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Two charter amendment proposals advance

One calls for $20,000 penalty for illegal vacation rentals

WAILUKU — A charter amendment to establish a $20,000 penalty for illegal transient accommodations and a proposal to streamline the processing of legal claims against the county were recommended for approval by a Maui County Council committee Tuesday.

Because of time constraints, the Policy, Economic Development and Agriculture Committee was not able to discuss a third amendment that would pave the way for a hired managing director to handle county operations instead of the mayor. The committee recessed the meeting and scheduled to reconvene at 9 a.m. today in Council Chambers on the eighth floor of the Kalana O Maui building to discuss the managing director amendment. Testimony both for and against the amendment was given on Tuesday.

After the meeting, committee Chairwoman Yuki Lei Sugimura said she did not expect a decision to be made today on the managing director resolution, but rather at a future meeting. Her committee has until July 2 to hear proposed charter amendments to meet an Aug. 23 deadline to get them to the county clerk’s office and onto the Nov. 6 general election ballot.

After charter amendment resolutions are recommended for approval by the committee, they are forwarded to the full council for two readings. The resolutions also need the approval of six council members, a super majority.

The resolution to establish a higher penalty for transient accommodations doing business without a permit was recommended by the committee by a 7-0 vote, with Council Members Riki Hokama and Alika Atay absent and excused.

Currently, the maximum penalty for operating a transient accommodation without a permit is $1,000, but the amendment would increase it to $20,000, plus $10,000 per day if the unlawful operation persists.

Transient accommodations include vacation rentals, bed-and-breakfast operations, short-term rental homes and other transient accommodation categories established by ordinance. If voters approve the amendment, it would go into effect Jan. 2.

“Most of us over the years have been quite frustrated with the challenges of enforcement against the illegal (vacation rentals) and so this is simply one additional tool to place in (the Planning Department’s) tool box that increases the potential fine for somebody who has been served with a notice of violation,” said council Chairman Mike White of his resolution.

He said he recognized that the high penalties would not solve the issue, but he said “this is simply an added hammer to place over the heads of the people operating illegally. We need to take a strong stance.”

Planning Director William Spence said the department supports the amendment.

“We can use any tool given our way,” he said.

Spence told committee members that, with the current penalty amount of $1,000, some businesses just write it off as the cost of doing business. Some high-end vacation rentals cost $10,000 to $15,000 a night, he said.

Council Member Don Guzman suggested that the amendment include a blanket cap of $20,000 for violations of the charter as well as violations of ordinances and rules and not single out transient vacation rentals operating without a permit.

Guzman said that, by having a blanket cap for all violations, that would help reduce the number of times the charter would need to be amended if there were a need to increase fines for other violations. And, tinkering with fines in the future could be done via ordinance rather than through a charter amendment, he said.

But White pointed out that, in a previous election, a charter amendment similar to one Guzman suggested failed at the polls.

In the 2014 general election, an amendment proposed to increase the penalties for violations of any provisions of the charter, and violations of ordinances and rules having the force and effect of law from $1,000 or one year’s imprisonment or both to $25,000 or one year’s imprisonment or both.

White said that while he agreed with Guzman’s sentiments, he believed if a blanket increase were proposed, it may not pass a second time.

Several testifiers also spoke in favor of the amendment for higher penalties.

Maui Meadows resident Madge Schaefer asked that the amendment be put on the ballot and that hiking the fine would make it riskier to operate illegally. But she said she had questions on what money generated by the fines would be used for as well as who would do enforcement.

She also questioned whether the fines would apply to bed-and-breakfast operators who have a permit but don’t live on the property as required.

Lawrence Carnicelli, government affairs director for the Realtors Association of Maui, said the association also supports the amendment.

But he said “our only worry” was whether the high fine would be challenged in court because the county would be singling out illegal transient vacation rentals while leaving other violators with lower penalties.

The second resolution to amend the charter would have claims with the county filed with the Department of Corporation Counsel’s Risk Management Division, rather than the county clerk’s office.

The resolution was recommended for approval by a 6-1 vote, with Guzman dissenting. Hokama and Atay were absent and excused.

White, who introduced the amendment, said he was approached by the Office of the County Clerk to have the process streamlined.

The resolution said the clerk’s office basically receives a claim and passes it along to other county agencies, and provides a copy to a third-party administrator, the mayor, corporation counsel and the council chairperson. It has no further role in the claims process other than to forward requests and communications seeking clarification and information on or the status of the deposition of the claim to county attorneys.

County Clerk Danny Mateo told the committee that at times the public gets upset with his office because his staff is not able to give updates on the status of the claims.

But Guzman said he was concerned about how submitting a claim to the Corporation Counsel’s Risk Management Division would be perceived because the claim would be submitted to attorneys who defend the county against claims.

Guzman said the process might have an appearance of a “taint” if “right off the bat” the claim were in the attorneys’ hands instead of a neutral party.

“We have a great system now; it’s humbug but it’s clean,” he said.

First Deputy Corporation Counsel Ed Kushi Jr., who was staffing the committee meeting, said the department supports the amendment.

“It cuts one step down,” Kushi said, noting the clerk’s office doesn’t process claims.

Deputy County Clerk Josiah Nishita said the amendment is based on how the City and County of Honolulu handles its claims.

If approved, the amendment would be effective Jan. 2.

* Melissa Tanji can be reached at mtanji@mauinews.com.

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