LIHUE — For the past eight years, Darryl and Julie Chong believed they were following the law.
Since renting out a bedroom in their Lawai home, the couple said they have regularly paid their general excise and transient accommodations taxes on their rental income and were waiting for county officials to develop clear standards for homestay and bed and breakfast operations like their own.
A letter from county planning officials ordering the couple to shut down their non-permitted operation, however, changed all of that.
“It was not our understanding or intention for our operation to be considered illegal, so we must admit our confusion and wrongdoing,” said Darryl Chong, who has lived with his wife in their home since 1994. “While this situation has caused a considerable financial strain on our household, we do welcome regulation.”
The South Shore couple were among nearly two dozen other visitor accommodation operators on Tuesday who asked county Planning Commissioners to craft solid permitting laws and procedures for their businesses.
It is something that, they say, has not been clearly defined until now.
“We need an ordinance that we can work with and work with you on,” said Haena resident Kirby Guyer, who has been operating a bed and breakfast business for 30 years on Kauai. “I know that almost everyone here is willing to work with any individual to assist, sit down and just discuss it and get it done. It has been so many years since we were told, ‘Well, we’ll deal with them separately someday.’ Well, I think someday is now.”
Lihue attorney Jonathan Chun said the decision to send out cease-and-desist letters, which started last year, marked an unprecedented enforcement move by the county.
It’s one that, he said, has caused mass confusion and frustration among some unwitting homestay and B&B operators who want to comply with the law.
“The county has never, ever done that before in its entire history to send out all of these letters to people telling them to cease and desist and then saying, ‘If you really want to make yourself legal, you need to come in and fill out an application,’” Chun told county Planning Commissioners. “They responded, they ceased and desist, they come and file an application, and then the county tells them, ‘Sorry, it’s too much for me to handle. You’ve got to wait 10, 15 or 30 years and we’ll get to you.’ The only response right now is, ‘Don’t worry. We’ll get to it later on.’”
The county sent out the notices after receiving pressure over the last two years to step up enforcement efforts on non-permitted violators.
Less than 100 of the notices, calling on accommodation operators to shut down their business within two weeks, have been sent out, County Planning Director Michael Dahilig said. A vast majority of the letters, he said, were sent out to non-permitted, single-family transient vacation rentals. Only 16 have been identified as homestays, which still require a use permit.
“We’re not going to stop investigations, and in particular, I think our focus is going to be shifting to those TVRs that we’ve shut down that are now trying to put on sheep’s clothing and turn into a bed and breakfast,” Dahilig said. “We are being a little more selective, at this point, in how we use our resources because of the need to provide due process of the law in a timely manner.”
Some residents say more oversight is needed to prevent non-permitted operations from spreading in residential areas and curtail alleged abuses by some homestay and B&B operators.
Wainiha resident Caren Diamond said North Shore communities are bearing the brunt of past county decisions to approve vacation rentals that have “actually interfered with the safety and safe evacuation in a tsunami evacuation district.”
Diamond, who sat on a 2005 stakeholder group to address the influx of vacation rentals on Kauai, said bed and breakfast operations have always required a use permit to legally operate.
“While I feel for everybody that didn’t get a use permit, that process has been available and I don’t understand why people didn’t use it,” Diamond said. “More commercial uses in residential areas is really problematic.”
Jeff Miller said he lives next door to a B&B that has become, over the years, a major business that has grown from a two-bedroom operation to a six-bedroom one, is advertised as “a sanctuary,” sells products, and offers services like massages.
The straw that broke the camel’s back, however, occurred recently when Miller and his wife were awakened by a man who walked into their darkened house with a flashlight in the middle of the night, thinking that it was the B&B next door.
“That’s an experience we will never forget,” said Miller, who asked that signs be required for B&B and homestay operations. “Neighbors are affected by them. I think they’re great — I love staying at B&Bs and I’m all in favor of your ordinance going through so that everyone can have a chance to have a licensed B&B, but I want neighbors to have a say in it.”
The county Planning Commission on Tuesday gave their unanimous stamp of approval to their first set of recommendations that seek to clearly define what a homestay is and create a quota system for approving them. In the meantime, cited operators have to shut down their businesses. A specific date at which the County Council will consider the proposed changes was not determined as of press time on Tuesday afternoon.
The approved language defines a homestay as an “owner-occupant dwelling in which overnight accommodations are provided to transient guests within the same dwelling unit in which the owner resides or in a guest house and the primary residential structures used for the homestay operation is the owner’s primary residence.”
The qualified operators, under that same definition, must also have a homeowner’s real property tax exemption for the homestay site.
“In the case of homestay operations, the presence of the owner at the site acts as a self-regulating mechanism,” Acting Deputy Planning Director Ka’aina Hull wrote in a report to the Planning Commission. “That is to say, activities that could significantly impact surrounding neighbors are often prohibited by the owners of homestays because such activities are just as, if not more, impactful on the owner who is residing onsite.”
A maximum of 10 complete homestay operation applications, as a part of the approved changes, would be reviewed by the Planning Commission each calendar year after they have been reviewed by the Planning Department.
Poipu resident Sam Lee said he and his wife, Sheila, feel “cautiously optimistic that this version of the ordinance will be an acceptable middle ground between our original position of no further visitor rentals of any kind, including homestays, in residential districts and the reality that homestays do exist, and on a limited basis, may be accommodated within some residential areas through county-managed rules and numerical limits.”
“We have not deviated from our belief that non-permitted rental activity should not continue in the residential areas, however, we feel optimistic that there is room for compromise,” Sam Lee said.