At a hearing of the Hawaiʻi County Board of Appeals last August, neighbors of a 10,000-square-foot house in the state Agricultural Land Use District challenged the decision of the planning director dismissing their complaints that the fellow who managed the property, Jason Eisert, had engaged in commercial operations – specifically, guests at the short-term vacation rental he manages had used the space for a wedding on April 24, 2024.
That event was the second time in a span of five days that activity on Eisert’s “Kona Kai” vacation rental generated ill-will among the neighbors. Several of them complained to the Planning Department that on April 19, guests of Eisert’s home on Pikake Place partied long into the night, shattering the normal peace of the agricultural subdivision with amplified music and loud singing.
On June 6, 2024, then-Planning Director Zendo Kern sent a notice of violation to Eisert.
“The Planning Department continues to receive complaints from the community regarding the ongoing unpermitted events on the property,” Kern wrote. “Planning was able to confirm that a party took place on April 19, 2024, and that a wedding was held on the property on April 24, 2024.”
Kern cited the language of Chapter 205, Hawaiʻi Revised Statutes, concerning what activities are to be allowed in the state Agricultural District, and two paragraphs in the county zoning law, Chapter 25 of the County Code, that forbid weddings and events to be held on Agricultural land. He proposed a fine of $5,000 for violating the state law and two $500 fines for violations of the county code, for a total of $6,000 in fines.
Eisert responded with a full-throated defense, obtaining an affidavit and receipts from the bride that showed the actual wedding was at the Outrigger; what occurred the evening of April 24 was merely the wedding reception. The party on April 19 didn’t really violate any ordinance or statute, he argued. If there was a noise infraction, it was a police matter, he argued – and at no time did the complaining neighbors call the police.
On July 2, Kern responded, thanking Eisert for the information and stating that “Planning has determined that no violations” occurred. Case closed.
One of the neighbors, Erin Gallogly, appealed the decision. The April 19 party, she stated, involved approximately 50 guests and was a commercial event. She had called Eisert to complain about the noise. He arrived at her house around 8 p.m., she stated, while the party was in full swing and “he heard the amplified noise first-hand.” Also, in his reply to the notice of violation, Eisert did not address the allegation of commercial use of his property, she wrote.
As to the April 24 event, which she now referred to as a “wedding/wedding related” event, that, too, was a commercial activity. She said that the Planning Department should have required Eisert to produce the rental agreements for both events. Failing that, the Board of Appeals should do so. “The CoH Board of Appeals can compare information in the Lease/Rental Agreement, statements and/or invoices from the service providers, statements from the renter, and the evidence provided by the complaints to ascertain if unpermitted commercial activity (i.e., wedding/wedding related event) occurred. Whether the event was a wedding or a wedding related event is irrelevant. The issue is an unpermitted commercial event,” she stated in her complaint.
It took more than a year for Gallogly’s complaint to make it onto the agenda of the county’s Board of Appeals. During that time, the allegation of a wedding-related event was dropped in a pre-hearing conference. The issue of loud noise was dropped as well. As to the only remaining complaint – that of a commercial use on April 19 – Planning Director Jeff Darrow, successor to Kern, said that the department evaluated the complaint on the basis of whether the event was advertised, admission charged, or donations sought.
Since the time the complaints were made, Darrow said, the department has changed its procedures. Now instead of issuing a notice of violation, the department issues a courtesy letter asking the subject of the complaint to respond. Only after receiving the response would the department now determine whether a notice of violation was warranted, he said.
Gallogly asked Darrow if Eisert had a special use permit. “In regards to the activities and the property,” he replied, “there are currently no special use permits.”
In her closing argument, the deputy corporation counsel representing the county, Jean Campbell, stated: “The scope of this case is very, very clear. The department did not receive any evidence of commercial activity. … A simple statement from a neighbor is not sufficient evidence for the government to take action against anyone. … We have no evidence that this was in fact a commercial event.”
The board then voted unanimously to dismiss Gallogly’s appeal. On October 10, it approved the formal findings of fact, conclusions of law, and decision and order.
Eisert accepts payment from guests at Kona Kai. The property is advertised on VRBO and other vacation rental platforms. Information posted on VRBO.com as of mid-October reflects a nightly charge of nearly $5,000, with a weekly rate of around $32,000. The property is described as having six bedrooms and able to accommodate up to 16 guests. Among the amenities is a 100-foot-long infinity pool, a pickleball court, and a movie room that can accommodate more than 16 people. The home is advertised as being “the largest in the county,” with the cited reference being the officials in the county “building department” (sic). (In point of fact, there are many much larger single-family homes along the Kohala Coast, according to property tax records.)
In a filing with the state Department of Taxation reporting revenue from activities subject to the general excise tax for the second half of 2021, agricultural “wholesaling” brought in $14,000, offset by exemptions and deductions totaling $13,000, for a net taxable income of $1,000. “Transient accommodation rentals” for the same period netted $20,050.
Yet the Board of Appeals determined that Eisert was not engaging in any commercial activity.
A Short History
On March 31, 2021, Jason Eisert of Provo, Utah, filed a certificate of organization for Kona Kai, LLC, with the Utah Department of Commerce. The stated purpose was to “own property in Hawaiʻi. Rent it out as business.”
Article III of the certificate states that the company “shall continuously maintain an agent in the state of Utah for service of process who is an individual residing in said state.” Eisert gave his own name as the registered agent, using the Provo address.
(Eisert is still listed on Utah records as the registered agent, despite statements to the Hawaiʻi County Council and others that he has been a resident of the county for many years. In June 2023, for example, Mayor Mitch Roth nominated Eisert to the county’s Tax Board of Review. Among other things, Roth stated that Eisert “has been a resident of Hawaiʻi for 6 years.” His accomplishments listed by Roth included “recognition as the First Place winner in the State of Utah for Problem Solving.”)
Not until October 18, 2021, did Kona Kai register with the Hawaiʻi Department of Commerce and Consumer Affairs as a foreign (i.e., out of state) limited liability company. Eisert is identified as the sole member as well as the Hawaiʻi registered agent, giving as his address the Kona property on Pikake Place.
In May 2021, Kona Kai acquired the property, paying $4.75 million for two adjoining lots, each around five acres. The seller was Koyo USA, a company that was one of the original bottlers of desalinated seawater at the state-owned Hawaiʻi Ocean and Science Technology (HOST) Park adjoining the Kona airport. To finance the purchase, Kona Kai was loaned $3.23 million by Selva, LLC, a Salt Lake company.
Within days of the purchase, Eisert filed Form D with the U.S. Securities and Exchange Commission, stating that Kona Kai, of which he was managing member, was offering $3.6 million in equity, of which $3.2 million had already been sold to 58 investors. States in which investors would be solicited were given as California, Hawaiʻi, Utah, and Wyoming. In describing the nature of Kona Kai’s business, Eisert checked the box for “Lodgings & Conventions.” The box for “Agriculture” was left blank.
Just two months following sale of the property, neighbors began to complain. Owners of property in the gated Ka Aina Pono (KAP) subdivision wrote to Eisert in July 2021, listing numerous issues.
“As you know, over the July 4th weekend a large party at your property subjected the neighborhood to four days of speeding and unsafe driving, increased traffic and gate use, loud music, strobing lights and loud partying late into the night and early morning hours. … [Y]ou could imagine our disappointment and concern to see the airBnB advertisement that would allow for 30 to 40 persons to stay at your property with no county permits in place.”
The easements allowing use of the roadway and gate system “were granted based on residential use, not commercial,” the neighbors wrote. “It is an unfair burden on the KAP property owners to have to pay for the accelerated wear and tear on the road system … In addition, this would create increased liability to each of us as the road is privately owned and not under the umbrella of an association.”
On December 31, Planning Director Kern issued a warning letter to Eisert, stating the department has “received a complaint alleging that you are operating an unpermitted commercial business, hosting weddings and events” on the Pikake Place property. Kern listed the various activities that the county does and does not allow and asked for a response by February 15. “We want to give you the opportunity to disprove the complaint or take necessary corrective action,” he wrote.
On June 26, Eisert responded to Kern’s warning letter, proposing several corrective actions that would “bring our property back to good standing with the county and allow for our additional farm dwelling agreement decision to be made.”
He added, “Honestly, I am still amazed at how unwelcoming everyone was in this community. I wasn’t even given the opportunity to introduce myself when I moved in. … It is a shame that I was greeted this way.”
To address county concerns, he said, and comply with county regulations, he was no longer going to advertise his property as a hosted rental and “farm workers will move from off-site locations into the main farm dwelling.” Also, “non-agriculture activities will not occur outside of the structural parameters of the dwelling structures. All activities and events that occur outside of the structural parameters will come under the agricultural use restrictions.”
The “golf driving range” will be “used only for personal use.” (In later communications, Eisert said he had removed this amenity.)
Further bookings, he added, will be limited to “groups consist[ing] of ‘one family or group of not more than five unrelated persons.”
Special Permit Sought
In October 2023, Eisert applied for a special permit “to allow for the establishment of a wellness and educational center with overnight accommodations within an existing one-story, single-family dwelling consisting of 9,452 square feet of gross floor area and consisting of 5 bedrooms, 5 full baths, 2 half-baths and a swimming pool and processing rooms, all of which are located on approximately 5.083-acres of land and identified as Parcel 14. Also requested is permission to revert an existing two-story, 1,870 square-foot agricultural storage building on the same property, back to its original use as a 3-bedroom, single-family dwelling where on-site management and other wellness support functions can operate, including overnight accommodations.”
Two months later, he separately applied for an “additional farm dwelling” permit to cover the reversion of the storage building to a residence.
Michael Matsukawa, an attorney representing owners of property in the same area, wrote Eisert on March 1, with a copy to the Planning Department, informing him that the use of private roads by his guests was not reasonable and “exceeds the scope of the easement.” He went on to summarize an exhaustive search of subdivision records, including easements, that thread through the neighborhood of Eisert’s property.
As all the land is private, there is no state or county law to address disputes over use of the easements, he noted.
But in the case of special permits, he added, the county Planning Commission’s rules require that any activity that a landowner puts on their land should not “adversely affect surrounding properties.” Since the access easement “is owned by others and the easement area is ‘surrounding property,’” he continued, “this rule requires the consent of owners of ‘surrounding property’ as to the kind of use that may be put on the affected easement area.”
“In any event, the 2008 Grant of Easement is ambiguous as to the scope of the easement in question, which means that the circuit court must be called upon to determine the scope of the easement in question, particularly the kind of uses that a benefited party, such as yourself, may put on the affected easement area,” he wrote.
Matsukawa went on to refer to a decision, Cooper v. Sawyer, of the Hawaiʻi Supreme Court in 1965, in which the court determined that the party benefited by an easement can use it only for a “reasonable” use.
Finally, Matsukawa wrote, Kona Kai’s application is incomplete: “[T[he legislative and judicial standards of the ‘reasonableness’ of a proposed Special Permit are conjoined. No doubt, an agency will not attempt to adjudicate a matter of law that falls within the jurisdiction of the circuit court to make. In other words, before Kona Kai, LLC’s application for a Special Permit can be deemed to be complete, Kona Kai, LLC (1) must obtain the consent of the owners of lots in the Ka ʻAina Pono subdivision or (2) must obtain a judgment from the circuit court on the scope of Kona Kai, LLC’s ability to use the affected easement area in the Ka ʻAina Pono subdivision.”
On August 8, 2024, Daryn Arai, a former county planner turned land use planning consultant, advised Kern that his client, Kona Kai, was requesting the immediate withdrawal of the special permit application. The Planning Department complied and refunded the $500 application fee.
The ‘Additional Farm Dwelling’
The December 2023 application to convert the outbuilding to a residence was actually the second such application. The first was made in January 2022, with Eisert stating that this would free up one of the bedrooms in the larger house, allowing the on-site caretakers to live in the converted shed.
The application was problematic. It was withdrawn in December at the same time the second AFD application was submitted. “We kindly request that the planning department consider this updated submission for approval,” Eisert stated at the time. “Our planner, Daryn Arai, has conferred with Deputy Director Jeff Darrow, and we understand that, upon approval, the additional dwelling will accommodate our farm workers and family only, while our primary dwelling will continue to support ‘hosted ‘short-term rentals.’”
“Our intent is to expand agricultural operations,” Eisert wrote, “but we have not had the resources and manpower to do so yet. … Approval of the additional farm dwelling application is a pivotal step for us, as it would enable the housing of an additional farm worker….
“In addition to bolstering our agricultural operations, the additional farm dwelling is integral to supporting Kona Kai LLC’s overarching business objectives. It will enable us to maintain the flexibility to continue our rental operations and, if approved, the activities outlined in our special permit application. The synergy between our agricultural activities and hospitality services is crucial for the sustainable growth of our business, ensuring we can meet our financial responsibilities to sustain our agricultural activities.” (Emphasis in original.)
By February 28, 2024, Kern had approved the application, binding on “all persons who may, now, or in the future, use or occupy the additional farm dwelling.”
Approval was subject to several conditions. The first is that the AFD “shall only be used to provide shelter for persons involved in agricultural or farm-related activity.” The second condition: the dwelling “shall NOT be used or advertised for hosted or un-hosted vacation rental activities.”
To complete the process, Eisert was to mail to the Planning Department a copy of the agreement with notarized signatures, along with a $41 check to cover the cost of filing with the Bureau of Conveyances. “The Planning Department will not approve a building permit application for the additional dwellings until the AFDA [additional farm dwelling application] document with all required attachments has been recorded at the Bureau of Conveyances.” (Emphasis in original.)
The Planning Department files include a copy of the check Eisert sent, as well as a copy of the notarized statement. But the Additional Farm Dwelling Agreement was not registered with the Bureau until after Environment Hawaiʻi notified the Planning Department, responsible for the filing with the bureau, that as of October 1, this had not been done.
Darrow was asked about this.
“We have emails that it [the BOC document] was in transit from Kona to Hilo via the pouch,” Darrow replied, referring to the daily shipment of documents to and from the Kona and Hilo offices of the department. “We are following up to see if it is somewhere here in Hilo or in Kona.”
In a later email, Darrow wrote, “It looks like it might have been left in the drawer in West Hawaiʻi where documents to be sent to Hilo are kept. They are looking now. Regardless, we will need to have a new BOC doc signed and notarized.”
The agreement was finally recorded at the bureau on October 22.
That year-and-a-half delay did not hold up approvals for the building itself, despite the plain language of the agreement. County inspectors gave the building alterations final approval in July.
In June, Eisert applied for an agricultural-based commercial operation permit, apparently after this operation was already established. “Kona Kai, LLC, operates a food hub and a permitted retail food establishment using Hawaiʻi-grown and raised products to prepare and sell meals, snacks, beverages, and value-added goods. Food will be offered primarily by appointment,” the application states. “Operations may run daily from 8 AM to 9 PM.” The application, submitted June 1, was approved on June 16.
Agricultural Tourism
On October 27, the Planning Department received an application from Eisert for a special permit “to allow agricultural tourism” on both parcels owned by Kona Kai. The application states that the request “applies to an existing one-story, single-family dwelling … [and] also includes a two-story, 1,870-square-foot additional farm dwelling … used for on-site management and hosted rental purposes.”
The inclusion in the sought-for permit of the “additional farm dwelling” to be used in support of the hosted rental would seem to run counter to the conditions of approval of the additional farm dwelling, which forbid its use in connection with “hosted or un-hosted vacation rental activities.”
Overnight accommodations are specifically not allowed under Agricultural Tourism permits, Planning Director Darrow stated when asked about the latest permit application.
Eisert was asked by email whether he had ever received a permit to use his property as a short-term vacation rental. He responded, “Under the county’s written guidance, hosted accommodations are permitted by right when the owner or operator resides on the building site.” To support this claim, he referred to, and included as attachments, two documents.
One was a letter from Darrow on July 25, addressing the subject: “Clarification of Hosted Rentals on Agricultural Lots.” Once Eisert’s Additional Farm Dwelling “has received final approval and your host has established permanent residence within that AFD, the requirement to maintain a locked-off host bedroom within the main dwelling no longer applies,” Darrow said. “Your host, residing within the approved Additional Farm Dwelling, satisfies the requirement for an onsite host presence. Accordingly, you may now utilize all rooms within the primary dwelling for guest accommodations.”
The second document is an August 16, 2021, memo to staff from then-Planning Director Zendo Kern. The memo, Kern said, was “to provide direction to staff when the department receives inquiries regarding hosted rentals.”
Under the department’s Rule 23, a short-term vacation rental is defined as one where the owner or operator does not reside on site, with no more than five bedrooms for rent, and rented for 30 days or less, Kern noted.
When the owner or operator does live on the site, the operation is referred to as a hosted vacation rental, he stated, which “the Planning Department does not regulate.”
He went on to say that the only regulations applying to these rentals are those defining “dwelling unit” (“rooms designed for or containing or used … [by] a single family only”) and “family” (persons related by blood, state-sanctioned adoption, foster parentage, guardianship or marriage, or a group of not more than five unrelated persons … occupying a dwelling unit”).
Kern restated his “interpretation” of family, initially provided to staff in an earlier memo: “The interpretation stated that a single-family dwelling permits a group of up to five unrelated persons. In this interpretation, a family or group of related persons occupying a dwelling unit will count as one person, which may allow up to four additional unrelated persons in the home.”
No mention is made in the memo of excluding properties in the state Agricultural District from operating either hosted or unhosted rentals. The county ordinance passed in 2018 that sets out the areas in which these are allowed states specifically that in the Agricultural District, a short-term rental certificate “may only be issued for single-family dwellings on lots existing before June 4, 1976.” The Kona Kai lot was not established until the early 2000s.
In an email to Environment Hawaiʻi, Darrow stated that he would be reviewing Eisert’s application for the special permit required for agricultural tourism operations. “It is my understanding that he is requesting a special permit for overnight accommodations as part of his ag tourism business,” Darrow wrote.
State land use law forbids overnight stays of 21 days or less as a part of agricultural tourism activities, except in Maui County. According to Eisert’s email, he intends “to transition away from overnight accommodations over time, honoring existing bookings while we scale farm tours and agricultural education once the special permit is approved.”
— Patricia Tummons
Daylan Tiogangco
Were these Ag Lots issued to Hawaiian Homes recipients?