Judge to rule in TVR case

LIHUE — The Kauai County Planning Department may be on the verge of losing its legal battle against the owners of vacation rental homes who refused to stop operations after their permits were revoked two years ago.

Although she didn’t make a ruling, Fifth Circuit Judge Kathleen Watanabe appeared to be leaning toward dismissing the county’s six lawsuits.

She questioned the county attorney representing the planning department about “confusion within the planning department and the county attorney’s office” and repeatedly returned to the subject of a mistake made by planning officials, which she described as “pretty amazing” and “really embarrassing.”

Here is the essence of the dispute.

According to Gregory Kugle, the Honolulu attorney representing the consolidated interests of the six transient vacation rentals, owners, county officials revoked the TVR permits, not because they were submitted two weeks late, as stated in the planning commission’s ruling, but because a $750 fee was not enclosed in their renewal applications.

“All of these cases are fairly simple,” Kugle said. “Not once did the planning department contend that the permits were revoked for any reason other than timeliness.”

Kugle admitted that his clients’ filed their annual applications to the county requesting permits to operate transient vacation rentals after the July 31, 2017 deadline but within the 30-day grace period allowed by county zoning ordinances.

The applications were denied, and notifications were sent out to each of the six TVRs, followed by cease and desist orders. But Kugle said planning department officials were required to notify the TVR owners that their permits were subject to an additional $750 fee.

“It was so easy to do, but the planning department didn’t do it. Why?” Kugle asked. “Because it was made up as an excuse afterward.”

According to Kugle, county officials who denied the applications weren’t initially aware of the grace period, and when the planning commission’s hearing officer discovered it during the contested case hearing, “he made up a new reason” to deny the permits, and the planning commissioners “didn’t even consider anything else.”

“The fact that he threw that in after the hearing was done,” Kugle said in closing, “that’s where we get into due process being violated.”

County Attorney Maryann Sasaki began presenting the planning department’s side of the case by saying the county’s denial of the TVR permits did not violate the landowners’ constitutional rights, as Kugle had argued.

A few sentences into Sasaki’s opening statements, Watanabe interjected to ask whether she could contest Kugle’s statements that the renewal permits were denied because the fees were not included instead of lateness.

“An incomplete application can’t be timely,” Sasaki started, before Watanabe cut her off, saying, essentially, that she wasn’t interested in debating semantics

“The planning department said they were too late. Period,” she said, adding that the planning commission’s hearing officer then, “basically reversed what the planning department said and then threw in the $750.”

Watanabe then took a moment to talk about how planning officials were forced to send out a second cease and desist order after realizing they got the dates wrong on the first one, a mistake, she said, “which I find pretty amazing.”

“You have these six TVRs that don’t timely file, and they say, oops,” Sasaki said, explaining the planning department’s position that the property owners didn’t pay the late fee because they weren’t aware of the 30-day grace period. “I submit they didn’t do it because they didn’t realize they had to do it. So this argument was kind of retrofitted after the fact.”

After Sasaki made a case for the public need to limit TVR permits and locations, and said the county was well within its rights to regulate the permit renewal process, Watanabe all but closed the door on the whole case.

“The problem with your arguments is that it again supports Mr. Kugle’s position,” she said. “Because there is a motive by the county to be confusing.”

Watanabe then returned to the inconsistent behavior of planning department officials, specifically the fact that the permits were revoked, not because they were submitted two weeks late, as stated in the planning commission’s ruling, but because a late fee was not enclosed in their renewal applications.

“The hearings officer saw that,” she said. “Why didn’t the planning department see that?”

Sasaki said that county officials, and the attorneys who worked the case for two years before it was assigned to her, may have made mistakes.

“I think it was basically an oversight, and really, poor organization on behalf of the planning department,” Sasaki said.

“If there is such confusion within the planning department and the county attorney’s office, how is the public expected to know what’s going on?” Watanabe asked.

The hearing concluded shortly thereafter. Watanabe did not give a ruling but said she would take the matter under advisement and notify both parties of her decision, “very shortly.”