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To all Maui Vacation Rental Property Owners or Managers:
The County of Maui is reviewing changes concerning vacation rentals. The proposed regulation could affect your rental operation.
Click here to read the proposed regulation.
Thank you for getting this out to people. And thank you also for what ever was done to get the "Hawaii Trying to Kill VRBO" Message Board up and running again. We are slowly going back to that board to share information on the overall TVR legislative issues for State sponsored bills.
In the meantime, just a comment on this new Maui County regulations, it pertains to non-vacation zoned properties. It is meant to address TVRs that are operating in residential neighborhoods. I thought it would be important to make this distinction known as the amount of things we are dealing with legislatively are large in number so it's hard to be an "expert" on every single one of these things coming along.
I am not a legal expert, so everyone needs to do their own due dilligence by reading the attachment you provided, but I strongly suspect it does not present a threat or challenge to any owners with properties that are in vacation-zoned areas/complexes.
Alohaes is correct, this will only concern you if you are trying to vacation rent your home in a residential subdivision or area that is not zoned for it. (defined as a separate building dwelling which is not a condo apt.) It is squarely aimed at absentee owners living on other islands or the mainland who have no on-island manager contact, and basically are breaking County ordinances regarding TVRs in residential zoning. What people need to understand is to study Chapter 19.65 of this County bill. Two main things to concentrate on is:
First, you can't have a house that is younger than 5 years old. That is to deter people from investing in / purchasing a newly built home or building in a residential subdivision / lot solely for the purpose of vacation rental. If you purchased a house in a residential neighborhood as an investment thinking you could vacation rental it, use it when you wanted, that probably was the norm for decades. Its all coming to an end, go long term rental and see if you can make the payments now. Nothing has made the local residents more up in arms than unsupervised vacation rentals next door to their homes, with unknown owners unresponsive or just plain uncaring.
Second, Section 19.65.080 Enforcement: and it is a very big change; it will make any online advertising illegal without a valid permit. The problem for the County is that they didn't have enough staff to respond to complaints, physically sending an inspector to the home was not viable in enforcing the problem of illegal rentals in residential neighborhood zoned areas as the burden of proof was on the County inspector. Now the burden of proof is on the owners that they were NOT illegally renting. The County is short of funds, the fines will be up to $1000 per day if they don't take the advertising down within 7 days, this will be easy money since there are an estimated 1000 to 1500 illegal home rentals on Maui. One person in the County Planning Dept. on a computer will be all it will take. Mayor Alan Arakawa (who has a B&B permit himself) stated he would not enforce against illegal rentals until there was an avenue to allow people to become legal, this bill will address that process finally. It won't be easy though, even tougher if the owner doesn't live on the island. If you thought getting a permit under the Bed & Breakfast Ordinance is tough, getting a Vacation Rental Home permit will be equally difficult. There are a lot of hidden requirements in the actual application put in by the Planning Department that are not spelled out in the Ordinance itself. I should know, it took us 11 months, 3 building permits and $20,000 to finally meet all the retrofit requirements for a Maui B&B permit. As an example, in 3 years since that B&B ordinance went into effect, only 16 permits have been granted out of a maximum allotment of 100 in South Maui. A lot of owners just give up.
Added into this new Vacation Rental Home ordinance, even if your home is located in a vacation zoned area, such as Wailea Resort, if the CC&Rs or Association of your particular subdivision doesn't allow it, the County can reject your permit, probably on a case by case basis of how much complaining they get from the Association.
Will this hot button issue be passed into law? Most definitely as there are more vocal activitists for this Ordinance than there are opponents, because a lot of opponents would have to stand up and say they are illegally renting even though economic conditions warrant it. The Mayor knows this, it will hurt the main tourist economy in the long run, but will keep his voting constituents who live in residential neighborhoods satisfied. Look for passage in this year. (They've been working on it for 2 years)
This has nothing to do with the latest proposed Hawaii House and Senate Bills regarding requirements for on-island contacts. That's purely a money (GET & TAT tax political issue) which obviously if you've been illegally renting transient vacation (TVR) of your Maui investment house, you aren't paying the local taxes anyway as you'd have to admit you are TVR illegally. The Maui legislation is different as it would allow a friend, relative or the dreaded real estate agent be your on-island emergency contact, they don't have to be an employee. IMO and based on a lot of industry sources, the HI House and Senate Bills have no way of passing, they are totally unenforceable, unconstitutional and will get struck down the minute they get passed if challenged in the courts.
The Maui County Council yesterday approved this Short Term Rental bill as it is now known. There are two readings of the final bill, the 2nd and final reading will take place May 18th, 2012. Upon final approval it becomes law. Today's article as reference from the Maui News.
This Short Term Rental Home Bill has been passed as of Wednesday, May 23rd, 2012. It will go into effect June 1st. Here is today's May 24th article as referenced in the Maui News.
Previously mentioned in the April 5th posting above, this is excerpted from today's news article: "Enforcement against illegal short-term rentals should be easier because Planning Department inspectors will be able to use the Internet and other advertising as "prima facie," or sufficient evidence, that a short-term rental business is ongoing."
Maui County has budgeted for this 2 new inspectors who have the sole task of enforcement of the ordinance. I'm sure a lot of owners will find a way to circumvent the rules with third party online advertising outfits, but it will make it harder, more distant, and a less trustworthy feeling for the consumer to directly connect with the owner or identify the property they are renting as it will now have to go underground.
Again, this only effects owners of rental homes in residential zoned subdivisions. This shouldn't effect most condominium owners.