Glut of illegal rentals angers homeowners

Crystal Young worries about a proposed hotel on city land in Haleiwa after witnessing resort sprawl in her nearby Sunset Beach neighborhood, where there is little park space and dozens of residential houses cater to visitors.

Driving through an area that once had a row of rural homes, Young points out fenced two-story houses renting for thousands of dollars a month, many unoccupied but operating as unpermitted vacation rentals.

“There was a whole lot of locals, hundreds … living there,” she said. “Now you have all those homeless people – and then you have those empty houses. It doesn’t seem right.”

As developer D.G. “Andy” Anderson proposes buying 3.2 acres of city land for a Haleiwa hotel, some residents are complaining about current traffic congestion, the lack of recreational space and the waves of illegal vacation houses raising rents and pushing out rural residents.

North Shore Neighborhood Board member Kathleen Pahinui said in addition to the noise from tourists and the lack of rentals for residents, illegal vacation houses artificially raise taxes for homeowners.

“They don’t care about the property taxes because in one week of rentals, they’ve got it covered,” Pahinui said. “I just think it’s wrong that the city has not enforced the zoning rules. The neighborhoods are no longer neighborhoods. …

“They’re basically turning it into a mini-resort area.”

City officials acknowledge that sales of vacation rental properties in residential areas increase homeowners’ assessments.

“If there’s no enforcement, the value of illegal ones will be there as market sales,” said Gary Kurokawa, administrator of the city Real Property Assessment Division.

Waimea Bay resident SharLyn Foo said she pays $200 a year for a city vacation rental certificate and is upset that illegal operators pay nothing.

“It’s just crazy. It really irks me,” said Foo, sister of the late big-wave surfer Mark Foo. “Basically, the law has no teeth.”

Young, who lived in her youth along Sunset Beach, said she has seen the “domino effect” of illegal vacation rentals pushing working people into poorer areas and forcing others into the streets.

She has joined Save Oahu’s Neighborhoods Hawaii, a group that began in 2005 to fight illegal vacation rentals in communities, including Kailua, where residents have appealed for more city enforcement of zoning laws.

Under city ordinances a “nonconforming use certificate” is required if a residential dwelling is rented for less than 30 days. Otherwise, the dwelling is regarded as an illegal vacation rental.

The last time the city issued nonconforming use certificates was in 1990, when it grandfathered in a number of those that had been operating for decades, some before zoning laws were in place.

The City Council considered proposals last year to legalize some illegal vacation rentals but has been unable to reach agreement.

Between Waialua and Laie, more than 460 vacation rental properties are listed on a popular vacation-by-owner website, even though the city has issued legal vacation rental “nonconforming use certificates” for only 85.

Nightly rates on the Web page range from $75 for a studio to $2,500 for a villa.

San Diego energy executive Joel Brilliant and his wife, Elizabeth, bought a residential property overlooking the Banzai Pipeline surf site for $1.99 million and developed a new $500,000 building several years ago, according to city tax records.

An advertisement on the Internet shows their “Blue Wave House” on sale for $5.8 million. Other websites list the rates for the Brilliants’ house starting at $650 a night.

Reached in San Diego by telephone, Brilliant admitted he is renting the house for $650 a night but insists he has the necessary permit.

“That’s all I have to say,” he said.

But the city’s zoning code enforcement chief, Mike Friedel, said records show Brilliant’s property does not have a vacation rental certificate.

Hawaii real estate agent Marlu West admitted she rents out a portion of her home at Ehukai for $600 a night. She said she once had a vacation rental certificate, but it expired.

Friedel said records show West has been cited more than once for operating a vacation rental without a city permit.

Enforcement officers do what they can to cite violators, Friedel said, but are fighting an uphill battle.

Some illegal vacation operators use various loopholes, such as claiming they were renting the house for 30 days or more, avoiding classification as a tourist rental, city officials said.

Friedel said enforcement officers need more support from other government agencies.

He said the state tax office has refused to share information about entities operating vacation rentals and that the City Council has refused to support imposing a fine upon vacation rentals that advertise without displaying their certificate number.

“We’re not getting cooperation from government agencies,” he said.

A PARTIAL SOLUTION to the demand for vacation rentals, some businesses say, would be to develop country inns such as the

80-room Haleiwa hotel proposed by Anderson, who owns the land beneath the restaurant Jameson’s by the Sea.

Antya Miller, executive director of the North Shore Chamber of Commerce, whose group represents 230 businesses, said country inns will not completely rid the North Shore of illegal vacation rentals, but the chamber would be able to suggest legitimate accommodations.

Miller said Haleiwa once had three hotels and now has none.

“We’re going to have visitors,” she said. “Why not have the necessary facilities and infrastructure to accommodate them?”

A 1960s city master plan included the proposed site in a Haleiwa regional park, but the discovery of a wetlands in the area and the lack of financial resources prevented the development of the park plan, city spokesman Jim Fulton said.

Miller said the city has had difficulty maintaining the existing park, much less develop new ones.

Anderson said the proposed hotel will provide about 110 jobs and actually reduce traffic because it will take visitors off the road.

North Shore resident Peter Cole, who has organized the Save Haleiwa Beach Park Coalition against the project, said he does not think there is any relationship between vacation rentals and a hotel because the two markets are different.

Cole said the city should not be selling off land designated for parks.

“It’s just not the morally right thing to do,” he said.

Young said the city does not hear from the people displaced by nearby illegal vacation rentals.

“They aren’t here to tell their side of things,” she said. “This gives the wrong impression that the majority of people are OK with the hundreds of short-term vacation rentals in what used to be our neighborhoods and homes.”

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