If you can recall back to August, we went over the 4th draft of the new proposed zoning legislation that was put out by the in regards to the current short term vacation rental policy. As a preface, I encourage you strongly to go and read the proposed drafts yourself. However, if you do not want to take the time to do that, the coming two weeks are going to be my personal review of the 5th draft. This review will be my breakdown of how I see this proposed draft, as well as some of my thoughts and opinions on this.
As it was in draft 4, the county is still planning to completely scratch the previously existing “Short Term Vacation Rental’ (STVR) policy that exists in the zoning code. They plan on implementing the new “Transient Accomodation Rentals” (TAR) in place. As I stated in the last review of their 4th draft of this proposition, I do not love that idea, but given the benefit of the doubt that the newer draft would provide more, I was willing to read forward into Draft 5.
In this week's blog I plan to break down Draft 5’s proposed plan for the hosted TAR’s. The 5th draft is comprised of two categories of classifications for short term rentals. They have hosted and un-hosted vacation rentals. The difference is as you can conclude from the name, whether or not a host is present in the property. The hosted TAR’s are then subdivided into two categories themselves, operator-hosted and owner-hosted. Difference here being who the individual who is present on the property as compared to whose name is on the deed (who has principal ownership on the property). There is some commonality between the two, whereas in order for the rental to be considered to be a “hosted” TAR the property must be their primary residence.
The Owner-Hosted rentals actually provide a lot of variability. A couple of the initial pros that stood out to me: they may exist in any zoning district, they can be any single-family dwelling, and there are nonconforming use certificates that are available, when proof of operation in the past is presented by the owner, for ohana units or guest houses that have been hosted vacation rentals. The nonconforming use certificates are transferable from seller to buyer of the property, if the buyer intends to use the property as a short term rental.
Initial Registration $500
Annual Renewal: $100
Nonconforming Use Certificate: $250
Nonconforming Use Certificate Annual Renewal: $250
I did not think that this section was too bad! Really it is very comparable to what currently is in place with the rules and regulations of the STVR’s. However, an ongoing annoyance that I have found repeatedly are the fees. Essentially if you apply for a Nonconforming Use Certificate you are going to be paying $250 annually, which I find a little egregious when put on top of the renewal fee. There is truly no reason in my opinion for the owner to be double charged because of what could be seen in my opinion as an existing condition that comes along with their property and their rights to use the property as they please.
Now onto the Operator-Hosted Transient Accommodation Rentals. Let me again restate that for a property to fall under this designation the operator must live in a single-family residence themselves. This designation would apply well to condotels or something of that nature. To quote the draft; “when they transient accommodation rental is subordinate and clearly or customarily incidental to the use as the residence and permanent address of the operator…”.
The operator-hosted TAR would only be permitted in Resort (V), General Commercial (CG), Neighborhood Commercial (CN), Resort Commercial (CV), Downtown Hilo Commercial (CDH), and Residential-Multiple (RM) districts.
On the positive side: the nonconforming use certificate is also available for “grandfathering in” of already existing units that under the new proposed regulations would not qualify as TAR eligible.
Initial Registration $750
Annual Renewal: $150
Nonconforming Use Certificate: $375
Nonconforming Use Certificate Annual Renewal: $375
Here is where I personally question where to begin to draw the line for personal property rights. I can see how a property owner could feel slighted by the restrictions as well as the increase in fees annually with the operator-hosted rental. With that being said I totally understand the increase in price when the operator-hosted TAR would be a condo or some sort of property with multiple units. As the gross number goes up, so too should the fees. From an investment property stance however this could potentially hurt a lot of people who are currently in the business of owning or operating these operator-hosted TAR.
I am not going to get too deep into the 5th draft, and next week I will go over the un-hosted side of the proposition. Again, I do encourage you to do your own home work, read Draft 5 of the Transient Accomodation Rental proposal. Trust me, I get it. There are a lot of ways to look at it. On one side of the coin there are investors and property managers who rely on this market to make a living. Then on the other side there are people out there unsure if they will ever be able to buy a home because of the state of the market. Is the TAR reform the correct fix? I have my opinions and I advise you to create yours and talk about it. Get out in the community with your neighbors and friends to see what they think. This is something that could potentially have a huge impact on our entire island from the top to the bottom. With tourism being such a large part of the overall economy that also means that where these folks are staying will have a massive impact on the businesses around the island as well. If the amount of Airbnb’s and VRBO’s in town diminishes are visitors going to be more likely to stay entirely on the resorts? Will that harm places like downtown Kona and the shops like the ones along the Kona Inn Shopping Village?