County Council passes short-term rental legislation on first reading

Measure would require a property owner to wait five years for a permit

Maui County Council Chairman Mike White presides over a council meeting Friday. On first reading, council members approved a bill to require at least five years of property ownership before an application would be permitted for a short-term rental. The measure requires passage on second reading. -- The Maui News / MATTHEW THAYER photo

WAILUKU — A bill that would require a person to own a property for at least five years before seeking a short-term rental permit passed on first reading at the Maui County Council on Friday.

Council members hope the bill will discourage people from buying homes and immediately turning them into vacation rentals. All except Council Member Don Guzman voted for the measure.

“This has to do with making it to where we can have more homes available for our people,” said Council Member Bob Carroll, who proposed the bill.

Under current laws, a person can apply for a short-term rental home permit if the dwelling unit was built five years prior to the permit application date. The proposed bill also would require a person to own the dwelling unit for at least five years before applying for a permit.

But some testifiers said the bill would infringe on property owners’ rights and would do nothing to curb illegal rentals. Lawrence Carnicelli, speaking on behalf of the Realtors Association of Maui, said less than 1 percent of legal home sales become short-term rentals, and that the current county laws already cap countywide rentals at 382.

A fence separates the intersection of Kaiwahine and Hale Kai streets in Kihei and a 9.3-acre site planned for 120 housing units for families earning 60 percent or less of area median income. Council members approved giving the developer, Urban Housing Communities, more time to start the project. -- The Maui News / MATTHEW THAYER photo

“Lengthening the (permitting) process will only increase the illegal rentals that proliferate our community and take away needed housing for our local families,” Carnicelli said. “The real issue with short-term rental housing springing up all over our neighborhoods is the lack of enforcement.”

Others warned the county could open the door to litigation if it passed the bill.

However, First Deputy Corporation Counsel Ed Kushi said having a short-term rental “is not a right. It’s a privilege.” Most council members agreed, saying that property owners who apply for permits are essentially asking to run a business in a residentially zoned area.

“To me, this (bill) is just a multipronged approach to address an issue that we all know is happening,” Council Member Elle Cochran said. “This isn’t the cure-all, end-all, but this is definitely a huge positive step to assist. . . . People are buying up purposely for the sheer profit of vacation rentals. We have to stop that.”

With budget talks coming up, Council Member Alika Atay added that the council should allocate funding for more enforcement officers.

On Friday, the council also approved pushing the construction start date of the Kaiwahine Village affordable housing project in South Maui to Sept. 30. The 9.3-acre project at the intersection of Kaiwahine and Hale Kai streets would include 120 two- and three-bedroom units to be rented to households earning 60 percent or less of area median income.

Construction was supposed to start in 2016. An extension was granted allowing construction to start by March 18, 2018, with the condition that the project would receive no further extensions.

However, landowner Royal Main Properties is no longer involved in the project, and the new developer, Urban Housing Communities, has requested a time extension.

Testifiers who opposed the extension said improvements should be made to the area first before the housing is built. Longtime Kaiwahine Street resident Dave Thomas said the street is in “awful” condition and needs to be paved.

While the council approved the extension by an 8-1 vote, with Cochran voting no, members expressed frustration.

“I have a hard time always reversing decisions,” Council Member Riki Hokama said. “That is not how the council should be.” The council also adopted resolutions authorizing the purchase of four units at the One Medical Plaza Building for a total of $1.2 million. The building at 30 N. Church St. would be demolished to make way for the planned Wailuku civic complex, a project including a parking structure, county office space, community space and a specialty market. The civic complex is in the design and development phase. It’s estimated to cost around $75 million.

* Colleen Uechi can be reached at cuechi@mauinews.com.