STAR-BULLETIN / APRIL 2007 Houses along this secluded stretch of beach in Haena on Kauai's North Shore have been cited by the state for allegedly operating illegal vacation rentals.

Kauai homeowners sue over rental restrictions

LIHUE » In a case that could have implications across the state, owners of more than a dozen homes used as vacation rentals on Kauai's North Shore have filed suit against the state for allegedly violating homeowners' rights in a conservation district.

The suit, filed Monday in Circuit Court, claims that a provision in the homeowners' Conservation District Use Permits that bars them from renting their homes is illegal and unenforceable, their lawyer said yesterday.

If they win, it would apply to all homeowners in conservation districts across the state.

"We tried to work it out (with the Department of Land and Natural Resources). We tried to come to a mitigated resolution," said the homeowners' lawyer, Big Island attorney Randy Vitousek.

"Now with the litigation, it may have (far-reaching) consequences," he added.

The roughly 35 plaintiffs own 14 homes in the conservation district in Haena, the northernmost community on Kauai. None of them lives in their home full time, and only one family, the Fayes of Koloa, currently lives on Kauai full time.

All use their homes as vacation rentals.

Last March, however, all but one of them received letters from the DLNR Office of Conservation and Coastal Lands, alleging the homes were being used as illegal vacation rentals and that they must cease any rental operations before June 30, 2007, or suffer up to $2,000 a day in fines, according to the lawsuit.

They asked for and received an extension until the end of the year, and then asked the Board of Land and Natural Resources to make Haena an exception to the conservation land rule. But that request was denied last December.

The homeowners say that if they are prohibited from renting their homes, some of them will be forced to sell, and, they claim, will redistribute the homes to only the extremely wealthy, the lawsuit states.

They also claim that enforcing the "no rental" clause is arbitrary, since there are dozens of long-term renters, as well as other vacation rentals, in the area that have not been subject to the cease-and-desist letters.

Vitousek said his clients are being targeted unfairly, since Haena is essentially a residential community and different from many of the other conservation lands across the state. Half of Haena is zoned for urban development, and the other half for conservation, without any cultural, ecological or geological differences between the two, he said.

"We want to make the Haena homes in the conservation district (consistent) with the Haena homes in the residential district," he added.

The rental clause, the lawsuit states, is illegal and invalid because the DLNR does not have the authority to prohibit the plaintiffs from renting their homes.

Deborah Ward, spokeswoman for the DLNR, said that officials were checking with the attorney general's office, and could not comment until they did so.