Many of us turn to resources like VRBO, HomeAway or AirBnB to rent single-family homes, condos and townhomes in our favorite vacation destinations, all across the globe. On Kauai, it has become very common for vacationers to choose these types of private home rentals over standard hotel options. Not too surprisingly, in response to this high level of demand from renters, the owners of these properties have learned that they can reap great rewards by placing their second homes on the vacation rental market.
Sounds great, right? You can go ahead and buy that dream home on Kauai, have other people rent it and earn enough money to cover some or all of your annual costs of ownership? BE CAREFUL! On Kauai, only certain properties have the legal right to participate in the short-term vacation rental program. The issues to pay attention to are whether the property in question is located in a Visitor Destination Area (VDA) or if it is otherwise a designated, legal Transient Vacation Rental (“TVR”), as recognized by the Kauai County Code.
“Transient Vacation Rental” Defined
According to the Kauai County Code, a Transient Vacation Rental is, “a dwelling unit which is provided to transient occupants for compensation or fees, including club fees, or as part of interval ownership involving persons unrelated by blood, with a duration of occupancy of one hundred eighty (180) days or less.”
To expand further on this definition, the Kauai County Code identifies a “transient” occupant as, “any person who owns, rents or uses a dwelling unit or a portion thereof for one hundred eighty (180) days or less, and which dwelling unit is not the person’s primary residence under the Internal Revenue Code. This definition shall not apply to nonpaying guests of the family occupying the unit, patients or clients in health care facilities, full-time students, employees who receive room and/or board as part of their salary or compensation, military personnel, low-income renters receiving rental subsistence from state or federal governments, or overnight accommodations provided by nonprofit corporations or associations for religious, charitable, or educational purposes where no rental income is transacted.”
So to put it in layman’s terms, any normal, unrelated, paying renter of your property for a period shorter than 6 months would qualify them as a “transient” occupant, and would cause your property to need to operate as a legal Transient Vacation Rental.
Where Did This “Transient Vacation Rental” Law Come From?
Until 2008, there was no law in place to specifically govern the operation of short-term visitor accommodations such as vacation rentals and B&B’s on Kauai. The 2000 Kauai County General Plan of made specific mention of the fact that the 1984 General Plan was silent on the subject of alternative lodging units such as these, and in Section 220.127.116.11 it further explained that the Comprehensive Zoning Ordinance (CZO) only defined “transient vacation rentals” in the context of multi-unit buildings; the CZO was silent regarding the use of single-family homes as vacation rentals, and the lack of clear regulations created a climate of great uncertainty, as single-family vacation rental operators claimed that silence on the matter implied that they need not apply for permits in areas zoned for residential, agriculture and open space, and so they operated their vacation rental businesses without any regulation.
Recognizing the need for more clarity, the 2000 County General Plan officially acknowledged Alternative Visitor Accommodations in Section 18.104.22.168, and laid out the definitions of “Alternative Lodging Units” as:
- A “Bed-and-Breakfast” is the use of a portion of a residence, an additional dwelling unit or a cottage for transient rental (less than 30 days) on a property where the owner resides in the principal residence.
- A “Single-Family Vacation Rental” is a single-family dwelling that is used as a transient rental.
Following the adoption of the 2000 County General Plan, many more years were spent examining the issue, and in early 2008, Ordinance #864 of the Kauai County Code was adopted, providing much more specific guidance regarding the regulation of Alternative Visitor Accommodations, including the definition and terms of regulation of the Transient Vacation Rental, and the locations where they may be permitted.
TVR’s & VDA’s
Visitor Destination Areas (VDA’s) are areas on Kauai where resort activity is permitted to occur. In accordance with Ordinance #864, a Transient Vacation Rental is permitted to operate within a designated VDA, and is prohibited to operate outside of a designated VDA unless a Non-Conforming Use permit (NCU) is already in place.
Even though a property is located inside of a VDA, it may not yet be a registered Transient Vacation Rental, but registering it is pretty simple. While most sale listings will include information relating to a property’s status as a Transient Vacation Rental, in all cases you should personally confirm the status with the County of Kauai Planning Department before purchasing a property.
A Transient Vacation Rental can operate outside of a VDA as long as a Non-Conforming Use (NCU) permit exists for the property. The NCU would have had to be obtained prior to March 30, 2009, as the County of Kauai will not issue a new NCU in an area outside of a VDA subsequent to that date. Again, in all cases you are advised to confirm the status of an NCU with the County of Kauai Planning Department before purchasing the property.