A Hawaii County Council committee voted unanimously April 7 to forward a controversial vacation rental bill to the county’s planning director and two planning commissions.
The Policy Committee on Planning, Land Use and Economic Development meeting heard testimony both in support and opposition to Bill 147 — a measure aiming to redefine hosted and unhosted short-term rentals, establish working standards and punitive fines, and expand the list of zoning areas where hosted rentals are allowed to operate.
The bill would lengthen the rental period considered “short-term” to stays less than 180 consecutive days, as opposed to 30 days under current rules.
It would also set occupancy limits, adjust “quiet hours,” and restrict activities allowed on rented properties to small events like picnics and birthday parties while banning large-scale gatherings like weddings without a permit.
The proposed legislation places all short-term rentals into two groups: bed and breakfasts and short-term vacation rentals.
Under the new rules, B&Bs are defined as hosted rentals where someone lives on the same property as the rental unit during guest stays. Conversely, STVRs are unhosted rentals with no on-site presence by a “host” — specified in the bill as someone “reachable” living on the same lot, whether it be an owner, family member, tenant or property manager.
Whichever group a particular property falls into dictates where it’s allowed to be located and what rules it must follow.
B&Bs are permitted in a large swath of zoning categories including residential, commercial and agricultural. STVRs, on the other hand, are mostly limited to resort areas and a handful of multi-family condo properties, largely restricting them to the Kona, Waikoloa Beach and Kohala Coast regions.
Some of the rules are even more particular. B&Bs can only serve breakfast to registered guests, while bedrooms in STVRs cannot be rented separately to multiple visitors at once — the entire unit must be rented by one party at a time.
Registration fees are set at $250 for new B&Bs with a $100 annual renewal, and $500 for new STVRs with a $250 annual renewal.
The bill calls for the creation of an enforcement fund, leveraging fines ranging from $5,500 for first violations to $10,000 for third violations and beyond. If county enforcers find an unregistered property listed as bookable anywhere online, including on popular sites like Airbnb and VRBO, they can consider that sufficient evidence of illegal operation, with owners then having to prove they’re in compliance.
Some of the testifiers at the meeting, like Michelle Melendez, bristled at the thought of these registration fees and enforcement penalties.
“I really am curious, the person who brought this forward, like, who do you work for?” Melendez asked the council via Zoom, referring to the bill’s introducer, Hamakua Councilwoman Heather Kimball. “Because you do not … work for the local people of Hawaii. She obviously has friends in the hotel industry … what constituent would say ‘yeah, let me submit all my private property information to the county and register my property for $250 to $500 a year, and then be subject (to an) up to $10,000 fine.’ What constituent would say such a thing?”
Melendez said requiring B&B operators to pay these fees will just add to the financial pain residents are already experiencing, brought on by the spiraling cost of living crisis.
“Milk is like almost $12 a gallon, gas is going up, electric (bills) are going up, our aunties and uncles need a way to sustain themselves here on the island,” she said. “Part of that is renting their ohana unit or a room to be able to feed themselves and pay for gas, and yes you do already get taxes for this, so why in the world are you being, like, misers?”
She then suggested the bill’s introducer be reprimanded, and made claims about the legislation’s origins.
“The person who put this forward should be removed from office for violating her oath of office,” Melendez said. “This goes against the Constitution, this goes against the local community. It goes against supporting our ohana, our aunties and our uncles and our kupuna. This bill was probably written in China, and that’s where it should stay. It does not belong on the Big Island.”
Supporters of the measure testified at the meeting, too. Some submitted written comments to the council, including Robert Golden, executive director of local nonprofit Puna Rising.
“Unlike resort areas such as Kona or Waikoloa, lower Puna has little to no resort infrastructure,” Golden wrote. “As a result, short-term vacation rentals serve as one of the primary pathways through which visitor spending reaches our communities.”
He listed off local businesses that see greater visitor spending when rentals are sited close by, like roadside vendors and booths at Makuu Farmers Market.
“These are not peripheral benefits; they are essential to the circulation of local economic value,” he wrote. “For many, income from a short-term rental is not discretionary; it is foundational to remaining housed and financially stable.”
Hilo resident Marie Ruhland testified in-person at the meeting and said she received a letter from the county Real Property Tax Division in January notifying her she was losing her homeowner tax classification due to operating a vacation rental — a 330 square-foot room attached to her home that she operated since 2000.
“Enforcement has been arbitrary and excessive,” Ruhland said. “The result of these changes is an eight-fold increase in our yearly property taxes. This further tax increase and loss of our exemption has forced me to close my vacation rental. Not only do we as short-term rental owners experience the loss of income, but the state and county also will lose their tax revenues as well. The inability of tourists to find affordable venues to rent will mean a considerable loss of income, I believe, for the Big Island.”
At the end of the meeting, Kimball responded to Ruhland’s concerns.
“I want to be super, super, super clear that this bill nor any of the other bills that we have put forward around short-term vacation rentals are the cause of that,” she said. “That has been the law for the last 40 years, that if you engage in commercial activity on a residential property, it goes to the highest and best use, which is commercial.
“I would like to, once we’ve got everyone registered and making sure that the folks that are operating hosted rentals where it is their primary residence, create a new tax class like Maui has for those guys that is not the hotel rate but is somewhere closer to the residential rate,” she continued. “But until we have a robust process for determining who those folks are, I don’t want to inadvertently be giving that same benefit to folks that are potentially operating illegally.”
Email Stefan Verbano at stefan.verbano@hawaiitribune-herald.com.
