Maui Tourism Management and Economic Development TIG Report

The Budget, Finance and Economic Development (BFED) Committee released their Tourism Management and Economic Development Temporary Investigative Group (TIG) Report at their committee meeting on February 2nd. The TIG held meetings on September 10, 2021, September 24, 2021, October 8, 2021, October 29, 2021, November 12, 2021, November 23, 2021, December 10, 2021, and January 19, 2022.

The group compiled several legislative action items, which will be discussed at the next BFED meeting on February 23, 2022. Among the proposals are recommendations for capping tourist accommodations, adding green energy requirements for for accommodations, managed retreat for structures in sea level rise areas, eliminating TVRs in varios zoning districts, and regulating the peer to peer car sharing industry, among others.

You can find the report with all of the proposals here.

A Guest Post Shared from the Realtor Association of Maui Government Affairs Director,  Jason Economou

An Overview of the TVR Phase-Out Issue Thus Far

By Jason Economou, RAM Government Affairs Director

January 13, 2022

There are roughly 7,302 condominium units located throughout the Apartment zoning districts that have a vested right to conduct transient vacation rentals (TVRs). This vested right is based primarily on the fact that these buildings were lawfully permitted to conduct that use historically, and many were built and designed for that purpose. The defense of this vested property right has been a major advocacy issue for RAM for decades. I will not take the time to go through the full history of the issue in this document, but if you are curious I encourage you to review previous analysis provided to RAM members from my predecessor, Dave DeLeon, as well as from myself. Though RAM was successful in having this right codified in the Maui County Code, where it remains today, there have been numerous attempts to strip the subject condominium units of their ability to conduct TVR use since then.

The most recent threat to this vested property right arose as part of the Maui County Council’s August 24th, 2021 agenda as County Communication 21-422. CC 21-422 included draft legislation from Councilmember Tamara Paltin’s office that would effectively phase out transient accommodations in the apartment zoning districts as they were sold. Specifically, it would make it so the ability to conduct TVR use in the subject properties is lost once a property is sold or transferred after December 31, 2021 (this date was clearly an aspirational placeholder). Therefore, current property owners would maintain the right to conduct TVRs in their units for however long they own the property, but they would not be able to confer that right to future owners if the sale or transfer occurred after December 31, 2021. CC 21-422, and the proposed legislation attached thereto, was referred to Councilmember Paltin’s  Planning and Sustainable Land Use Committee.

After CC 21-422’s referral to the committee, RAM and our colleagues got busy on research and messaging in opposition to this proposal. Within days, we identified several issues with Councilmember Paltin’s TVR phase-out proposal (hereinafter, the “Paltin proposal”), and we circulated our concerns publicly. Our arguments against the Paltin proposal were as follows:

1. This Bill Would Defund Affordable Housing for Maui County:

• Maui County’s recent Comprehensive Affordable Housing Plan, calls for the County to “increase funding into the Affordable Housing Fund to $58 million annually.”
• This increased contribution to the Affordable Housing Fund will be used to effectuate necessary infrastructure updates and to allow the County to play a meaningful role in the development of truly affordable housing. 
• If this legislation is passed, we estimate thatthe County stands to lose as much as $74 million in property tax revenue annually (which is roughly 8.77% of the total operating budget!).
• This loss in revenue would make it difficult for the County to maintain the services it currently provides, and it would make it impossible to increase funding to the Affordable Housing Fund.
• Without the revenue, there is no investment in Affordable Housing, and there will be property tax increases for everyone else.

2. This Bill Will Harm the County, the State, and Many Others:

• The STR property tax class in Maui County is expected to produce $137,908,224 in property tax revenue for the County in FY 2022 (more than 5 times as much as the Hotel class or the Owner-Occupied class).
• With there being roughly 13,466 properties in the STR class overall, the average amount of tax paid by each property is $10,241 per property.
• This legislation is designed to remove just over 7,300 properties from the STR property tax class, which equates to roughly $74 million in lost revenue! That is equal to 8.77% of Maui County’s operating budget for this year.
• The only way to make up for this huge loss in revenue is to increase property taxes for everyone else..
• This bill will also remove 7,000+ units from paying TAT, which we estimate to be a loss of roughly $69 Million in TAT revenue for the State of Hawaii. Now that the County will also be charging a 3% surcharge, it will result in direct loss of revenue for the County as well
• Conveyance Tax losses could be substantial, but are difficult to estimate at this time. These 7,000 properties currently equate to billions of dollars worth of real estate, but some estimate that they could lose as much as half their value the moment this legislation is passed. That will be devastating for conveyance tax revenue, and devastating to individuals who own these properties. There is the distinct possibility that this legislation could also cause a bit of a financial crisis, since many current owners will suddenly own more on their mortgages than the units are worth. That is essentially what happened on a national level in 2008, and we all remember how bad that was.

3. This Bill is Yet Another Gift to the Hotel Industry!:

• During the pandemic, the Hotel properties were the only properties that were assessed at a lower value due to lost revenue, and they were openly given priority in reopening when restrictions started loosening.
• Now, through this bill, the County is eliminating the only real source of competition on the island that the hotels have.
• These impacted properties are not “illegal short term rentals.” They are mostly professionally managed units in buildings that have historically been used for the purpose of transient accommodations. The main difference between these units and the hotels is that they are usually family owned, as opposed to the hotels that are owned by multinational corporations.
• The only group that will benefit from this bill is the hotel industry, as the reduction in revenue this bill will cause will be devastating for everyone else in the County.
• It will be most devastating to anyone that hoped the Affordable Housing Plan would actually produce affordable housing.

4. The Impacted Properties are Not Suitable for Our Residents:

• The proposed legislation aims to “create long-term affordable housing opportunities for residents,” but the reality is that these properties are not suitable for that.
• Parking is generally 1-2 spaces per unity, and the spaces are primarily for compact vehicles.
• Units were designed as transient accommodations to begin with, and have minimal storage for families or long term occupancy.
• Units are all 30+ years old, and have high maintenance fees and high special assessments to cope with aging infrastructure. Some recent special assessments have been as high as $100,000 per unit.
• Impacted properties are primarily located in the sea level rise exposure area, and will face financial and practical challenges with climate adaptation. Turning these into “affordable housing opportunities” will almost certainly ensure deferment of critical infrastructure updates for many of these properties, and an increased risk of catastrophic circumstances (like the Miami Condo Collapse).

5. Is this Legislation Even Legal?

• The counties are granted zoning authority by the State of Hawaii through HRS § 46-4, which does allow “for the amortization or phasing out of nonconforming uses or signs over a reasonable period of time in commercial, industrial, resort, and apartment zoned areas only.”
• However, TVR use is explicitly permitted pursuant to the Maui County Code, and has been conducted in the Apartment Zoning Districts for a very long time by many properties. This is hardly a “nonconforming” use. Therefore, it is unlawful to abruptly eliminate the use in this manner.
• These properties clearly have a vested property right to conduct transient rentals, and the proposed legislation will result in a lot of litigation against the county.  Some might argue this legislation is a government taking or violation of due process, and there will likely be claims for zoning estoppel, and it will ultimately cost the County (i.e. tax payers) a lot of money to sort out.

As we waited for the Paltin proposal to get scheduled in the Planning and Sustainable Land Use Committee, we also learned that Council Vice-Chair Keani Rawlins-Fernandez had been working on a TVR phase-out proposal. The Rawlins-Fernandez proposal also asserts that its purpose is “to create long-term housing opportunities for residents by phasing out Transient Vacation Rentals in the Apartment Districts,” but it goes about it in a different way. Rather than phasing out TVR use in all of the subject properties, it would allow TVR use to continue for those properties that are located within the sea level rise exposure area, but it would eliminate the use for all subject properties outside of that area in January 2023. Therefore, it would impact the property rights of roughly 3,624 of the subject units, approximately 3,000 of which are currently paying the STR tax rate.

The TVR phase-out issue was agendized by the Planning and Sustainable Land Use (PSLU) Committee for the first time on November 3, 2021. The intent of the November 3rd meeting was to determine what, if any, legislative proposal the committee would send to the three Planning Commissions for review. In the lead-up to that meeting, RAM and the MVRA raised a large number of concerns and arguments against the legislation, and we each initiated Calls for Action among our members. This resulted in over 500 emails opposing the proposal being sent to each member of the County Council, as well as hundreds of people providing testimony on the Maui County’s eComment forum for  PSLU-34.

At the outset of the November 3rd meeting, it became clear that Councilmember Paltin was distancing herself from the argument that her proposal would create long-term affordable housing opportunities for residents, and appeared to pivot toward the argument that a TVR phase-out was necessary to reduce the number of tourists and meet the ⅓ visitor to resident ratio outlined in the Maui Island Plan. It also became clear that Councilmember Paltin had desired for the PSLU Committee to discuss the Rawlins-Fernandez proposals as well as her own, even though it had not been properly agendized. Regardless, the PSLU Committee did not end up discussing either legislative proposal. Instead, after several hours of public testimony (mostly in opposition to the proposals), Committee Chair Paltin announced that she wanted to defer the item to a later date, and the members agreed unanimously. Currently, we anticipate the TVR phase-out issue to be agendized again in early February, but it could be sooner.

Moving forward, we are under the impression that Councilmember Paltin intends to let the Rawlins-Fernandez proposal have priority. Therefore, we are refocusing our advocacy efforts primarily against that proposal. Broadly, the arguments against the Rawlins-Fernandez proposal are essentially the same as the arguments against the previous legislative proposal:

1. This Bill Will Defund Affordable Housing for Maui County:

• Maui County’s recent Comprehensive Affordable Housing Plan prepared by Hawaiian Community Assets calls for the County to “increase funding into the Affordable Housing Fund to $58 million annually.” 
• If the Rawlins-Fernandez proposal is passed, we estimate thatthe County stands to lose as much as $30 million in property tax revenue annually (which is more revenue than the entire Hotel/Resort Class is expected to generate).
• This loss in revenue would make it difficult for the County to maintain the services it currently provides, and it would make it impossible to increase funding to the Affordable Housing Fund.
• Without the revenue, there is no investment in Affordable Housing, and there will be property tax increases for everyone else.

2. This Bill Will Hard the County, the State, and Many Others:

• The STR property tax class in Maui County is expected to produce $137,908,224 in property tax revenue for the County in FY 2022 (more than 5 times as much as the Hotel class or the Owner-Occupied class).
• With there being roughly 13,466 properties in the STR class overall, the average amount of tax paid by each property is $10,241 per property.
• This legislation is designed to remove just over 3,000 properties from the STR property tax class, which equates to roughly $30 million in lost revenue! That is equal to roughly 8% of Maui County’s estimated property tax revenue for 2022.
• The only way to make up for this huge loss in revenue is to increase property taxes for everyone else..
• This bill will also remove 3,000+ units from paying both State and County TAT.
• Conveyance Tax losses could be substantial, but are difficult to estimate at this time.

3. This Bill is Yet Another Gift to the Hotel Industry!:

• For the same reasons as stated above

The Impacted Properties are Not Good for Our Residents

• The proposed legislation aims to “create long-term housing opportunities for residents,” but the reality is that these properties are not ideal for that.
• Parking is generally 1-2 spaces per unity, and the spaces are primarily for compact vehicles.
• Most units were designed as transient accommodations to begin with, and have minimal storage for families or long term occupancy.
• Units are all 30+ years old, and have high maintenance fees and high special assessments to cope with aging infrastructure. Therefore, the cost to a long term renter or owner occupant would be astronomical without the property generating income.

5. This Legislation is not Lawful:

• As outlined above, the impacted properties have a vested interest and lawfully acknowledged right to conduct transient accommodations.

Though our opposition to these proposals is multifaceted, the issue really comes down to a simple choice:

The County of Maui can either attempt to reduce tourism numbers by punishing TVR owners, or it can fund affordable housing opportunities for its residents.

It cannot do both.

With that in mind, we don’t need to consider whether or not tourist numbers should be reduced, but instead focus exclusively on the economic benefit provided by these properties, and how losing those benefits would negatively impact housing opportunities.

• Links to useful and historically relevant documents:
  
  • 2021 Maui County Real Property Tax Statistics
    
  • Ordinance No. 1797 (1989): This is the ordinance that kind of started the whole issue with these properties. This was Maui County’s first attempt at eliminating transient vacation rentals in the Apartment zoning districts, but Section 11 of the ordinance created a carve out for all the subject properties.
    
  • “The Minatoya Opinion”: This is a 2001 legal memorandum from Deputy Corporation Counsel Richard Minatoya, which outlines the vested property right of the subject properties to conduct TVR use.
    
  • Ordinance No. 4167 (2014): This ordinance codified the right of the subject properties to conduct transient vacation rentals by amending the permitted uses for Apartment zoned properties in the comprehensive zoning ordinance. Thereby making TVR use in these properties a fully conforming, permitted use.
    
  • List of Apartment District Properties Allowed to be Used for Short-Term Occupancy: This is a list of Apartment zoned properties that are generally recognized to have the vested right to conduct transient vacation rental use.
    
  • Maui Vacation Rental Association Blog: Excellent coverage of recent Council activity. Additionally, they provide helpful resources like this table that separates out the subject properties in various ways.
    
  • The Rawlins-Fernandez TVR Phase-Out Proposal
    
  • List of Apartment District Properties Allowed to be Used for Short-Term Rental Occupancy within/abutting the SLR-XA: This is a list generated by the Department of Planning in response to inquiries concerning the phase out proposal from Council Vice-Chair Rawlins-Fernandez. These are the properties that would be permitted to keep conducting transient vacation rentals under her proposal.
    
  • Paltin TVR Phase-Out Proposal
    
  • Agenda and Video for November 3, 2021, Planning and Sustainable Land Use Committee Meeting
    
  • eComment forum for November 3, 2021 PSLU Committee Meeting
    
  • UHERO Economic Analysis of Maui County Comprehensive Affordable Housing Plan
    
  • Video and Slides of presentation concerning the TVR Phase Out Proposals
    
  • Hawaii Sea Level Rise Viewer

The Maui County TAT (MCTAT)  The Maui County Transient Accommodation Tax began November 1, 2021. The County of Maui recently posted new info to their MCTAT website, and there is now a payment voucher to download there as well. You can see the County website info here: https://mauicounty.gov/2466/Transient-Accommodations-Tax To get copies of the payment voucher go to this page https://www.mauicounty.gov/DocumentCenter/View/130059/MCTAT-Payment-Voucher Maui County also has an email to send questions to at mauitat@mauicounty.gov. You can call the MCTAT office at 808-270-7637. Always feel free to call or email me with any questions you may have as well. The question I get most often - what about reservation made prior to Nov. 1 the beginning of the tax:  Those reservations are not subject to the tax because those parties entered into a contract price before the tax. Tax is only paid on reservations on or after 11/1/21. The county webpage has a FAQ on this subject at https://mauicounty.gov/Faq.aspx?QID=1181 "What about bookings made in advance before the effective date? Under Act 1 (2021), Section 7 states: “[t]he county transient accommodations tax, if adopted, shall be imposed on the gross rental, gross rental proceeds, and fair market rental value of all written contracts that require the passing on of the taxes imposed under this chapter; provided that if the gross rental, gross rental proceeds, and fair market rental value are received as payments beginning in the taxable year in which the taxes become effective, on contracts entered into prior to the adoption of the ordinance pursuant to section 46- , HRS, and the written contracts do not provide for the passing on of increased rates of taxes, the county transient accommodations tax shall not be imposed on the gross rental[.]” Here is the graphic from that page:

The county also offers an online payment portal.  "Online: Automated Clearing House (ACH) payments are accepted via the County’s online payment portal at https://www.mauicounty.gov/tat/payment.  No fees will be assessed for ACH payments.  However, ACH payments require bank verification, which can take up to 4 days.  If your payment needs to completed sooner, please remit your payment using other payment method." Please note if you are filing a zero tax due you will not be able to file that online. Online filing is for payments only. To file a zero tax due use the payment voucher and mail in form. For a pdf copy of the FAQ go to https://mauicounty.gov/DocumentCenter/View/129320/TAT-TAX-FACTS---FAQs If you have any questions please feel free to email me at jenrusso@mauivacationrentalassociation.org

See the List of Proposed Properties Subject to the phase out:

11/03/21 PSLU Committee On Wednesday's PSLU committee meeting. Chair Tamara Paltin began with explaining the theme of this meeting: “This is really centered around General plan 1D: to maintain a sustainable balance between the resident, part-time resident and visitor populations. This is not about Hotel industry or Short term rental industry or visitor industry. It is more about our residents and the vision they had and their quality of life.” Chair then went on to explain that for PSLU 34, on phasing out TVR use in apartment districts they have a new proposal. This proposal sponsored by Councilmember Rawlins Fernandez seeks a phase out bill that would allow for TVR use to continue for all buildings in the sea level rise exposure area. However, all the properties outside the SLRExA would lose the right to conduct TVRs on January 1, 2023. This potential affects 3000 units. Thank you so much for those who took the time to oppose this measure on Wednesday! The meeting went on to have over 100 on the oral testimony list, and public testimony went on through 9am-3pm. To watch the meeting go here: http://mauicounty.granicus.com/MediaPlayer.php?view_id=1&clip_id=149 There was 200 pieces of written testimony was submitted, you can see that here:  https://mauicounty.granicusideas.com/meetings/1438-planning-and-sustainable-land-use-committee-2021-on-2021-11-03-9-00-am/agenda_items The committee voted unanimously to defer this item to a future committee meeting date. The next discussion will focus on the new proposal. The county planning department has since submitted a list of properties that are in or abut the sea level rise exposure area. These would be the properties allowed to remain doing TVR use. This new proposal also changes its intent to just create housing, not necessarily affordable housing.  MVRA has created a list to show what properties are subject to this new phase out. See that here:  https://docs.google.com/spreadsheets/d/e/2PACX-1vSruJ0CUYT7f1GsbNfP_WJVHaOgEY3FDpWjRUQd8OATX8z-7Ym5jK3ZTaD6dDsvVAg4zVPBqXqe9kyb/pubhtml See a portion of this new bill's intent below:

Chair Paltin also explained that she feels that “we need housing for everybody, many of these units used to be housing for everybody prior to 2014.” and gave a brief history lesson of these units. Tom Croly testified and added to that history lesson, recalling that many of these buildings and units actually did do vacation rental use prior to 2014, as it was an allowed use for them all along. Phasing out 3000 legal vacation rentals will certainly divest these property owners of rights, and further identification of these buildings units, and what kind of housing would be created, if it was used for vacation rental in the past, and researching any other unintended consequences should be the next steps. Stay tuned for more meetups and discussion on the issues and unintended consequences of this newest TVR Phase out. In addition, at that meeting on Wednesday the visitor accommodation Moratorium proposal passed out of committee and onto the council. This proposal if passed will pause any vacation accommodation permits, including hotel, condo, or STRH, for two years. What should you do?  Support us! Transient Vacation Rental owners can join MVRA at MVRA.NET/JOIN Be informed, take action, and educate your guests.

Phasing Out Vacation Rentals in the Apartment District The proposed Phasing Out of Transient Accommodations in the Apartment District is on the agenda in the Planning and Sustainable Land Use Committee meeting this Wednesday, November 3rd at 9am. This proposal will affect all of us, and we recommend giving oral testimony or submitting testimony for this meeting. Some of the issues with this proposal: This proposal suggests a sunset date whereby any sale or transfer of title on properties after that date will no longer be able to do transient vacation rental use. This use has been explicitly legal in our county code, and many of these buildings in the apartment districts have been engaged in this legal use for many years. These properties have made the largest contributions to affordable housing, and the county’s budget. Since 2018, Maui’s vacation rentals have contributed $18.9 million towards affordable housing, more than all the hotels, all the homeowners and all other businesses COMBINED! This year the legal short term rentals generated $8.5M for the affordable housing fund. This bill could potentially defund affordable housing for Maui County at a time when we need it most. The intent of this proposed phase out bill is to create affordable housing, however, most of these properties would not be affordable to rent. Many of these properties do not have storage and parking that is appropriate for affordable housing. This bill could result in a potential loss of $74M in Real Property Tax revenue for the county of Maui, and a loss of $69M in TAT Revenue for the State. The result will be an increase in taxes for Maui residents.  Please take a moment to tell your story, how this proposal affects you, and the network of small businesses that you support.

What can you do? If you have a vacation rental operation in the apartment district or this concerns you, please reach out to your council members, send testimony, or better yet give oral testimony at this week’s County Council meeting.  Item you are testifying on is PSLU-34 To testify: Meeting of November 3, 2021 9:00 AM will be held virtual online here: BlueJeans link https://bluejeans.com/149341846 To phone in testimony:To join the meeting by phone, call 1-408-915-6290, and enter meeting code 149 341 846 To submit written testimony: Go to https://mauicounty.granicusideas.com/meetings/1438-planning-and-sustainable-land-use-committee-2021-on-2021-11-03-9-00-am/agenda_items/617b54d0f2b67075970158b3-pslu-34-cc-21-422-phasing-out-transient-accommodat View the agenda here: https://mauicounty.legistar.com/View.ashx?M=A&ID=901831&GUID=D7AA512E-D668-48C6-85F9-6C1FBB940823 To view the proposed bill and committee report: https://mauicounty.legistar.com/View.ashx?M=F&ID=9924078&GUID=03DC0520-4C86-4EAB-8543-97F2AB200AE5 Finally, feel free to reach out to your County Council representatives via email or phone:  Alice Lee, Council Chair: Alice.Lee@mauicounty.us, Phone: (808) 270-7760;  Keani Rawlins-Fernandez, Council Vice Chair: Keani.Rawlins@mauicounty.us, Phone: (808) 270-7678; Tasha Kama, Presiding Officer Pro Tempore of the Maui County Council: Tasha.Kama@mauicounty.us, Phone: (808) 270-5501;  Gabe Johnson, Councilmember: Gabe.Johnson@mauicounty.us, Phone: (808) 270-7768;  Kelly King, Councilmember: Kelly.King@mauicounty.us, Phone: (808) 270-7108; Mike Molina, Councilmember: Mike.Molina@mauicounty.us, Phone: (808) 270-5507; Tamara Paltin, Councilmember, Chair of Planning and Sustainable Land Use Committee: Tamara.Paltin@mauicounty.us, Phone: (808) 270-5504; Shane Sinenci, Councilmember: Shane.Sinenci@mauicounty.us, Phone: (808) 270-7246; Yuki Lei Sugimura, Councilmember: Yukilei.Sugimura@mauicounty.us, Phone: (808) 270-7939

SUBMIT TESTIMONY

Submit Testimony

Some talking points for this discussion: If you own property, how much would you have to charge for a monthly rent in order to cover costs? Is it affordable? How will this affect decisions like hiring contractors, renovations and maintenance? An unintended consequence is a decline in the construction industry. Are there other small businesses that you work with that will be affected? If this legislation is passed, we estimate that the County stands to lose as much as $74 million in property tax revenue annually, or 8.77% of the total operating budget This loss in revenue would make it difficult for the County to maintain the services it currently provides, and it would make it impossible to increase funding to the Affordable Housing Fund. Without the revenue, there is no investment in Affordable Housing, and there will be property tax increases for everyone else. Many of these buildings and units are built along the shoreline, or are 30+ years old. These kinds of buildings tend to have special assessments and additional expenses and would not be suitable for affordable housing. Our colleagues at the Realtor Association of Maui also summarized nicely: The top 5 reasons why we oppose this legislation: Basic Economics: The Director of the Department of Finance has already warned the County Council that this move “would possibly lead to a negative revenue change at about $23 MILLION per year.” Overall, RAM has determined that these impacted properties represent upwards of $74 Million in property tax revenue per year (that is about 8.7% of the entire budget!). Eliminating this much revenue would make it hard for the county to maintain current services, and it would jeopardize the county’s bond rating. It Will Defund the Comprehensive Affordable Housing Plan: The 2021 Comprehensive Affordable Housing Plan calls for the county to: (1)“Increase funding into the Affordable Housing Fund to $58 million annually;” and (2) For the County to use its bond rating to borrow against the increased Affordable Housing Fund as a means to fund infrastructure updates to support affordable housing development.The TVR Phase Out Bill would make both of these goals virtually impossible! Hawaiian Community Assets, the authors of the plan, agree with this assessment. The Bill Does Not Create Long-Term Affordable Housing Opportunities for Residents: TVR use in the subject condominiums is an incentive for investment purchasers to seek out and purchase these aging condominiums instead of other residential properties on the island. If there is no difference between the permitted uses allowed in an aging 1 bedroom condominium in Kihei or a 3 bedroom home in Waihee or Makawao, but the prices are comparable, an investment purchaser might as well buy the 3 bedroom home that would have been more suitable for one of our residents. Also, even if these properties lose TVR use, they are generally not the type of housing our residents need, and they will likely not sell at rates many of our residents can afford. The subject properties are all 30+ years old, primarily built and designed as TVRs, largely located in the sea level rise exposure area, and have aged infrastructure that has been used hard for many years. That means they have minimal parking, minimal storage, high maintenance fees, high special assessments, high tax assessments, and are in the areas most susceptible to climate change. Given the current prices of comparable non-TVR units and the average monthly maintenance fees of these units, few (if any) can be expected to sell at “affordable” or even “workforce” rates. This Bill is a Huge Gift to the Hotel Industry: Eliminating TVR use in the subject condominiums only benefits the hotel industry, as it will be eliminating their only real competition while negatively impacting county revenue and affordable housing development. With no competition, the hotels will maximize their capacity and realize huge gains in revenue. Naturally, much of this revenue will go back into advertising Maui as a destination, thereby increasing the numbers of tourists visiting the islands. Throughout the pandemic period, the County of Maui already demonstrated great preference for the hotels and resorts, and this further gift of eliminating their competition almost entirely is alarming and arguably inappropriate. Legal Challenges: Many property owners have already contacted RAM and expressed their intent to take legal action against the County of Maui if their property rights are abridged. Though HRS Section 46-4 ostensibly provides the counties authority to phase out “nonconforming” uses in the Apartment zoning districts, it is difficult to classify TVR use as “nonconforming” for these subject properties. TVR use is expressly permitted in the language of the comprehensive zoning ordinance, and has been stated as expressly permitted in several pieces of legislation over the past 7 years. TVR use has been conducted in the A-1 and A-2 districts by thousands of property owners, throughout hundreds of buildings, over the course of decades. It is unclear if impacted property owners would win a legal challenge against the County of Maui, but it may cost our county a lot of money and time to find out. Put your testimony into your own words, and add your own personal experience. Mahalo!

SIGN UPS ARE OPEN! Our next meet up is for Bed and Breakfast Operators and Short Term Rental Home Permit holders. We will be discussing the renewal process, filing for your renewal and what to look out for and what to expect. Many operators and managers are either in the process, have recently renewed, or will renew soon. We will have a presentation from Tom Croly with Q&A, and we would like members to share their own renewal experiences to help others be better prepared.  Looking forward to seeing you there! If you have any questions please email them to me at jenrusso@mauivacationrentalassociation.org

Sign Up Now!

Proposal to Phase out Vacation Rentals in Apartment Zones starting 12/31/21 Maui County Council has Proposed a Bill to Phase Out of Vacation Rentals. This bill proposed today in council says that it intends to create more units available for residential use by phasing out transient accommodations in the apartment districts.  The resolution says current vacation use is allowed in buildings within the apartment zoned areas until a date after 12/31/2021 when said properties are sold or transferred. So any sale or transfer after 12/31/2021 would mean the vacation rental use of this property is not allowed. The buildings in the apartment district that this bill would affect include the properties on this short term occupancy list published by the county Department of Planning. This proposal is heading to a future agenda on the Planning and Sustainable Land Use Committee.

Click here for a pdf copy of the proposed bill To see the Short term occupancy list of properties in the apartment district: https://www.mauicounty.gov/DocumentCenter/View/112945/Short-Term-Occupancy-List-as-of-08182021?bidId= At this point, this is just a county communication and the proposal will be discussed in an upcoming PSLU committee first and then be transmitted to the planning commission subsequently. We will keep you updated on the progress and when opportunities arise to submit testimony.

For more information or updates email membership@mauivacationrentalassociation.org

Although the Mayor vetoed bill 60, the visitor accommodation building moratorium bill that was approved by our council, there is another one underway. This one will be heard at the planning commission on September 28th. This proposal includes creating a committee that is going to do a temporary inva(TIG) on tourism management. Council member Fernandez Rawlins has said that she plans to work with the hotels on this committee, and we will be reminding them that vacation rentals are a legitimate part of the visitor accommodation industry in Hawaii and need to be included. https://www.mauicounty.gov/DocumentCenter/View/127726/Resolution-21-98-referring-to-the-Maui-Planning-Commission-a-bill-for-ordinance-declaring-moratorium-on-new-transient-accommodations We will be updating on this proposal.

Registration for Short Term Rental Condos Coming Up: Registration for Short term rental condos will be under review at the next Planning Commission agenda on July 13 at 9am. The Planning Department’s report on the proposal: https://www.mauicounty.gov/DocumentCenter/View/127730/071321_Agenda-Item-B2_Resolution-21-55-Apartment-District_memo Planning Department recommends using TMK rather than a registration number, and that each unit or property owner must hold a valid general excise and transient accommodation license for the property, with taxes paid in full and kept current, and be classified in the short term rental real property tax rate.

What Happened at the PSLU meeting 7/1/21

In the op-ed by Council member Tamara Paltin, [https://mauinow.com/2021/06/29/short-term-rental-home-caps-scheduled-for-discussion-in-committee/] she is quoted as saying that, ““Reducing the number of short-term rental homes will open up more long-term options for residents.” 

The concern is the council continues to make difficult decisions based on hyperbole rather than actual facts. There are several factors that will open up more long-term options for residents, but decreasing the number of slots for future short term rental permits is probably not going to have much of an effect. There aren’t a ton of homeowners putting in applications for short term use, but there are a lot of homeowners buying second homes for seasonal use. There are a lot of building permits for seasonal homes. There aren’t a lot of options for affordable housing. 

It is understandable that people are angry about the state of housing on Maui - however blaming legal vacation rentals is not going to solve the issue.

In 2020 during COVID there was a perfect storm across the nation - creating a “Pandemic Shift” in home sales. There were low interest rates, little inventory and people wanting to move to Hawaii because they can remote work from home. This high demand for homes in Hawaii brought median house sales rates up to over a million on Maui. None of these home sales were to make a STR. You cannot even apply for a permit until you have owned your property for 5 years. This same “Pandemic Shift” had many people moving to Hawaii and Maui and renting long term, further exacerbating the long term rental problem, as many Maui renters can’t compete with mainland incomes.

With the 220 or so permits that exist for short term rental homes about 50% of them are owned by Maui residents. These are residents that have chosen to go through the legal process, and many of them also provide long term housing on Maui for other residents. These are not bad people, and should be celebrated for their small business and work in the community and financial contributions to the county and housing. 

Many of these owners vet their visitors carefully, and educate their guests carefully. There are certain stipulations for some properties that mean they do not qualify to make application for B&B 

Every single permitted home has a local manager listed on the  property signage and that manager has their contact information on a sign on the property. 

Maui needs more affordable housing in order to solve our housing crisis. Vacation rentals are already contributing to this solution. Vacation rentals are the biggest source of funding for Maui’s Affordable Housing Fund. 

Affordable Housing Fund Contributions - 2019-2022

Vacation Rentals have contributed a total of $18.7 million

Timeshares have contributed a total of $5.9 million 

Homeowners have contributed a total of $5.3 million 

Hotel/Resorts have contributed a total of $4.8 million 

Vacation rentals represent 37% of the county real property tax revenue generating a staggering $142.4 million this year.

--

There were a lot of written testimony regarding this PSLU item 67: 112 written comments in the ecomment system https://mauicounty.granicusideas.com/meetings/1355-planning-and-sustainable-land-use-committee-2021-on-2021-07-01-9-00-am/agenda_items/60d66da74425383eb0000a03-pslu-67-cc-21-67-short-term-rental-home-permit-cap A lot of good points were made in oral testimony, but in the end the Planning and Sustainable Land Use committee members had their minds already made up. It seemed like they did not take into account the recommendations of the Planning Commission in their review of this bill, which was to initiate a study rather than arbitrarily choose cap numbers. They did not weight the 4 meetings worth of oral and written testimony that many in the industry made during the planning commission's public hearing (there was about 150 pages of testimony and minutes from those meetings). The proposed bill that went through the planning commission and planning department was represented with the intent to reduce the caps to existing and pending permits, and that is what people were testifying about. But when it came down to it, they reduced caps in some districts to less than the number of existing permits, with the plan to decrease the numbers through attrition. That was not something that was discussed or put in the report.