LIHUE – Mayor Bernhard Carvalho, Jr. signed the B&B bill on Friday, making it more difficult for Kauai residents to earn income by renting out rooms in their home on a short-term basis.
Bill 2587 narrows the definition of a homestay (commonly referred to as a bed-and-breakfast or B&B) in order to ensure that a property owner actually resides onsite, which the mayor’s administration argued is necessary to prevent owners of illegal Transient Vacation Rentals (TVRs) operating outside of officially designated Vacation Destination Areas from exploiting a loophole in the old ordinance.
According to county officials, under the old definition, a TVR owner could theoretically get away with operating a vacation rental anywhere on the island by allowing a tenant lessee to live onsite and operate the property as a B&B. This bill closes that loophole by requiring the property owner to both live onsite and qualify for a homeowner’s property tax exemption in order to get a permit to rent out rooms on a short term basis as a B&B.
The bills also prevents B&Bs from using a guesthouse to provide accommodations, and it requires a special permit for B&Bs located on agricultural land.
In addition to tightening the definition, the bill limits the number of B&B permit applications that may be reviewed to 10 per year, although county officials have said that applications that have already been submitted will not count against the cap.
The issue blew up in March, when the Planning Department attempted to crack down on illegal TVRs by sending 93 cease-and-desist letters warning operators that they had two weeks to shut down or risk facing fines of up to $10,000 a day. Despite not being a target of the enforcement action, more than a dozen B&B operators were caught in the sweep because while they were properly paying their property taxes at the vacation-rental rate, they did not have a B&B permit.
Historically, the county has not enforced rules that require B&Bs to operate with a permit. Prior to May of this year, the county only issued nine B&B permits total, with the earliest dating back to 1989 and the last issued more than a decade ago, in 2004.
At the time the County Council started working on this bill, there was not a single legal B&B operating on the island with a valid permit.
During testimony before the Kauai County Council, many B&B operators accused the county of using heavy-handed tactics. Several said they tried to get permits, but were turned away by the Planning Department, which they say told them permits were not necessary. Despite heavy protest, the council voted 6-1 to approve the changes, with only Councilmember Gary Hooser voting in opposition.
With the mayor’s signature, the changes are immediate, but county officials testified before council that those who submitted an application prior to the mayor’s signature will be treated under the old rules.
With the mayor’s signature, Bill 2587 becomes Ordinance 987.