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Software, higher fines help weed out illegal rental units

County collected $50K in fines last year, with $300K pending, in litigation

Aided by new software and the promise of heftier fines, the Maui County Planning Department issued more than 180 notices of warning and 80 notices of violation to illegal operators last year in the state’s fastest-growing vacation rental market.

The department’s Zoning and Enforcement Division collected $50,000 in fines from notices of violation issued throughout the 2019 calendar year; others that are still pending or being litigated total more than $300,000 in additional fines, according to the Maui County Transient Vacation Rental Enforcement Summary released this week.

Longtime efforts to curb illegal rentals have been boosted in recent years with the help of customized software and a charter amendment that Maui County voters approved in 2018 that raised fines to $20,000 initially and $10,000 daily for each day the operation continues. The new fines went into effect Dec. 22.

County inspectors tasked with cracking down on illegal rentals have gotten overwhelmed by the sheer amount of vacation rentals and advertisements — especially since Maui County’s vacation rental industry appears to be booming.

From January 2019 to January 2020, the number of vacation rental unit nights in Maui County rose from 208,659 to 265,374, giving the county not only the largest total of unit nights but also the largest year-over-year increase at 27.2 percent, according to the Hawaii Tourism Authority’s Hawaii Vacation Rental Performance Report.

(A vacation rental is defined as the use of a rental house, condominium unit, private room in private home, or shared room/space in private home. The report also does not determine or differentiate between units that are permitted or unpermitted.)

Vacation rental unit nights in West Maui grew from 82,858 to 113,101, a 36.5 percent increase, while unit nights in South Maui rose from 95,171 to 119,907, a 26 percent increase.

Oahu, which sees millions more tourists than Maui each year, had 224,634 unit nights in January, a 13 percent decrease from the 258,313 unit nights it had in January 2019. That was despite the 11.8 percent growth of units in Waikiki from 99,147 to 110,836.

Maui County also has the highest unit occupancy percentage and highest average daily rates. In January, occupancy was at 85.6 percent, tops in the state, while average daily unit rates were at $311.14, slightly above Kauai’s $308.24 and far exceeding Oahu’s $190.01.

Add the abundance of vacation rentals in Maui County to the whopping number of advertisements — 20,783 in January 2019 and 30,029 in December 2019, according to the county’s report — and inspectors faced a daunting task of manually organizing and deciphering tens of thousands of listings. Because many advertisements do not contain the property’s location, it was time consuming for inspectors to confirm a single advertised property.

(The number of ads, however, does not reflect the actual number of rentals, as operators may be using multiple platforms to advertise their properties.)

In 2018, the county contracted LODGINGRevs, a web-based transient vacation rental monitoring and enforcement company, to help root out illegal rentals. The company’s customized software helps inspectors filter out legally operating vacation rentals and produce a list of potentially illegal operations. Inspectors must then identify the physical location of the operation, investigate and take enforcement action if necessary.

LODGINGRevs also checks for ads multiple times on a weekly basis, filtering them with the software and processing them manually to manage new, reoccurring and/or changed listings, and those that have been reactivated. A team at LODGINGRevs researches listings daily to make sure they’re in compliance on a case-by-case basis. County inspectors must confirm many properties that LODGINGRevs cannot identify, especially when some properties require a drive-by inspection.

When an illegal property is identified, the county can issue notices of warning, notices of violation and fines, as well as ban illegal operators from applying for bed-and-breakfast permits for two years or short-term rental permits for five years. There are currently 605 names on the department’s list of banned individuals.

Known illegal vacation rental properties — those that have been identified, confirmed and tracked — decreased from January 2019 to December, the department said.

In January 2019, there were 213 known noncompliant properties, primarily single-family homes; by December they were down to 35, with 178 ceasing advertising by the end of the year.

The department noted that there are more than 6,700 units in Maui County that do not require a permit to advertise and operate. These exempt properties are primarily apartment or hotel-zoned condo complexes that don’t need a permit due to their existing zoning or other qualifying entitlement.

Many of the online ads last year were for permit-exempt properties — 19,418 of the 20,783 January 2019 ads and 28,812 of the 30,029 December ads. According to the county’s report, that means a very low percentage of ads are for rentals with permits and rentals operating illegally, and that the amount of illegal rentals may be lower than projected by other agencies, who do not have the same data that LODGINGRevs and the county have.

While it’s impossible to track every illegal rental and numbers will fluctuate, the Planning Department counted the early numbers as a success and said it expected to see a decline in vacation rentals this year as it starts levying heavier fines.

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

** This story has a correction from the original posted Friday, Feb. 28, 2020.

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