At its February 14 meeting, the Board of Land and Natural Resources continued to levy fines against landowners in Kona who had been using their houses in the Conservation District as vacation rentals.
The board fined Sheri Parish-Hamilton, who owns a beachfront home on kuleana land in Honaunau, $10,000, which is $5,000 less than the Department of Land and Natural Resources’ Office of Conservation and Coastal Lands (OCCL) had recommended.
The OCCL had also recommended fining her $15,000 for building a single- family residence in the Conservation District without a permit and another $15,000 for constructing the home within the standard district setback of 15 feet on all sides of the property. The Land Board ultimately voted to reduce the former fine to $1,000 and eliminate the latter fine altogether.
In total, the board fined Hamilton $13,000, including $2,000 in administrative costs.
Hamilton’s attorney, Onaona Thoene, had argued that the home the OCCL claimed was built without a permit actually existed on the property before Hamilton bought it from her cousin in 2003. She had sought to expand the house in 2005, which would have required a Conservation District Use Permit (CDUP), but later decided simply to repair the existing home.
Thoene also pointed out that the house existed before the establishment of county or state setback rules, and was, therefore, a nonconforming structure.
With regard to the OCCL’s proposed $15,000 fine for the illegal vacation rental, Thoene argued that only owners who have had to apply for and receive a CDUP would be barred from such use.
“Because the restriction against transient rentals apples to a ‘permittee’ and Ms. Hamilton’s nonconforming use does not require a CDUP, it is improper for the Board to impose a fine based on a violation of a permit condition that Ms. Hamilton is not subject to,” Thoene wrote in testimony to the board.
Land Board member Chris Yuen noted that in the OCCL’s report, the photo of the original house shows it was pretty run down. “Was it habitable?” he asked.
Hamilton said it was and that it had been used as a transient rental.
Yuen asked whether the house was demolished to build the current house, noting that a surveyor Hamilton had hired years ago called the structure a shack.
“We actually used each wall. We reused the same materials in that house. Windows, trim. We used a lot of it. We slowly repaired it, but did not demolish,” she replied.
“Is the house of the same design?” Yuen asked.
“Pretty much,” Hamilton said.
Land Board chair Suzanne Case asked whether the house was there in 1964, which is when a structure had to exist to be considered nonconforming.
“It looks like it could have been there since 1864,” Yuen joked.
Maui Land Board member Jimmy Gomes seemed skeptical that all Hamilton did was repair and replace things on the house. “Looking at this new home, it’s completely revamped. It seems to be way larger than the original footprint,” he said. Hamilton, however, assured him that it was not.
“Everybody would agree the original house is nonconforming. It looks like it’s been there forever. I think we can all safely assume it was there since 1964,” Yuen said. “The question is, is this old structure here that we’re looking at in the pictures had that been … damaged or destroyed to the extent of more than 50 percent of its replacement cost?” he asked. If it had, the department’s rules do not allow it to be rebuilt without a permit, he argued.
Thoene countered that the house was not destroyed and that the rules allow for repair and maintenance without a permit.
“My gut feeling [is] it had lost more than 50 percent of the cost to replace it by the time these pictures were taken,” Yuen said, referring to the photos of the home as it was in 2003. “The rules say the burden of proof to establish a legally nonconforming structure is on the applicant. The rule doesn’t say whose burden it is to establish whether the replacement cost is more than 50 percent,” Yuen said.
He said he was very sympathetic with reducing the proposed fines.
OCCL administrator Sam Lemmo said that the home was a single-family residence. “If you change that use to a commercial use, a transient vacation rental, it then becomes something different from what it was intended for. Therein lies the reason we’re seeking a penalty for that,” he explained. With regard to the fact that the house was unpermitted, Lemmo said he thought Hamilton seemed amenable to applying for an after-the-fact CDUP. Lemmo also said he did not have a problem with eliminating the proposed setback fine. “That could have been an overreach on our part,” he said.
“At the end of the day, I’m interested in compliance. I’m not interested in people’s money, per se,” Lemmo said, adding that
his main focus was getting the maximum — $15,000 — for the illegal vacation rental to maintain the department’s credibility with regard to enforcement. Hamilton said she stopped as soon as she received a letter from Lemmo’s office informing her it was illegal. “If you want to fine them for the construction of a home, that’s up to you. I’m trying to get through this without a contested case,” Lemmo said.
Yuen said he thought the reconstruc- tion of the house was a violation based on the fact that the old house lost more than 50 percent of its value beforehand, but recommended only a $1,000 fine.
With regard to the illegal vacation rental, Yuen proposed a $10,000 fine because “there is this possibility there is an argument they had a legal TVR … in the preexisting nonconforming structure.”
In addition to the fines, Yuen recom- mended that Hamilton apply for an after- the-fact CDUP within 180 days.
The board approved Yuen’s recommendations and Thoene indicated that Hamilton found them acceptable.
Full Fine
Later in the meeting, the board did impose the maximum fine of $15,000 for an unauthorized transient rental near Ke‘ei Beach, plus a fine of $2,000 for administrative costs. The property is owned by Hugh Wilson, Ke‘ei Beach, LLC, Hubert Richards, and Elizabeth Richards.
In this case, the home was fully permitted, but, according to the owners’ attorney Veronica Nordyke, they were unaware of the permit conditions prohibiting short-term rentals when they inherited it.
Once OCCL informed them of their permit conditions, the Wilsons immediately stopped all rentals and have been in compliance ever since, she said. She added that the family disagreed with the fines, since it was a first violation and no harm was done to the environment. She asked that the board reduce the fine to somewhere in the zero-to-$1,000 range.
With regard to the proposed administrative expenses, Nordyke suggested that should be reduced as well, since the violation case was essentially the result of self-reporting to the county while trying to obtain a county TVR permit.
Nordyke said the home had been in the family for more than 100 years and the recent vacation rentals helped fund needed repairs.
“The fine should be measured based on harm to environment, not on any alleged profit. That is not a factor staff should be looking at,” she said, adding, “There was no profit. They were receiving income, but it was to offset [repair costs].”
“That’s still income,” board chair Suzanne Case said.
Board member Yuen added that by Nordyke’s logic, someone could make $300 a night renting the home “and as long as the guests were nice people and didn’t break any coral or throw beer bottles around, there’s no harm to the resource.” The family could make $300,000 in income “and no fine should be levied. That’s your position,” Yuen said.
“Yes, that’s part of our position,” she replied.
Board member Sam Gon explained that the fine was not so much for damage, but inappropriate use of the Conservation District.
Nordyke suggested that the board update its penalty guidelines to reflect that. She also cited a January 2019 Hawai‘i Supreme Court decision that she said backed up her recommendations.
After an executive session, the board unanimously voted to approve the $17,000 fine OCCL had recommended.
—Teresa Dawson
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