Some vacation rental owners bow out before Sept. 30 permit application deadline

The deadline for vacation rental owners to apply for a permit to continue to operate draws near, but some owners already threw in the towel.

Thanks to the county’s new vacation rental law, which went into effect in April, short-term vacation rental properties — defined as rentals where the owner does not reside, are rented for less than 30 days and have no more than five bedrooms — will be prohibited outside of resort zones. Owners of existing short-term rentals in the excluded zones need to apply for a nonconforming use permit by Sept. 30 in order to continue to operate.

But the rules required in order to be approved for the permits have caused some owners to shut down their rental properties entirely.

“One house we had to sell, we had to close another one,” said Lucretia Worster, owner of HiLife Media and Rentals, who used to own three rental properties and now owns one.

Worster explained that it would be too expensive to implement the requirements for the nonconforming use permit on all of her properties.

Applicants are required to submit approved building, plumbing and electrical permits, building diagrams, proof of property taxes, certification for parking, verification that notices of the business were submitted to all neighbors within 300 feet of the property, and must comply with “good neighbor rules” that include noise limitations. Applications also require a nonrefundable $500 application fee that must be renewed each year for an additional $250.

“We’re losing a lot of business, but of course all the rich people who own properties get to keep going just fine,” Worster said.

Because new short-term vacation rentals only will be allowed in hotel and resort zones after the Sept. 30 deadline, Worster said she will not likely be able to afford another rental property.

“It’s been a bummer,” Worster said. “It feels like, in Hawaii, they’d rather you work for someone else, because they make it so hard for business owners.”

Worster said she isn’t alone in her situation. Other rental owners closed all their properties entirely, with some leaving the state to return to the mainland. Vacation rental owners in Leilani Estates have been particularly affected, she said, with no time to rebuild their properties that were destroyed in last year’s Kilauea volcano eruption.

Volcano resident Ira Ono said he lives on his rental property, and so is exempt from the new law. However, he said a regional tally estimated that approximately 800 property owners were affected by the new law in Puna and Ka‘u alone, with many people deciding not to bother with the lengthy application process.

“I know somebody whose application was denied,” Ono said. “And you could reapply, you could try to correct the problems, but you’re still out that $500.”

Worster said the application for her sole remaining property has been in limbo at the county Planning Department for weeks, adding that department staff told her it would take upward of two months to be reviewed.

Planning Director Michael Yee said Monday that the department has accrued substantial overtime in order to manage the huge influx of applications. The department’s Kailua-Kona office has been closed to the public on Fridays since Aug. 23 to dedicate more staff to processing applications.

While the deadline for applications closes Sept. 30, vacation rental owners who submitted applications will be allowed to continue operating until the Planning Department approves or denies their permit.

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.