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Homeowners Sue County for Molokai Rental Ban

Photo courtesy of Maui Vacation Rental Association

By Catherine Cluett Pactol

Four homeowners on Molokai along with the Maui Vacation Rental Association (MVRA) have filed a federal lawsuit against the County of Maui for its bill banning short term rentals on the island.

Bill 22 became effective on March 10, when county lawmakers signed into law Ordinance 5059, making Molokai the first island to put a zero cap on short term rentals (STRs). The ordinance rules that the 17 existing STR permits will remain valid until Dec. 2020, after which they will not be eligible for renewal.

The complaint states the county’s decision affected the rental operations of 17 families, many of which had operated legally for 15 years or more. Many had permits saying they could operate into 2021, the suit claims.

“It is stunning that a County with 1/3 of its population unemployed would still be engaging in an anti-small business agenda while promoting off-island corporate interests,” said attorney Terrance Revere, who filed a lawsuit in Federal Court on behalf of the affected homeowners and the Maui Vacation Rental Association (MVRA). “We are taking this action because even though my homeowner clients did nothing wrong and had no complaints against them, the County decided to make the number of STRHs permitted on Molokai to be zero. Instead of grandfathering in existing permit holders, they told my clients — with no due process whatsoever — that their STRH permits were being yanked away.”

Molokai Councilmember Keani Rawlins-Fernandez,who championed the bill that passed in Council with unanimous support, said Molokai residents had requested a zero cap for years.

“The blind hypocrisy is astounding, as the attorney representing Maui Vacation Rental Association is accusing the county of promoting off-island corporate interests, when the adopted ordinance actually promotes on-island community interests,” she wrote in a Facebook post last week. “We followed the legislative process to the letter, and the Molokai community was loud and clear about their wishes.”

Councilmember Tamara Paltin, who chairs the Planning and Sustainable Land Use Committee, said the committee traveled to Molokai for discussion about the legislation with the community.

“The majority of the people that had no financial interest, no skin in the game, were pretty much unanimously against it,” she told The Maui News. “The only folks that were for it were folks that had a financial interest in it.”

Short term rentals have long been a contested issue on Molokai, with many operating illegally, generating enforcement concerns. The 17 permitted rentals were approved on an individual, limited-term basis by the Molokai Planning Commission, meaning there is no guarantee they would be granted renewal when the permits expired.

Rawlins-Fernandez said via social media that many community concerns contributed to the bill, including “1) non-resident speculation increases property taxes for neighboring properties, 2) taking up limited housing supply for residents, 3) threatening the character of our neighborhoods, 4) tourist[s] invade residents’ privacy, treating residents as side show attractions, to name a few.”

“We seen the impact STRs has had on the other islands and prefer to protect our island from being overrun and priced out of our ancestral home,” she wrote. “This is our home, not a place for non-resident exploitation and profiteering at the expense of our residents and culture.”

Meanwhile, the lawsuit points out that “many Molokai residents and businesses are dependent on the tourism industry and have been harmed by the elimination or uncertainty surrounding these legal vacation rental homes in the resort areas, including house cleaners, landscapers, contractors, property managers and booking agents.”

“Most people on Molokai didn’t even know it was on the table to shut them down,” said Dayna Harris of Molokai Vacation Properties, one of the affected businesses. “Some prominent business owners didn’t even know they are no longer allowed. I am still getting Molokai people wanting to book short term homes for next year and I have to tell them sorry, Molokai people don’t want them, don’t you know?”

The bill has also spurred worries from Maui homeowners that similar legislation will be passed for Maui.

“This (Molokai) case should protect short-term rental operators in Maui, which is why our members are coming to the aid of the Molokai 17,” said Terry Tolman, former Executive Director of the Realtor’s Association of Maui and current MVRA Chairman. “Many fear they’ll be next.”

Molokai resident Mahina Poepoe supported the zero cap, creating a petition to Maui County lawmakers that received nearly 900 signatures.

“One by one these Short Term Rental homes contribute to cumulative impacts that affect everything from rising property taxes, affordable housing shortages for full time residents, and degraded quality of community, as well interfering with fishermen and gatherers who utilize the shorelines and ocean resources for traditional and subsistence gathering,” she wrote in the petition.

She also pointed out that 16 of the 17 permitted homeowners do not live on Molokai, and most don’t even live in the state.

“The feeling that we’re used to having in our rural communities, which is knowing who your neighbors are, just being able to have that safe feeling, was kind of removed,” Poepoe said in a Hawaii Public Radio interview.

The County Council has given the option for current STR permit holders to convert their homes to bed and breakfast operations, which are still legal and require the owner to live on the property.

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