Twice last month the Intermediate Court of Appeals has found in favor of the County of Kauaʻi’s law governing the renewal of non-conforming permits to operate transient vacation rentals outside of designated resort zones.
In one case, it reversed the decision of 5th Circuit Judge Kathleen Watanabe finding that Kauaʻi County had improperly cancelled the certificate that allowed Elizabeth Kendrick and Joe Chaulklin to operate a transient vacation rental from a single-family residence they owned in Anahola, called the Ginger Beach House.
In the other, it upheld the same judge’s decision affirming the Planning Department’s cancellation of the TVR certificate held by Elizabeth and Stephen Rigotti allowing vacation rentals of their property in Wainiha.
As background, in 2008, the county banned TVRs outside of specified visitor destination areas, but it did allow holders of lawful certificates to continue operating as a non-conforming use. They were required to renew the certificates yearly. In 2010, the county enacted another law that made denial automatic if the application for renewal was submitted late or incomplete.
In 2014, the Planning Commission adopted an interpretive rule that, despite the ordinance, allowed the Planning Department to accept late renewal applications for up to 30 days beyond the renewal deadline. TVR owners filing late were assessed a penalty of $1,500 in addition to the annual fee of $750.
In 2017, another interpretive rule was adopted, this one eliminating any chance of late applicants retaining their TVR certificates.
The Kendrick and Chaulklin Case
Evidence submitted to the court showed that Kendrick and other TVR certificate holders were reminded of this impending rule change by email in February 2016.
In that email, Planning Department staffer Mike Laureta informed non-conforming TVR operators that he was giving them fair warning. “[F]rom here going forward,” he wrote, “if you’re 1 day late, the department will issue you a forfeiture notice. If you don’t run your business in a professional manner and forget to timely renew, no excuse will be good enough.”
When, in December 2016, Kendrick and Chaulklin timely renewed their certificate, they were reminded of the next renewal deadline of December 12, 2017. And, again, the letter accepting their renewal pointed out that late applications would result in automatic forfeiture of their certificate. “Should your renewal be at least one (1) day late, you will be served with a Cease & Desist and Notice of Forfeiture,” the letter stated.
But when the renewal deadline for 2017 came around, the application wasn’t postmarked until December 15 and wasn’t received by the Planning Department until December 20. The Planning Department cancelled the certificate and denied the renewal application.
Chaulkin and Kendrick contested the decision and the full Planning Commission then held a contested case hearing. It upheld the Planning Department’s action.
On December 20, 2018, Kendrick and Chaulkin sued in Circuit Court. In August 2020, Watanabe issued her ruling, finding that the denial was improper and instructing the Planning Department to issue them the TVR certificate for 2017 and following years. Among other things, Watanabe based her ruling on the fact that the county did not post the change in interpretive rules on its website until 2018 and determined that the plaintiffs’ due process rights were violated inasmuch as she found the county had inconsistently applied the ordinance and interpretive rules of the Planning Commission.
The county appealed. On October 25, the ICA issued its ruling, reversing the lower court’s decision and affirming that of the Planning Department and Planning Commission.
The Rigotti Case
A mere five days later, the ICA ruled on a similar case involving the untimely renewal of a TVR certificate.
This litigation came before Watanabe on July 30, 2019, some seven months after the Kendrick/Chaulkin case, although Watanabe issued her final ruling on it (upholding the Planning Department) on April 1, 2020, four months before issuing her ruling in the Kendrick/Chaulklin case, on August 4, 2020. (The Kenrick/Chaulklin litigation was delayed by an effort to have the case heard in federal court, which eventually remanded it back to the 5th Circuit.)
In this second case, involving the Rigottis, the paperwork to renew their TVR certificate was submitted one day late. The Rigottis claimed a storm had prevented them from the timely submittal of their renewal application by the deadline and argued, among other things, that an emergency proclamation by Gov. David Ige, suspending the effect of some laws, also applied to the ordinance and rules relating to TVRs. The Rigottis challenged the Planning Department’s decision in a contested case hearing before the Planning Commission, which denied their appeal. They then sued in 5th Circuit Court, claiming, among other things, the decision to revoke their TVR certificate violated their constitutional due process rights.
Neither the lower court nor the ICA was swayed. “Notwithstanding the flooding that hindered (but did not completely prevent) the filing of the renewal application in the final days before the deadline, there was nothing in the record evidencing that the renewal application could not have been filed well before the deadline,” the ICA noted in its decision.
The Rigottis’ vacation rental is no longer advertised on VRBO. The Kendrick/Chaulklin property remains on the VRBO site.
— Patricia Tummons
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