Four months since the August Lahaina and Kula wildfires on the island of Maui, Hawaii’s government has been struggling to find suitable long-term housing for the thousands of survivors who no longer have a place to call home.
More than 6,000 people are still living in hotels — and many have been shuffled between these hotels multiple times with very little notice. Given Hawaii’s housing crisis, with soaring prices and a small inventory of affordable housing available on the island, they have nowhere else to go.
This month, Maui Mayor Richard Bissen proposed Bill 131, a program that incentivizes short-term rental, timeshare and non-owner-occupied property owners to house a person or family displaced by the fires. The incentive is an exemption from having to pay real property tax if they convert their vacation home to a long-term rental. That equates to tax savings of $5,850 to $14,600 annually, depending on the type of property.
“We are faced with the daunting task of identifying approximately 2,700 homes to house families, with an inventory of approximately 13,800 short term rentals, 2,500 timeshare units, and 16,000 non-owner-occupied units already existing on Maui,” Bissen said at a Maui County Council meeting this month.
“Many of these sit empty and we are encouraged we can meet our goal,” he added.
Bissen also suggested punishing property owners who don’t participate in the program by increasing their taxes. This would “make up for the loss of tax revenue” from the owners who are participating.
Over 1,000 pages of testimony were sent to the Maui County Council. Many people were in support of the bill, citing firsthand the struggles that the displaced families have encountered.
“Some have moved up to eight times, no stability, mental disorders, and health concerns arising with the stress and anxiety of no permanence. I can tell you a hundred horror stories from these people,” testified Elizabeth Ray in support of the bill.
But testimony submitted by several short-term rental property owners expressed concern about losing money.
For some of them, to break even on their investment means charging visitors a few hundred dollars per day to rent their property, which makes a lot more than what a $2,000 to $3,000 per month long-term rental can bring.
“That’s right, they will be losing money,” Bissen said in response to the property owners’ complaints. “But what they will be gaining is much more, and what the whole community gains.”
Short-term property owners were also strongly opposed to the mayor’s idea that they should be penalized for not participating. One reason for the opposition are concerns for elderly retirees who rely on income from short-term rentals. Some also called the bill unfair and didn’t think it was a real solution to the problem. They felt taxes should be raised for hotels, too.
Others were very specific about how it would affect their livelihood. “I cannot make up for the loss of taxes from 2200 homes!! I cannot foot the bill to build 2200 new homes!!! I cannot make up for the loss of tax revenue due to Lahaina’s destruction,” retiree PK Opal, a full-time Maui resident, wrote in her testimony. She said her property is classified as a short-term rental while she is “in the process of obtaining residency,” and the bill would penalize her though she has nowhere else to go.
The American Resort Development Association, a timeshare advocacy group, said most of its members provided accommodations to displaced families immediately after the fire, but that converting the units to long-term would be impossible.
“There would be serious legal challenges and legal exposure if a timeshare unit that is owned by up to 52 different owners with a legal right to occupy it, is converted to a long-term rental,” the Hawaii division of ARDA wrote to the county council.
It also was opposed to punitive measures. “A RPT [real property tax] increase for timeshare would unfairly penalize an industry which provided both significant monetary aid and emergency shelter for residents impacted by the wildfires,” wrote ARDA. Lobbyists even spoke to the county council about having any language involving timeshares be removed from the bill.
But even though Bissen mentioned tax penalties when he first proposed the bill, and the Maui County of Finance director mentioned tax penalties at the Dec. 5 county council meeting, this language was not included in the bill. Ultimately, the bill passed on Dec. 15, and it’s now awaiting Bissen’s signature.
It remains unclear if there will be a tax rate change for those not participating in the program down the road and how that will be enforced. SFGATE reached out to Maui County for further explanation but did not receive a response.
