County still wrangling with illegal rentals

LIHUE — It’s been a year of cat and mouse games for the planning department, according to Michael Dahilig, county planning director.

That’s because they’ve been cracking down on illegal single-family transient vacation rentals outside of the Visitor Destination Area.

In a presentation to the County Council Wednesday, Dahilig gave an update on the department’s enforcement activities since October 2014, which was the last time the department briefed the council.

Currently, there are 447 active TVRs outside of the VDA that have been licensed and have certificates to legally operate. Additionally, the department is working on eight contested-case hearings.

Since October 2014, the planning department has completed 320 inspections on properties that were flagged as suspicious.

“(Those inspections) came out as a consequence of the irregularities between our records and the real property assessment records that came in during that assessment year,” Dahilig said.

The department issued 95 additional zoning compliance notices, and closed down 89 illegal transient vacation rentals over the past 14 months. In fiscal year 2015, from October 2014 to September 2015, the planning department shut down 71 illegal TVRs.

Since the inception of the 2016 fiscal year, the department has been able to shut down six illegal TVRs, according to Dahilig’s presentation.

Just because those illegal TVRs have been ordered to shutter their businesses, however, doesn’t mean they stay closed for long. By the time the planning department circles back around to many of those TVRs, they’re open for business again.

“It’s not just a citation and they shut down,” Dahilig said. “We have been getting into much administrative litigation as a consequence of people being persistent and wanting to have rights on the property that they are not entitled to.”

Dahilig said he doesn’t anticipate that problem to wane any time soon.

“This is a way of life for us now,” Dahilig said. “We are going to have to enforce on TVRs consistently because people are going to continue to choose to break the law.”

Due process, mandated by the United States Constitution, also makes it difficult to shut down TVRs, he said.

“Property can’t be deprived without due process of the law,” Dahilig said. “We say that there is no property right there, and they say there is, so we have to go through due process in order to ensure that we don’t get sued.”

The biggest challenge in due process for the department is the fact that they have to perform all three elements of facilitating an enforcement case — the investigation, prosecution and judiciary. In most cases, the police department does investigation, the prosecuting attorney handles prosecution, and the courts handle the judiciary element.

“Due process elements are lengthy and costly,” Dahilig said. “It’s meant to be slow and deliberative.”

Looking forward, due process will continue to be a challenge for the department, Dahilig said, as well as chronically having to manage those TVRs that open after being told they’re operating illegally.

Illegally operating a TVR can bring with it a $10,000 a day fine, and Dahilig said the department has used that method in certain cases, but they haven’t fined everybody that’s been caught reopening an illegal TVR.

Council Chairman Mel Rapozo said he thought they should be fining everyone who reopens their doors after being shut down. He said in his opinion, the fine should be large enough to make it more lucrative for illegal TVRs to close their doors than to stay in business.

Websites, like, present another challenge for the department because anyone can list their home on the site as a vacation rental option, but they have the opportunity to choose whether they’re visible to the public on a given day.

Those properties that are legal transient vacation rentals have certificates, which are posted on the website, but not all of them do. And it’s those that don’t have a certificate posted that are most likely operating illegally.

The problem is that the list is ever changing.

“We can really only get a snapshot in time (of which properties are listed and operating illegally) because you can opt not to appear on the list,” Dahilig said. “It varies.”

Dahilig called this phenomenon the “Uber effect” after the popular car-share networking company that connects commuters with those looking for a ride in any given city. In the smartphone application, car owners can make themselves available or invisible depending on whether or not they’re open to giving someone a ride.

Airbnb and other websites have transferred the concept to renting rooms in hotels, bed and breakfasts, and private homes.

On the Airbnb website, there can be hundreds of options listed on a given day and they’re always changing, Dahilig said. That makes it difficult to track who is operating what type of rental property and their location.

Prior to May 2015, TVR owners were able to take advantage of a loophole in the existing homestay definition in order to get a B&B permit and operate. Legislation passed by the council that month narrowed the definition to ensure that the property owner actually resides onsite.

It also limited the number of B&B permit applications to 10 per year.

Dahilig said 25 applications came in before the cap went into effect in 2015 and only three homestays applied after the cap.

“We’re trying to work through to provide more direct policy guidance on homestay issues,” Dahilig said. “A more permanent measure to close that loophole.”

The planning commission did deliver an affirmative determination that homestays are not home businesses, which was a common defense used for appeals, and that has been a step in the right direction when it comes to tightening the definition of a homestay, or B&B, Dahilig said.

Bill 2609, which is on the council floor and went through a public hearing on Wednesday, will help solidify TVR rules.

The bill will be before the planning committee on Jan. 21 and then could go back before the council for a second reading on Jan. 27, depending on what happens with the planning committee.


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