Caption: The Molokai Happy House where many Molokai Residents and Visitors have enjoyed staying for over 15 years

HONOLULU: Late Friday, July 10, 2020 the Maui Vacation Rental Association (MVRA) along with 4 homeowners on Molokai filed a lawsuit in federal court against the County of Maui seeking to reinstate their permits to operate as Short-Term Vacation Rentals.

On March 10, 2020 Maui County passed Bill 22, signing into law Ordinance 5059 that set the Molokai legal, short term rental cap to zero. This, effectively, canceled the operations of 17 families, the existing reservations for visitors with plane tickets, and the jobs of some Molokai residents, on December 31, 2020. Many of these homes had operated legally for 15 years or more. Many had permits saying they could operate into 2021. 

=“Litigation was our last resort. We met with County Council members, with the Mayor and with the Planning Department. Ultimately, they were not able to protect these Molokai property owners and residents.” said Jen Russo, Executive Director, Maui Vacation Rental Association. “Reluctantly, we decided we must stand for fairness and for abiding by the Constitution. This is about creating good policy, we all benefit from that.”

The case is being handled by Attorney Terrance Revere, of Revere and Associates Honolulu, who filed a lawsuit in Federal Court on behalf of the affected homeowners and the Maui Vacation Rental Association.

“It is stunning that a County with 1/3 of its population unemployed would still be engaging in an anti-small business agenda while promoting off-island corporate interests. We are taking this action because even though my homeowner clients did nothing wrong and had no complaints against them, the County decided to make the number of STRH’s permitted on Molokai to be zero.  Instead of grandfathering in existing permit holders, they told my clients-- with no due process whatsoever-- that their STRH permits were being yanked away,” says Revere. 

The case asserts that under state and federal law the County violated the permit holder’s right to due process. Also, many of these legal vacation rental home owners will have to answer to potential claims from the renters they must now cancel. 

“Most people on Molokai didn’t even know it was on the table to shut them down. Some prominent business owners didn’t even know they are no longer allowed. I am still getting Molokai people wanting to book short term homes for next year and I have to tell them sorry, Molokai people don’t want them, don’t you know?” Dayna Harris of Molokai Vacation Properties, one of the affected businesses on Molokai, exclaimed.

“We are encouraged by the community outpouring of support for the legal vacation rental program, especially now when small businesses are hurting”, says Greg Mebel, President of the MVRA. When the Planning Commission recently heard a question about lowering the caps on STRH permits, it spurred one of the highest numbers of attendees to a Planning Commission meeting ever, via a virtual Blue Jeans video conference (at times over 200). A Planning Department sponsored STRH feedback session, held earlier this year, was attended by so many the Department scheduled an encore second session to accommodate supporters. Subsequently, the Planning Department decided not to pursue a phase out of the legal vacation rentals. 

Recently, legislation has been proposed that would take away short term rental rights from hundreds of legally operating condo owners. “While the MVRA always prefers to work with local policy makers, we’ve been forced to also raise a legal fund. Condo owners have been calling the Planning Department for information. Then they call MVRA and ask what can be done, how can they join?” says Terry Tolman, former Executive Director of the Realtor’s Association of Maui and current MVRA Chairman.

“This (Molokai) case should protect short-term rental operators in Maui, which is why our members are coming to the aid of the Molokai 17”, continued Terry, “Many fear they’ll be next.”

“There is a lot of frustration locally with high costs of living and lack of affordable housing, which we understand. That frustration has created attacks on legal vacation rentals that are simply not supported by facts. Unfortunately, these attacks won’t affect the problems they’re supposed to solve,” adds Jen Russo. “The members are prepared financially to go all the way with this lawsuit, but we sincerely hope we can resolve this amicably with the County long before then.” 

Summary of Legal Details

The lawsuit describes multiple violations with Ordinance 5059 (Bill 22): 

• Ordinance 5059, and its application is inconsistent with and conflicts with other zoning provisions and County approvals that were granted and issued to the permit holders on Molokai. Ordinance 5059 violates Haw. Rev. Stat. § 46-4, which prohibits an amendment of a zoning law to prohibit a lawful pre-existing use, and it violates the Hawaii and United States Constitutional protections for non-conforming uses and vested rights

• The permit holders went through a rigorous permitting process and made investments to rent properties pursuant to these provisions

• Many Molokai residents and businesses are dependent on the tourism industry and have been harmed by the elimination or uncertainty surrounding these legal vacation rental homes in the resort areas, including house cleaners, landscapers, contractors, property managers, and booking agents.

• Many other businesses, such as retail merchants, restaurants and activity providers, are also economically supported, in part, by these legal rentals

• Ordinance 5059 will have a direct and substantial impact on Plaintiffs, its members and those similarly situated, who currently rent properties legally under the current regulations and desire to continue to do so

• Ordinance 5059 is an unconstitutional restraint on property rights, its broad application unreasonably impairs previously granted property rights, and its application does not serve any legitimate public purpose or benefit.

• The Ordinance 5059 is contrary to the express purpose of the Ordinance No. 3941 which is not only to: “retain the character of residential neighborhoods” but also “to allow for varied accommodations and experiences for visitors.”  In setting a cap of zero and revoking the permits that had already been granted, the Molokai Planning commission and the County Council failed to show any evidence that the permitted STRH properties had created any deleterious impacts on their neighborhoods beyond the unsubstantiated allegation that they impacted the availability of housing.

 

The Molokai Community Plan was adopted in 2018 and included an important component to expand complementary tourism markets, support limited growth of alternative lodging units, and support increased enforcement of the STRH ordinance. Less than 1% of Molokai’s residential housing has been granted an STRH permit to allow short term rental uses. This is in line with the goals set forth in the Molokai Community Plan. 

The plaintiffs ask the court to have declared invalid and enjoin the enforcement of Bill 22. 

The owners of vacation rentals on Molokai are being denied due process rights and not being treated equally under the law. The County of Maui has disparately regulated permitted and lawful vacation rentals, causing devastating economic impact on the owners, interfering with their investment-backed expectations, and intentionally discriminating against these owners. This amounts to a regulatory taking, entitling the owners to just compensation. 

Greg Mebel, President of MVRA, full statement: 

“We are encouraged by the community outpouring of support for a legal vacation rental program, especially now when small businesses are hurting.  When the Planning Department held a community forum asking whether the community supported STRH’s, so many people showed up to support, they had to have a second, impromptu session to give everyone a chance to enter the forum. When the Planning Commission recently heard a question about lowering the caps on STRH permits, attendance was among the highest ever to a Planning Commission meeting. They were overwhelmingly in support of maintaining a legal STRH program. Our community knows that this program is one of our strongest tools, to vet, tax, regulate, and control vacation rentals.  It’s how each neighborhood’s voice is heard. Our program leads the entire State.

On Molokai, this program was implemented, permitted, and relied upon for years. There were no complaints against the 17 permit holders there. Suddenly removing the program and telling those permit holders that their permits will terminate, some even before the expiration date, was neither constitutional nor fair. So, our group was forced to challenge that action. We met with Council members, Planning Department and the Mayor and did not make this decision lightly. In fact, it’s the first time our small group has had to create a legal fund.

Short term rental homes make up around 200 homes of the 54,000 plus (per last US census) households on Maui. This is 1 in 267 homes. All legal STRH’s have signs out front, with contact phone and permit numbers. It’s mathematically and clearly impossible for this group to adversely affect the characters or health of neighborhoods. 

The STRH program has built in safeguards against affecting home values. Only people who have owned their home for five or more years can apply. New home owners can’t apply for a permit.

There are an estimated 11,000 – 15,000 second homes on Maui. This is about 1 in 5 homes. At this concentration, second homes could affect whether a long-term neighbor “knows” who the new neighbor may be. Many second home owners have friends who come to stay in their place with rental cars. They may look like short term renters, but unlike permitted Short term rental homes, there are no regulations on these visitors. This is where we’ve seen a great amount of confusion.

Maui’s STRH regulations include a host of requirements that the property manager must enforce, like occupancy limits, quiet hours, parking restrictions, no parties, as well as safety checks to ensure that homes are safe for the visitors and those visitors do not impact neighbors. This is why there are virtually no complaints against legal, short term vacation rental homes (STRH’s). There simply is no empirical data suggesting STRH’s detrimentally affect neighborhoods. The STRH program on Maui took that into account when it was created.  On the contrary there is plenty of data showing the benefits of a regulated, balanced program. That’s why our County's stakeholders got together and created it in the first place.”

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To donate to the legal fund please go to MVRA.NET/DONATE

I have a big favor to ask. We would love to get some more data on our Maui Vacation Rental industry. As evidenced in the recent planning commission meeting, our community needs more information on this important industry and its workforce. We created a new survey for participants in the Vacation Rental business to fill out. It should take around 10 minutes. Please take a moment to fill out the survey. If you know someone you could share it with please do! The bigger our data set the better.

Do the Vacation Rental Survey!

To see our most recent newsletter and sign up for updates please see https://myemail.constantcontact.com/What-Happened-at-the-Planning-Commission-Meeting-Last-Week-.html?soid=1102067254153&aid=YU4CTiMFwaE

The Planning Commission public hearing on resolution 20-27 on June 9, 2020 at 9am heard hours of testimony opposing the reduction of caps. There were about 20 oral testimony given in opposition, and two in favor. Thank you to everyone who gave their testimony. One of the testimonies in support of the resolution was Councilwoman Tamara Paltin, whose committee brought forth this resolution, and who will also be voting on the resolution. For those who sent a copy to MVRA, I counted 42 letters in opposition of this resolution, none in support. The planning commission remarked it was the largest attendance that they had ever seen in a meeting, at 150 participants on the bluejeans system. It seems that the system caps out at 150 participants, I know there were people digitally getting kicked out of the meeting, or not able to attend because of the limitations. Thank you for trying.

Our attorneys at Revere & Associates prepared and submitted a letter of opposition to the Planning Commission and County Council regarding resolution 20-27. You can see a copy of that letter by clicking here.

After hours of testimony the public hearing on resolution 20-27 was recessed until the next meeting. The Planning Department erroneously published a public testimony call in number that did not work, so while they rectify that matter there is still time for more written and oral testimony. For some examples of testimony and where to send it click here.

Planning Commission Chair Lawrence Carnicelli brought up a serious issue with the resolution, and that is that it was written and proposed pre-COVID19, and he brought the broader question forth, do we need to perhaps pause this resolution, given the current situation. Commissioner P. Denise La Costa said she would like more data and statistics on the matter. Commissioner Kawika Freitas was in favor of the Resolution. Commissioner Dale Thompson suggested that a compromise could be made, if we lower the caps, but give a grace period, or fee for any that expire so that those permittees do not have to re-apply. Commissioner Stephe Castro suggested screening applicants better might help, while Commissioner Christian Tackett said this is not a great time for recommending the resolution. The planning department presented their powerpoint presentation, with their recommendations.

Next week’s Planning Commission meeting will be held Tuesday, June 23 beginning at 9:00 am, but there are 7 items on the Commission’s agenda with the continuation of the public hearing for the cap on short term rental home permits scheduled to begin NO EARLIER than 1:00 pm. The commission will likely not get to it until after 3:00 pm, given the number and complexity of the items before it. Here is a link to the next meeting agenda: the permit cap item is listed as item G-1 https://www.mauicounty.gov/ArchiveCenter/ViewFile/Item/27409

Look for the video of last weeks meeting here, https://www.akaku.org/boards-commissions/. The video was not available as of today, but will be posted there.

To see our most recent newsletter and sign up for updates please see https://myemail.constantcontact.com/What-Happened-at-the-Planning-Commission-Meeting-Last-Week-.html?soid=1102067254153&aid=YU4CTiMFwaE

Today Mayor Victorino announced in his press conference it is now ok for Maui Short Term Rentals, this includes permitted homes, permitted bed and breakfast operations, and condos, to advertise for accommodations, and they can begin taking reservations on June 16 for people who are not subject to quarantine. 

Here are the details from the administration:

Governor Ige's 9th Supplementary Proclamation Related to the COVID-19 Emergency, dated June 10, 2020, states that persons traveling to the State who require paid or commercial lodging while subject to the mandatory 14-day quarantine shall designate a hotel or motel as their designated quarantine location. 

Quarantine for persons traveling inter-island expires on June 16, 2020.

Under Mayor Victorino's Public Health Emergency Rules amended June 8, 2020, operation of essential business includes hotels and motels, in compliance with the State of Hawaii restrictions.

 

Therefore, effective June 16, 2020, all vacation rentals, including condominiums, Bed and Breakfast Homes and Short-Term Rental Homes, may operate for inter-island travelers, or out-of-state travelers who have completed their mandatory 14-day quarantine. 

Out-of-state visitors that arrive in Maui County must complete a 14-day mandatory quarantine at a hotel or motel prior to rental of a condominium, Bed and Breakfast Home or Short-Term Rental Home.

These rules remain in effect until July 31, 2020 unless they are terminated at an earlier date or extended to a later date. Violation of this rule is punishable as a misdemeanor, with fines of up to $5,000, up to a year in jail, or both. This applies to visitors and hosts who do not follow quarantine requirements.

If the Governor’s Proclamation expires or is terminated prior to the expiration or termination of Mayor Victorino’s Public Health Emergency Rules, the Mayor’s Rules remain in effect.

Click Here for today's slides from the Mayor’s press conference.

For more updates like these subscribe at MVRA.NET/newsletter

The planning department is presenting a case for phase out at the next Maui Planning Commission Meeting. The item on the agenda is Resolution 20-27 from Maui County Council proposing to reduce the number of short term rental home permits in each region, capping them at their existing numbers. The Planning Department is using this resolution as a platform to bring up their idea of phasing out the permits. 

Agenda: https://www.mauicounty.gov/ArchiveCenter/ViewFile/Item/27356

Report: https://www.mauicounty.gov/DocumentCenter/View/122051/060920_Agenda-Item-C1_Council-Reso-2027_STRH-permits_memorandum

Submit written testimony by 9am Friday June 5 to planning@mauicounty.gov

Planning Commission Meeting June 9, 2020, 9am

To testify and watch the Planning Commission meeting: https://maui.bluejeans.com/663596249

To listen to the meeting or provide oral testimony via phone, dial 1-888-749-9073 and enter code: 663 596 249 

The Real Property Tax Public Hearing is Wednesday April 29, 2020 at 6PM in the evening.

The Economic Development and Budget Committee (EDBC) Chair Keani Rawlins-Fernandez proposed a set of tax rates at the budget meeting today. Most of these tax rates are close to last year’s rates and similar to the rates proposed by the Mayor. 

There are two rates that have changes for Maui Resident homeowners: the owner occupied rate and the rates for B&B homeowners, classified as commercial residential. For the Commercialized residential tax rate, Fernandez has proposed a reduction of about 13% from last years rate of $4.60/$1000 to $4.00/$1000. We have been asking for a reduction to $3.35/$1000 because B&B permit holders are currently forbidden from hosting visitors. For owner occupied, She has proposed a rate reduction of about 28% from last year’s rate of $2.90/$1000 to a proposed rate of $2.10/$1000. 

B&B permit holders should plan to sign on to Wednesday night’s public hearing and testify that it is not equitable to continue to tax them at a premium from homeowner taxation, if they are not allowed to have guests. We should all urge the council to give us back the ability to use the permits as soon as possible. Testimony from one of your empty B&B rooms might be effective.

For Hotels, the EDBC has proposed a rate of $10.25/$1000 and this represents a reduction of 7% from last years rate of $11.00/$1000.  Short term rental was the only tax category where an increase over last year's rates has been proposed. The tiered Short term rental rates have been proposed at $10.75/$1000 for the assessed value up to $800,000 (same as last year) and $11.00/$1000 for the assessed value from $800,000 to 1,500,000 and $11.40/$1000 for assessed value in excess of $1,500,000.

STRH permit holders should give testimony at Wednesday night’s public hearing to express their concern about the fairness of raising short term rental tax rates, while reducing tax rates for hotels. And allowing hotels to continue to operate yet forbidding Short term Rentals from operating. 

The STRH permit holders should ask for the short term rental rate to be reduced to $8.28/$1000 for the first $800,000 of value, as this is the lowest rate that was published in the notification for the public hearing of tax rates and they could not by law set the rate any lower than this. To make up the difference in revenues, testifiers should propose increasing the Hotel tax rate and give a reason why hotels should be paying a higher tax rate than Short Term Rentals.

How to sign in to testify:

The public hearing will be run remotely through a videoconferenceing site on the blue jeans platform. You click here to sign into the meeting https://primetime.bluejeans.com/a2m/live-event/pgxygess

You can also give oral testimony via phone. To join the meeting by phone call 1-408-740-7256 (US) or 1-888-240-2560 (US toll free), then enter meeting ID 358865836 and passcode 5937.

The clerk will call out to the testifiers and you will be given three minutes for your testimony. If your connection is lost, the meeting will continue, you can just call in again, or go to the website link again and reload. If you need more information on the process you can also call the county clerk at 808-270-7748 before the public hearing.

The proposed Loophole Bill is agenda item CC 20-246 , at the County Council meeting tomorrow.

This bill turns the use of the condo units in the apartment district into nonconforming uses that are subject to Maui County Code section 19.50.110 C that states:

C. Nonconforming uses.

1. A nonconforming use shall not extend to any part of the structure or lot that was not arranged or designed for such use at the time the use became nonconforming. 
2. Any nonconforming use that is discontinued for twelve consecutive months shall not be resumed.
3. Work may be done on any structure devoted in whole or in part to any nonconforming use if the work is limited to ordinary repairs, including repair or replacement of walls, fixtures, wiring, or plumbing. Further, the work shall not exceed 50 percent of the current replacement cost of the structure within a twelve-month period, and the floor area of the structure, as it existed at the time the nonconforming use was created, shall not be increased.
4. No nonconforming use shall be changed to another nonconforming use.

This would take away the right to short term rent any unit that stops operating for a year. Here is a list of condos the planning department says is not currently doing short term use. This bill changes short term use rights on the planning department's Short Term Occupancy list, also known as Maui's Minatoya list. This is a list of the condos that could be affected.

Another major issue with this proposed legislation is it is significantly different from the bill that was presented to the three planning commissions last fall . We feel that the planning department should not be misleading the council or the public, and that this bill should be sent back to the planning commission for review.

For more detailed information on the distinctions between the two bills and the planning departments bait and switch please see this letter from Jason Economou, the Government Affairs Director of the Realtors Association of Maui . 

For updates on this and other news sign up for our newsletter at mvra.net/newsletter

This is a heads up. We will be sending sample testimony in a newsletter next week. 

Public Hearing to be held Wednesday, April 29, 2020, beginning at 6:00 P.M.  

THE REAL PROPERTY TAX RATES FOR THE

COUNTY OF MAUI FOR THE FISCAL YEAR

JULY 1, 2020 TO JUNE 30, 2021

 

The foregoing schedule of rates will be considered at the public hearing. The final rates

for each property class may be fixed within the proposed ranges.

Meeting Site: Online Only via BlueJeans Events link:

https:llprimetime.bluejeans.com/a2m/live-event/pgxygess

Meeting will be televised on Akaku: Maui Community Media, Channel 53, and

livestreamed on https:llmauicounty.legistar.com

website: http://co.maui.hi.us/Archive.aspx?AMID=226

SEND WRITTEN TESTIMONY TO: county.clerk@mauicounty.us

Under Mayor Victorino’s most recent emergency order, B&Bs and Short term rental homes may only accommodate essential workers. Existing guests may finish out their stay, but no new non essential visitor stays may begin. Owners of lodging where passengers arriving at the airport to stay at a short term rental home or bed and breakfast will be subject to the $5000 penalties. This order is in effect until April 30, unless extended. The Mayor also indicated that his next move will be to work with car rental agencies to shut rentals down. You can view the county of Maui press conference video here on our facebook page. You can also see the powerpoint slides here. Mayor Michael Victorino announced in a press release late Thursday:  A night-time curfew pilot program will start at 11 p.m. Friday night, April 10, for Maui County. Curfew will be from 11 p.m. to 5 a.m. on Friday, Saturday and Sunday. The public may not travel outside the home during these hours, unless for urgent medication, medical emergencies or essential business. This includes motor vehicles and other wheeled means of transportation. “After reflection on the upcoming holiday weekend and concerns in our community, I have decided to mandate a night-time curfew for at least the next three days,” Mayor Victorino. “These are difficult times for all of us and we’re doing everything in our power to stop the spread of COVID-19. We will evaluate the effectiveness of this curfew after this weekend and will continue to make policy changes as needed.” Other rule changes effective 11 p.m. Friday, April 10: Only two (2) members of a household may leave home to conduct essential activities, unless other household members absolutely cannot be left home alone (i.e. young children, elderly and persons with disabilities). Businesses are required to limit entrance to two (2) people from one household, unless other household members absolutely must accompany them. Essential businesses with employees that have direct public contact or handle food, shall be required to wear a mask or other face covering. Employers also shall allow employees to voluntarily wear masks or face coverings. Bed and Breakfast homes and Short-Term Rental homes may only operate to provide housing for essential workers.

To see a copy of the Public Health Emergency Rules click Here . In section B item 22 The Emergency Rules Read: “Hotels and motels, to the extent used for lodging: and service providers to hotels and motels that provide services that are necessary to maintaining the safety, sanitation and essential operations of the hotel and/or motel. The operation of Bed and Breakfast Homes and Short Term Rental Homes is permitted but only for purposes of providing housing to exempt personnel defined in Rule 13 or by approval of the Mayor.” We also received some further guidance on the subject. These emergency rules go through April 30, 2020. They are primarily intended to stop the flow of incoming visitors, in line with the goal of stopping travel-related coronavirus spread.  This rule applies to all short term rentals, any rental less than 6 month.  If you have a current existing reservation that is fine. If you are an owner of the rental you can be there, if you are a new purchaser visiting your rental property is fine. If you have a new long term rental that is ok.  You may also rent short term to a Hawai’i resident that needs to self-isolate, or any Hawai’i essential workers.

We want to know how you are doing in light of the County of Maui COVID19 Shutdowns and quarantine.

Please take this survey to let us know better what the situation is. This survey is anonymous, and internal. 

After you complete the survey there will likely be a solicitation message from survey monkey, there is no obligation to participate in that.

Take The Survey: https://www.surveymonkey.com/r/MvraCOVID19