The County Council Planning Committee drew closer Thursday to the completion of a bill that would change several portions of the county's short-term vacation rental home law to support tourism while pushing local rental operators to comply with permit laws.
"It's a worldwide issue of how to regulate these types of businesses," committee Chairman Don Couch said. "If we don't have that inventory here (for visitors), they'll go somewhere else. I'd rather see something here and have it regulated."
The short-term vacation rental law was passed in 2012 to create a permitting process for short-term rental homes, which the county hoped would offer residents and small businesses a stake in the tourism industry and to give visitors an alternative to the hotel experience.
Chairman Don Couch addresses the Maui County Council Planning Committee during Thursday’s meeting in Council Chambers. The committee is working on a bill that would amend several portions of the county’s short-term vacation rental home law.
The Maui News / COLLEEN UECHI photo
Council Member Don Guzman discusses the five-year permit ban that the county can issue to residents found operating rentals illegally. He is a member of the council’s Planning Committee that is discussing changes to the short-term vacation rental home law.
The Maui News / COLLEEN UECHI photo
So far, the county has approved 150 of its 400-permit limit, according to Couch.
However, countless illegal rentals continue to operate, which officials say deprive the county of taxes and are unfair to those who expend resources to go through the lengthy permitting process.
Under the current law, the county can issue a five-year rental permit ban to those found operating illegally. However, this is one reason many don't want to come forward and seek permits, worried about being subject to the ban, committee members said.
Council Member Don Guzman suggested reducing the number of years, but Planning Department officials said that the current ban sends a stronger message.
"It's one of the strongest enforcement tools that we have," department Deputy Director Michelle McLean said. "We beg you not to take that away. . . .We feel a shorter ban would just get written off as the cost of doing business."
The committee eventually decided to keep the five-year ban but suggested a six-month grace period from the ban during which operators would have to show proper licensing and prove they were paying general excise and transient accommodations taxes, property taxes and a possible after-the-fact permit fee. Committee members suggested a $5,000 fee.
McLean acknowledged that the department didn't start enforcing the ban until May, giving some illegal rentals a default grace period. Committee members said that the six-month period would be a final chance for residents to seek a permit before facing the ban.
"If somebody was unaware of a county law, I can somewhat buy that," Council Member Mike White said. "But I can't ever buy that somebody's operating without understanding that they would have to pay (general excise tax). . . . I agree the ban is a challenge, but it's there for a purpose."
Residents currently under a five-year ban could seek a permit if they can meet the proposed criteria six months after the bill passes, according to Couch.
The committee also changed requirements for taking a rental application to the county planning commissions. Under the current law, certain "triggers" send applications to the commissions for approval, including if another short-term rental home is already within a 500-foot radius of the applicant.
However, this has overburdened the commissions, staff planner Gina Flammer said. Flammer explained that the department has expended an estimated 4,000 hours on rental applications and permits over the past two years.
"The Maui Planning Commission is . . . spending a disproportionate amount of time on these applications versus other projects they could be reviewing," Flammer said after the meeting. "Thirty-six percent of their agenda items since 2013 have been related to a B&B or STRHs (short-term rental homes)."
The committee changed the commission trigger in the bill to two or more homes within a 500-foot radius, requiring the third short-term rental home within a 500-foot radius - and each subsequent application - to go before the planning commission.
Final committee discussion and decisions also included:
* Approving a motion to treat units under a condominium regime as individual units for permitting purposes. Condominium units currently are viewed as one collective lot.
* Leaving the Maui Meadows short-term rental home cap at five. Testifiers who said that the number was low had previously suggested raising the cap to 10.
* Allowing accessory use on agricultural-zoned land as long as the homeowner complies with state land-use laws. Currently, the County Code requires homeowners to seek a state special use permit for short-term rentals in agricultural districts, but the committee plans to do away with the requirement since the state Legislature may possibly change land-use laws.
The bill's proposed amendments still are subject to change. The committee's next meeting is set for Feb. 18.
Couch said that the committee will review enforcement issues, which are "the last thing, then we're ready to go" with the bill to the full council for review.
* Colleen Uechi can be reached at firstname.lastname@example.org.