property. And have no doubts, many of these are extremely lucrative businesses.

Mel said he checked out one homestay on line, and based on its reservation schedule, it's making $22,000 per month. John Friedman said the six-unit operation next door to him in Waipake has been grossing $40,000 monthly over the last eight years, while operating without a permit. The county's attempt to shut it down has resulted in a protracted legal process.

Gary also contended that the county had given operators “implicit authority to continue just by looking the other way,” and was treating homestay owners differently than TVR owners, who were allowed to keep operating while the county hashed out a law and permitting process.

Mike said the county had considered that, but the reality is “the very first application that came through was a TVR that got shut down.” In other words, taking Gary's approach would allow illegal TVRs to remain open, too.

Mike also disputed claims that the planning department had told homestay operators they didn't need a permit, attributing it to confusion that arose in the wake of the TVR law, where both finance and planning were reviewing applications

“We have always been consistent in saying homestays require a use permit,” Mike said, noting that some people may have been told they didn't need to go through the TVR nonconforming use process , and interpreted that as they didn't need any permit.

Kaaina also explained how the department came up with a cap of 10 applications, saying the commission typically reviews about 20 use permits per year, so 10 homestay use permits seemed about the maximum that could be handled without overwhelming commissioners or the department.

About 100 homestays/B&Bs were identified in the state Department of Business and Economic Development census, planners said. But no one knows how many are actually operating on Kauai, where some websites advertise up to 1,700 home-based visitor accommodations, most of them unpermitted.

Though planners said a law is needed now to stymie the flood of illegal TVRs trying to game the system, Councilwoman JoAnn Yukimura said she thought it was “problematic” to “give permanent rights” without a more comprehensive law in place. Planners are viewing the ordinance before the Council as an interim measure, while it works out additional regulations. 

Both Gary and JoAnn questioned whether B&Bs were a nuisance, with JoAnn saying the burden was on planners to show that people had complained about these uses.

Kristin Zimmerman told the Council that it needed to think about how the mushrooming home stay/TVR industry is affecting longterm housing for young people on the island, many of whom are living at home because they can't find rentals.

"We are basically Kauai the big hotel," she said. "Open your eyes to it. Thank goodness he's [Dahilig] giving some cease and desist orders."