State Land Use Commission to Rule on Hawaii County Vacation Rentals

In 2018 Hawaii County followed in the footsteps of the other islands by passing an ordinance regulating unhosted vacation rentals. I wrote about the bill, the rules implementing the Short Term Vacation Rental (STVR) application process, and what the future might hold for hosted STVRs (pre-Covid19, at least). I also wrote about the difference between county zoning and land use designations as assigned by the Hawaiʻi State Land Use Commission.

In August, the State Land Use Commission (LUC) will have a hearing to issue a declaratory ruling on whether Hawaii County acted correctly in prohibiting homes that otherwise met the requirements for a short-term vacation rental permit from applying if they were on a post-1976 parcel designated “agricultural” by the State.

My guess is that the Commissioners will uphold the Countyʻs decision. But read on for what I really believe the solution should be.

Homeowners at Kohala Ranch are among those challenging the restrictions on Short Term Vacation Rentals

Summary of the Underlying Issue of Short-Term Rentals on Ag-Designated Property

To summarize what I explain in detail in the post on Hawaii State Land Use designations, in 1976, every square inch of the state was classified into one of four designations: Conservation, Agricultural, Urban, and Rural. Conservation is actually the largest classification, followed by Agricultural. Urban represents only 5% of our islands, and Rural only 0.3%.

The admirable intent of designating almost 95% in the first two categories was to protect both environmentally sensitive areas including forests, watersheds, and coastlines; and to preserve land with the greatest agricultural use and potential. In practice, however, much of the land on Hawaii Island that was not near towns or qualified as Conservation got designated as Agricultural, regardless of whether it was suitable for cultivation.

True agricultural use like this North Kohala equestrian estate (MLS 618452) occurs on a small percentage of Hawaii Islandʻs ag-designated subdivisions.

Homes in Kohala By the Sea, Kohala Ranch or Puakea Bay Ranch more often feature swimming pools than horse barns. How did these subdivisions come to be designated as agricultural?

A short history lesson. Parker Ranch Foundation Trust was created in 1992 to manage the Parker Ranch assets for the benefit of the local community, through its support of health care, education, and charitable organizations. The Trust was land rich and cash poor. The Trustees recognized that the lands that were most marginal for grazing had the sunny, dry climate that would be most attractive for real estate development and their holdings near Kawaihae, just north of the Kohala Coast Resorts, were sold and subdivided with the County applying agricultural zoning to follow the Stateʻs designation.

The State legislation is very clear when it comes to allowable uses on ag-designated lands. The Statute limits rentals to over 21 days, and that only in the presence of bona fide agricultural activity. That specific language is why the Countyʻs legal counsel believed they could not issue non-conforming use permits for existing STVRs on ag-zoned and designated parcels created after the law took effect.

The Likely Outcome and the Better Solution for Ag-Zoned Subdivisions

The state statute HRS § 205-4.5(a)(4) very clearly defines that single-family homes on agricultural designated lands should be farm dwellings used in conjunction with agricultural activity, not luxury residences. However, the CC&Rs and Design Guidelines at a subdivision like Kohala Ranch or Puakea Bay Ranch result in large upscale homes that only rarely have more than a home garden (and I can tell you from personal experience even that is really hard to achieve at the lower Heathers elevation unless Covid-19 stay-at-home orders give you the ability to water several times a day.)

The extent of my own Covid-19 victory garden next to the pool at Kohala Ranch. Does this qualify as “farming”?

In short, lands that were large ranches or undeveloped in 1976 may never have been suitable for farming, and present use in no way reflects the state statute, regardless of the issue of whether short-term vacation rentals are allowed.

As I said at the outset, I believe the State land use commissioners will have to confirm the Countyʻs right to prohibit STVRs on ag-zoned and designated lands that are post-1976 lots, because the Statute says so.

On the other hand, the better solution would be for the LUC to update the designations for all these subdivisions, which today are clearly residential, not agricultural in character…and never going back to agricultural use. They even have an appropriate existing category to use. The little-used Rural District is for areas with small farms and low-density residential lots, at least half an acre. And thatʻs exactly what these are.

Then we can start to put some real effort into encouraging farming and ranching on true agricultural lands that are as yet undeveloped but have the potential to feed Hawaii.