Illegal TVR case settled

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WAILUKU - The County of Maui has settled its largest - and first ever - dispute over an illegal transient vacation rental.

Stephanie Rager, of San Juan Capistrano, Calif., paid $35,000 in July to put an end to a bitter fight with the county over Rager's former short-term rental in a residential neighborhood in Kihei where TVRs are not allowed without a conditional use permit.

The settlement became public information after it was presented to the county Board of Variances and Appeals late last week. Rager had faced a maximum possible fine of $214,000 for violating the county code, according to the case file.

"We negotiated the settlement until we reached a point where everybody agreed it was reasonable," said Maui County Deputy Corporation Counsel Mary "Mimi" Blaine Johnston.

Rager declined to comment when reached by phone Saturday.

Rager owns a four-bedroom, three-bathroom, 1,895-square-foot home at 2626 Mikoi Place, which she called "Hale Mikoi." County zoning investigators said Rager continued to rent out Hale Mikoi for several thousand dollars a week months after receiving two violation notices last year.

Rager and her husband, Tim, bought the home in the Keonekai Heights subdivision in December 2005. The couple never applied for a conditional use permit to operate a short-term rental.

The Mikoi Place house is now listed for sale. But the couple continues to own a pair of legal short-term rental properties on Maui and the Big Island.

"I think any time we use fines to limit a kind of behavior, from speeding to TVRs, then one result of fines should be to act as a deterrent," Johnston said. "This is the biggest settlement so far; it's probably the only settlement so far."

Johnston also noted that Rager's short-term rental violated the Keonekai Heights homeowners' association covenants and restrictions against TVRs.

Rager had clashed with several of her neighbors, who then complained to authorities about problems at the home with visitors coming and going at all hours, cars lining the streets and loud parties.

Rager argued that after she was told to stop using her home as a vacation rental, she stopped. After that, she said, she was providing a place to stay only for friends and family.

The county called its evidence overwhelming. Investigators and county attorneys tracked down and interviewed at least two renters who had traveled from the Mainland for a wedding and an anniversary. They said they didn't know Rager personally.

The county also alleged that she continued to advertise the property online, and rent it out, after receiving cease-and-desist orders in April and June last year.

Rager disputed the original notice of violation and appealed the fines. She claimed that the allegations were false, and that the inspector overseeing the case was harassing her.

County officials in Mayor Charmaine Tavares' administration maintain that there are numerous vacation rentals in residential areas that continue to operate outside the law.

Violating the county zoning ordinances can cost up to $1,000 for the initial violation and up to $1,000 for each day that the violation persists, according to the county code. The maximum fine has never been imposed.

However, Maui County deputy orporation counsels are now working on a second-ever settlement. This time, it's for a nonpermitted vacation rental in Lahaina, Johnston said.

Tavares says that the unfettered expansion of unpermitted short-term rentals in recent years diminished an already inadequate long-term rental housing market and harms the character of neighborhoods. After she took office last year, her administration began cracking down on illegal TVRs, and a County Council committee concurred with a resolution of support in March 2007.

The TVR industry and its supporters responded by saying that the move has caused people to lose their homes and destroyed businesses that relied on their customers, especially on the north shore.

The Maui Vacation Rental Association also filed a lawsuit against the county, saying it had an understanding with the previous mayors that it was OK for them to continue to operate until new regulations were in place.

A set of bills to establish clear standards and ease the permitting for bed-and-breakfast and TVR operations is before the County Council's Planning Committee, which has the matters on its agenda for a meeting at 9 a.m. Tuesday.

* Chris Hamilton can be reached at chamilton@mauinews.com.