A bill regulating vacation rentals took a big step forward Tuesday, clearing a council panel on its way to two final votes.

Bill 108, more than a year in the making and now on its fifth draft, passed the council Planning Committee on a 6-1 vote, with Puna Councilwoman Eileen O’Hara voting no and Hilo Councilman Aaron Chung and Puna Councilwoman Jen Ruggles absent.

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“This bill was in no way meant to ban vacation rentals but to protect neighborhoods,” North Kona Councilwoman Karen Eoff said. “We do have to start somewhere; we’re the only county in the state that doesn’t have regulations.”

Planning Director Michael Yee asked the council to keep the bill on track.

“Hawaii was special way before vacation rentals came into play. Every major tourist town is looking at how to find the right balance,” Yee said. “The idea of not striking a balance today or finding a path would be a mistake.”

Mayor Harry Kim defended council members who were taking heat from some disgruntled vacation rental operators.

“The administration asked the council to do this,” Kim said. “This is no different from regulating any other business. … This is about zoning for the island, which is needed. We cannot allow our businesses to go on without regulation. … This was something that should have been regulated a long time ago.”

Among those praising the county for its work was an Airbnb spokesman.

“We think you’ve struck a pretty fair middle path,” said Matt Middlebrook, public policy manager for Airbnb in Hawaii, testifying from Kona.

Middlebrook recommended the county allow new vacation rental nonconforming use permits when people drop out of the program, so as to “refill that bucket” in an industry with rapid turnover. He said Oahu started with 3,000 rentals in 1989 and it’s now down to 800.

He also recommended a grace period for those who lost their rental homes during the Kilauea eruption in lower Puna.

Some vacation rental owners found the bill too onerous. Many asked for an economic impact statement for each district before going forward.

Vacation rental owner Pamela Small, testifying from Kohala, deemed the bill “convoluted, bloated, draconian and punitive.” She said two of the council members, Kohala Councilman Tim Richards and Eoff, own vacation rentals themselves and are trying to limit competition.

“What you propose in this vacation rental bill will cripple Puna,” Small said.

The Board of Ethics earlier cleared Richards and Eoff of conflicts of interest in voting on the bill.

Several neighbors of the rentals, however, said the bill doesn’t go far enough.

Kailua-Kona attorney Michael Matsukawa, speaking as a resident rather than an attorney, hinted that litigation could follow legislation.

“The citizenry is prepared to test the false assumption that underlies Bill 108,” he said in testimony. “What is not listed as a permitted use for the RS District is prohibited. A judge will be asked if this provision is clear and obvious to its meaning and effect.”

He said the whole bill is based on the false premise that vacation rentals in residential zones need to be grandfathered in because they were previously a permitted use. That’s not the case, Matsukawa said, because 1999 county zoning code clearly states “any use not listed among the permitted uses in a zoning district is a prohibited use within that district.”

Matsukawa said the county should enforce its existing zoning laws rather than grandfather in the violators.

“Don’t be afraid to enforce the law,” he said. “Changing the law is the easy, but irresponsible, way out.”

Regulating vacation rentals on land in the state agriculture district remains a sticking point. State law requires all dwellings on farm lots that were created after June 4, 1976, be farm dwellings only. Because of the overriding state law, county planning officials say they can’t issue nonconforming use certificates on agriculture properties created after 1976.

“It’s making it crystal clear that if a dwelling was approved as a farm dwelling, the special permit could not then subjugate that,” said Deputy Planning Director Daryn Arai.

In the long term, the restrictions could be modified by changes to the county general plan, with overlays for specific areas such as Volcano Village and Pahoa Town, said Yee. Changing agriculture designations to rural designations would be a good step, he said.

That didn’t satisfy O’Hara, who said her Puna District doesn’t have prime farmland as defined by the state.

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“We’re trying to thread a needle through a jumble of archaic state land use laws,” O’Hara said. “For us to move forward right now puts the kibosh on a lot of people in Puna. … It is a huge pull out of the pocket of constituents in my district. … You call it ag. It’s not really ag. These laws were written in plantation days.”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.