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Wednesday, February 6, 2019
ICA Throws out Case Against Vacation Rental
By Robert Thomas @ 1:24 AM :: 6123 Views :: Honolulu County, Land Use, Tourism

Hawaii App: Slipshod Investigation By Planning Department Cannot Support Vacation Rental Citation

by Robert Thomas, InverseCondemnation, Jan 31, 2019

Those of you interested in the ongoing debate about vacation rentals (aka TVR's) (in Honolulu, the minimum period a property owner can rent in a residential district under the zoning code is 31 days, unless the owner possesses a nonconforming use permit) should read the Hawaii Intermediate Court of Appeals' published opinion in Dao v. Zoning Board of Appeals, No. CAAP-15-565 (Jan. 31, 2019).

You should read the opinion even though it contains a whole lot of detail, because it not only details the applicable law, but also how the City and County of Honolulu Department of Planning and Permitting goes about investigating and prosecuting violations of the ordinance. Let's just say that the court wasn't too impressed with the Department's methods.

The property owner, Mr. Dao, was cited multiple times for renting to tenants for less than the required 31 days. Neighbors dropped dime (this is the source of most TVR citations), the Department sent out a deputy to investigate, and citations and notices of violation were forthcoming. 

In short, here's what you can glean from the opinion:

  • A notice of violation for a TVR violation must be supported with more than an investigator's statement that he spoke to an unknown person outside of the property, who refused to identify himself but said that he was a renter of the property, and that his rental period was less than 31 days. This, according to the court of appeals, was not the "reliable, probative, and substantial evidence" required to support is conclusion that the land use ordinance had been violated. There was not "corroborating personal observations," no conversations with "any of Dao's neighbors at the time," and no other investigation. In short, drive-by investigations aren't good enough.  
  • The Department also cited Dao separately, and treated it as a continuing violation, which meant no time to cure and that the daily fines began to pile up immediately. While the court concluded in that second instance there was evidence to support the notice of violation (this time, the Department investigator gathered better evidence, including the testimony of neighbor eyewitnesses to the activities at the property, and a conversation with an identified tenant), the court also concluded it was error to treat it as a continuing violation based on the first violation, which, as noted above, was bad. You can't treat someone as a recidivist if the original violation on which you reached that conclusion was no good. 
  • As for a rule applicable to future cases, the court held "that the LUO's [Land Use Ordinance's] prohibition of transient vacation rentals in residential districts is violated when, and only during the period that, the prohibited use occurs. No other conclusion is supported by the LUO or the DPP's [Department of Permitting and Planning's] rules. Thus, for a determination that a violation of the LUO occurred for a continuous period of time to be upheld, there must be 'credible evidence of a sufficient quality and probative value to enable a person of reasonable caution to support a conclusion' that the violation occurred throughout that period of time." Slip op. at 40. Applying that rule, the court concluded that it was not OK for the DPP to treat Dao's rentals as continuing violations. See slip op. at 40-41. 
  • Finally, the court cut down on the $65,000 fine imposed. First, because there was not a recurring violation, the DPP could not fine Dao as a continuing violator. Second, because Dao was not a recurring violator, the fines could not be imposed on that basis. Finally, the DPP abused its discretion by applying the highest fine (and not the lowest) for what turns out to be an initial violation. The Department didn't provide a reason for whacking him so hard, right out of the gate. 

Overall, this seems like a case where the Department forgot that even in zoning violation cases, there has to be actual evidence of the violation. Hitting someone with a notice of violation and then telling them to disprove it (all the while laboring under ever-increasing daily fines) just won't cut it. 

PDF: Dao v. Zoning Bd of Appeals, No. CAAP-15-565 (Haw. Ct. App. Jan. 31, 2019)

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