Vacation rentals: Changing the face of neighborhoods

Vacation rentals dot Puako. (pins approximate for security reasons) Map data: Stefan Buchta via Googlemaps API /Special to West Hawaii Today

Vacation rentals (red) and home-shares (green) dot the Leleiwi community. Pins approximate for security reasons. (Map data: Stefan Buchta via Google Maps API /Special to West Hawaii Today)

HILO — It’s a sunny day in the oceanfront community of Leleiwi, and Terry and Jayne Oliver of Butte, Montana, are strolling the lawn of their vacation rental.

The couple, here for 10 days, use the tidy white house as their base as they travel the island, exploring its many attractions. They prefer vacation rentals to hotels, they said, because it’s a nicer atmosphere, it’s more relaxing and it includes amenities such as a kitchen.

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“It’s more like a home,” Jayne said.

Just around the block, Native Hawaiian homeowners live along narrow, leafy Nene Street, which backs up to Keaukaha Homestead, a Department of Hawaiian Home Lands neighborhood. Here, friendly residents talk story with a reporter, but they don’t want their names used.

Are they bothered by all the newcomers and vacationers in their neighborhood?

An older man working on his yard pantomimes blinders, such as would be put on a horse. What’s the point, he asks.

“For us to talk about these things makes no sense,” the man said. “They coming, they coming, they coming and they’re not gonna stop.”

Longtime residents of Leleiwi, an 80-home community between Carlsmith and Richardson ocean parks about 5 miles from Hilo town, worry about gentrification of their laid-back little corner of paradise. Almost a quarter of the homes have been converted to, or are being used as, vacation rentals, estimates Stefan Buchta, a member of the Leleiwi Community Association.

Across the island, the Puako community is experiencing a similar influx of vacation rentals. These are probably different from vacation rentals in other areas, said James Fritz, who rents out his home sometimes and lives in it other times.

The upscale community of largely part-time residents, where vacation rentals can go for $2,000 and up nightly, aren’t as likely to notice an influx of newcomers as would residents of long-established neighborhoods, he said.

But other formerly close-knit little communities all over the Big Island are feeling the impact of vacation rentals in their neighborhoods.

Some are taking a “if you can’t lick ‘em, join ‘em” approach, converting their own homes into vacation rentals, too. Some are bailing out, putting their homes up for sale.

Others hope the County Council can create regulations that stop the spread.

But owners of vacation homes already on the island, and their representatives, aren’t confident they’ll be able to continue operating, even with a grandfather clause. Those in residential and agriculture districts, especially, worry the county won’t give them a special certificate they’d need to stay in the business.

“If they denied my application for whatever reason, I would absolutely have to sell,” Heather Bandt, who lives in her Aloha Kona home four months a year and rents it out as a vacation home the rest of the year, said in an interview last month.

Zillow, an online real estate database, shows homes for sale in the neighborhood ranging from $425,000 to $684,000. Bandt said her family built their home, so it has a lot of sentimental value. But she needs to be able to pay her mortgage, property taxes and other expenses, she said.

Buchta has been compiling islandwide data for a presentation before the County Council when it takes up Bill 108, which would regulate vacation rentals. He said the bill has taken on a life of its own.

“People with vested interests are pushing back hard,” Buchta said. “But the longer we put it off, the worse it will be.”

Bill 108 would require existing transient vacation rentals outside of the Vacation District, the General Commercial District or Resort Nodes to apply for a nonconforming use certificate in order to be grandfathered in. Those in the allowed districts would be required to register with the county, but they don’t have to apply to the Planning Department for the special permit.

Short-term vacation rental is defined in the county bill as a residential dwelling where the owner or operator does not reside on the building site, that has no more than five bedrooms on the building site for transient use, and is rented to transients for a period of 30 consecutive days or less.

The bill doesn’t regulate so-called “hosted” rentals, where the owner lives on-site. Bed and breakfasts are already regulated by the county.

The county bill is on hold until after the Board of Ethics rules on whether North Kona Councilwoman Karen Eoff, one of the co-sponsors, has a conflict of interest because she owns a vacation condo in the Vacation District along Alii Drive. The board next meets March 19.

It’s not easy to get a grasp of how many Big Island homes are being used as short-term rentals, defined by the state as any rental of less than 180 days. Landlords who rent short-term are required to register with the state for transient accommodations and general excise tax licenses and remit the required taxes to the state. It’s not known what percentage have done so.

Ross Birch, executive director of the Hawaii Island Visitors Bureau, used Hawaii Tourism Authority figures from its 2017 visitor plant inventory in a recent presentation to the County Council.

The tourism industry estimate of 8,647 advertised vacation rental units on the Big Island probably overstates the issue, as it includes duplicates from several vacation rental platforms. Buchta estimates the number to be closer to 4,859, deriving his information strictly from listings on Airbnb.

Airbnb is the third-largest vacation rental platform on the island, a company spokeswoman said.

It’s not known how many owners are currently paying the required TAT and GET. Owners of multiple units usually operate under one tax license, and tax information, other than the name and license numbers of those registered, is confidential. A 2017 survey by the tourism industry resulted in 2,037 Big Island rentals being voluntarily reported.

Bills in the Legislature would allow vacation rental platforms such as Airbnb to collect taxes on behalf of the landlord, strengthen counties’ ability to enforce zoning and land use laws and make it unlawful for transient accommodations brokers to engage in business with operators that are not in compliance with all state laws and county ordinances.

They’d also give each county $1 million to set up a registration, property taxation and tracking system for vacation rentals.

Their future remains uncertain, however, as key bills were recommitted to committees on a deadline Friday and other bills moved forward. It’s said no bills are dead as long as the Legislature is in session, but it remains to be seen whether this regulation will survive until the May 3 end of session.

“We’ve got to regulate this, and that’s what we’re trying to do,” said Mayor Harry Kim. “It’s not just the impact to county services, but what it does to the lifestyle. You don’t put a store in a residential neighborhood, so why would you put any other commercial building?”

Richard Standke, who owns five of the vacation rental houses in Leleiwi and two others in Hawaiian Beaches, said the influx of new money brightens up neighborhoods, employs housekeepers and construction workers and creates quality housing.

“The taxes paid by tourists help support local government services,” Standke said. “New, beautiful homes make neighborhoods beautiful.”

Standke, who lives in Los Angeles, said vacation homes in the Big Island’s oceanfront communities don’t compete with local housing, because land is “dirt cheap” on the island. There is plenty of room for lower-priced homes and rentals on the island, he said.

He said his quality short-term rentals wouldn’t be used for longer-term rentals because he wouldn’t be able to recoup his investment. Other transient landlords have said they fear putting their property into long-term rentals because it’s so difficult to evict scofflaws.

“This is one of the nicest places on Earth to visit,” Standke said. “To rent it to one family is not a good use of oceanfront property.”

Close to Richardson Ocean Park, Koa Kealoha, another longtime local, offers a freshly cut coconut to Cindy Soto, who is visiting from Los Angeles. She’s touring the area in a dusty black pickup truck driven by one of Kealoha’s buddies.

Kealoha doesn’t want to see the neighborhood change around the one-story home he inherited. But he, too, acknowledges the inevitable.

“It’s going to happen,” Kealoha said. “You can surround me. Just surround me with love. If you surround me with hate, you’re going to get it back.”

Lounging in a lawn chair in his front yard with a beer and a cigarette and surveying the surf across the street, he smiles a slow, easy smile.

“This is the life,” he said. “You’ve got to live the life.”

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