MAUI VACATION RENTAL ASSOCIATION

 Telephone (808) 573-0066   FAX (808) 573-2217

Statement of Public Position on Affordable Housing

Oct. 24, 2005

      MVRA is concerned about the shortage of affordable housing for residents. Most of our members are residents, and we feel a connection and commitment to our community. While we do not wish (or deserve) to be blamed for the high cost of housing, we are doing what we can to assure that our operations will not fuel more price inflation in the housing market.       

1. County-sponsored research studies suggest that vacation rentals have a minimal impact on affordable housing.

    

 MVRA has reviewed the existing data relating to the impact of small-scale visitor accommodations on availability and cost of housing.  In particular, we reviewed the methodology and conclusions of a Vacation Rental Study commissioned by the Maui Planning Department in 2002, and conducted by SMS Research of Honolulu. The SMS Study was concerned with impacts of Bed and Breakfast Homes and Vacation Rental Homes which accommodate visitors in single-family dwellings.  (Note: the study did not evaluate impacts of other types of visitor accommodations such as Condos or Time Shares).  The SMS Research data is summarized in Exhibit A, and it suggests that our operations have an impact on affordable housing which is considerably smaller than previously believed. This impression is corroborated by a more recent, independent Survey performed by the Kauaian Institute in the summer of 2005.

2. Despite reassurances from these studies, MVRA does not believe that these numbers “tell the whole story.” 

    

We have heard verbal reports of at least one family who was evicted from a long-term rental so that an owner could begin to use the property for vacation rental.  We have heard numerous reports of realtors showing prospective buyers a home and justifying a high asking price by “the income stream you can expect from vacation rental.”  We have heard public testimony at hearings that “vacation rental income is priced into the market” for home resales.  Our approach to the legislative process has been consistent, regardless of the issue: for any negative perception raised (regardless of whether we believe the perception is accurate) we attempt to incorporate a mitigative measure in our proposed ordinance. 

3. Accordingly, MVRA has included the following six provisions in its proposed ordinance which are designed to offset potential housing price inflation resulting from our operations.

    

1. Permits shall be non-transferable.  Since the new owner will have to apply for a new permit, this will make it risky for a prospective home buyer to “count on” vacation rental income, and should help to offset price inflation resulting from that anticipated income.  Since the permit process is lengthy and costly, a new owner would have to invest time and money in applying for a permit, then wait for the review of their application, with no guarantee of the outcome.

2. No application will be accepted for short-term rental of a property which has an existing long-term tenant.  This would prohibit an owner from applying for a vacation rental permit, and then evicting a long-term tenant if the permit is granted. It would introduce a negative financial incentive against converting from long-term to short-term rental use, because the owner would need to carry a vacant property (with no long- or short-term rental income) throughout the lengthy and costly permit process – again, with no guarantee of the outcome.

3. No new housing shall be constructed expressly for vacation rental use.  This provision is designed to prevent visitor accommodations from competing with residents for new housing inventory.  Permit applications would not be accepted for buildings younger than a certain age.

    

4.  Vacation rental dwellings will be subject to increased real property taxation, including  improved residential, commercial , and  hotel rates, depending on the type of vacation rental. We suggest that the County dedicate this additional tax revenue to financing infrastructure on lands which are designated for development of affordable housing.

    

5. Non-resident vacation property owners can qualify for the  simplified permit processes  if they provide both housing and employment for a resident (onsite) manager.

6. Month-to-month rentals for residents would become legal.  (Under current definitions, a lease of six months or longer is required for a long-term rental to be legal).

    Our operations create around 600 full-time equivalent jobs for Maui residents, helping them to afford housing for their families.  Many short-term rental operators would not be able to afford their own homes without the income from short-term rentals, and without it, they would be competing for more-affordable housing.