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.

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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.

Who pays for Maui’s Affordable Housing?

This may surprise many, but Maui’s vacation rentals are in fact the largest contributor to Maui’s affordable housing fund. 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! In the same time period timeshares, hotels, and homeowner properties together have contributed $16 million. Vacation Rentals include legal permitted short term rental homes, condos, and Bed and Breakfast operations. By law at least 3% of real property tax goes toward the affordable housing fund, and this year the county council voted to have 6% of real property tax appropriated to the fund. Maui’s number one supporter of affordable housing by far is vacation rentals. While much has been said about the impact of vacation rentals, without them there would be dramatically less money available for the County budget and specifically for affordable housing.

This year alone, short-term rentals will supply Maui County with $142.4 million in real property tax revenue. That is more than 1/3 of all the real property tax revenue collected County wide! As such vacation rentals are the largest source of funding for the Affordable Housing Fund raising $8.6 million this year alone, and have been the biggest source of funding for the last 3 years. The second highest contributor is non-owner occupied properties with $5.8 Million, this tax classification includes long term renters.

Compared to other visitor related accommodations, vacation rentals are the only segment to have increased their tax contributions this year. Timeshares saw a 7% decrease in their assessed value, and will contribute $2.2 million less than last year. Hotel and Resort classification saw a 19% decrease in assessed value this year resulting in a $3.7 million decrease in funding from last year. Meanwhile, vacation rentals will generate $28.6 million more in property tax revenue this year, a staggering 25% increase from last year!

The council and administration depend on short-term rental properties to fund our county. Likewise, vacation rentals support Maui’s homeowners as well, by subsidizing lower taxes for residents. Right now Maui homeowners generate $33 million in real property taxes. Without the $142.4 million in taxes generated by vacation rentals, homeowners would have to more than quadruple their taxes to keep the same county budget. Plus, Maui’s vacation rentals also generate local jobs, supporting a network of small businesses like accountants, contractors, landscaping, cleaning, restaurants, shops, and interior design professionals, all of whom in turn spend money sustaining the economic circle.

While vacation rentals are often criticized, and seldom praised, it’s worth considering the value vacation rentals bring to the table as a whole to fully understand the context of the situation.

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To see this article in the Maui News go to https://www.mauinews.com/opinion/columns/2021/06/vacation-rentals-contribute-the-most-to-affordable-housing-fund/

Visitor Accommodations Moratorium & Condo Registrations going to Planning Commission

On Friday June 18th the county council approved the transmittal of a proposed resolution entitled "REFERRING TO THE MAUI PLANNING COMMISSION A BILL FOR AN ORDINANCE ESTABLISHING CHAPTERS 19.98 AND 20.41, MAUI COUNTY CODE, DECLARING A MORATORIUM ON NEW TRANSIENT ACCOMMODATIONS ON MAUI." 

The resolution from council member Keani Rawlins-Fernandez includes the establishment of a Temporary Investigative Group by the Budget, Finance, and Economic Development Committee to look at tourism management. Fernandez said at the meeting and further explained in an Op Ed piece in the Maui News that, “A main focus of this TIG will be a substantial reduction of vacation rentals, including the approximately 11,000 units on the short-term occupancy list and aggressive enforcement of illegal transient accommodations. This is an effort that is supported by the hotel industry and unions alike, and I look forward to working closely with them during the TIG process. Steering tourism back into the hotel and resort areas is of high priority.” 

(https://www.mauinews.com/opinion/columns/2021/06/transient-accommodations-moratorium-prioritizes-management-of-tourism/)

We know vacation rentals are a legitimate part of a diversified and healthy transient accommodations industry for Maui. This TIG is of concern, the members of this TIG should also be working with members of the vacation rental industry and not only the hotel unions when looking at tourism management of Maui.  We anticipate this item appearing on the planning commission agenda around September. 

Another item on the planning commission agenda of July 13th is the creation of a registration system for the legal permitted short term rental condos.  Here is the Planning Department report on the proposed ordinance

https://www.mauicounty.gov/DocumentCenter/View/126257/Draft-Bill-for-Ordinance-Relating-to-Chapter-1912-Apartment-District-Vacation-Rentals?bidId

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MVRA in the news

MVRA was interviewed and contributed to the NPR story “Vacation Rentals Continue To See High Demand, But Regulations Create Uncertain Future” that broke on Tuesday June 1st. We had the opportunity to comment on the benefits that vacation rentals bring to the Maui Community, and some of the issues we have seen this year with regulation on Maui.

You can read the article or listen to the interview here: https://www.hawaiipublicradio.org/local-news/2021-06-01/vacation-rentals-continue-to-see-high-demand-but-regulations-create-uncertain-future

Travel announcements Maui County’s post arrival covid testing ended Friday, June 4, 2021. From May 4-31 - 92,963 travelers did post arrival testing, that resulted in 29 positive antigen tests, that equaled 5 positive NAAT tests.  Did your guests arrive with the wrong COVID test? It can happen, so what do you do? Unfortunately vacation rentals are still mandated to not take guests if they MUST quarantine. Some folks have said they have gotten calls from airport screeners with guests that do not have tests from one of Hawaii’s trusted partners. The county has a posted approved hotels for quarantine list here: Hotels/Motels in Maui County Approved for Quarantine by State of Hawaii and County of Maui as of 5/7/2021 * Property Name Open? For a list of the approved COVID test Hawaii travel partners check here: https://hawaiicovid19.com/travel-partners/ For more information visit hawaiicovid19.com/travel and recommend guests register with the State of Hawaii Safe Travels online system. Only test results from Trusted Testing and Travel Partners will be accepted. All incoming travelers are required to have their temperatures checked and complete a health questionnaire online before they can leave the airport.

Governor Ige announced some changes to Hawaii travel at his press conference yesterday. As the percentage of Hawaii population with vaccinations increases Ige plans to continue to lift restrictions. On June 15, 2021 restrictions on interisland travel will be lifted. There will be no testing and no quarantine requirements for inter-county travel,” said Gov. Ige. Travelers that have been vaccinated in Hawai'i will be able to bypass quarantine without a pre-travel test when returning to the state. This will end requirement for pre-travel test/ quarantine for trans-Pacific travelers who can verify that they were fully vaccinated in Hawaii. When the fully vaccinated in Hawaii reaches 60% the state plans to allow those vaccinated in the US to avoid quarantine without a pre-travel test, for those traveling within domestic locations. At the 70% vaccinated benchmark the state plans to end the safe travels program. Hawai'i is currently at the 52% vaccinated rate. You can watch the press conference here: https://www.facebook.com/387637784744953/videos/902735660283035

County Property Tax Rates are Set

The Maui County Council voted unanimously yesterday to approve the proposed rates and their budget for fiscal year 2022. 

The short term rental class saw the implementation of tiers and rates set at $11.11 for tier one, $11.15 for tier two, $11.20 for tier 3. The largest amount of real property tax revenue in Maui County comes from short term rentals, this year they will generate $142.4 million, up from $113.8 million last year during the pandemic. Vacation rentals represent 37% of our real property tax revenue for the current fiscal year and pay for 17% of the county’s operating budget. As such vacation rentals are the largest source of funding for the Maui County Affordable Housing Fund raising $8.6 million in the current fiscal year, and have been the biggest source of funding for the last 3 years.

On the whole visitor accommodation related properties raised 55% of the County’s real property tax revenue. The hotel class saw an increase in rates to $11.75, and Timeshare saw a raise in rates to $14.60. 

Certified values increased for short term rentals in FY2022. Certified values decreased by 19% for Hotel classification and 7% for Timeshare classification.

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Mayor Victorino has announced his FY2022 budget. The proposed budget totals $828.9 million, including $669.6 million for operations and $159.3 million in capital improvement projects. There is a decrease in projected operation costs by $13.2 million over FY 2021. 

The Mayor has proposed a decrease in the real property tax rate for owner-occupied residences below $1.5 million of assessed value and a decrease in all tiers of short-term rental classifications. 

Short term classification details on the proposed rates:

STR Class Assessed Value Tiers	FY21 Rate	FY22 Proposed Rate	Change
<=$800,000	$11.08	$10.70	($0.38)     -3.4%
$800,001 - $1,500,000	$11.08	$10.85	($0.23)     -2.1%
>$1,500,000	$11.08	$11.00	($0.08)     -0.7%

The proposed Commercialized residential classification rate is $4.60, no change from FY21.

Mayor Victorino is also proposing spending $1 million to implement climate action projects and programs for Maui County departments. 

“We must take action on climate change,” he said. “To manage this effort, my office will coordinate climate action to ensure the County’s resiliency.”

To promote cultural perpetuation, the mayor is proposing grant funding for the Maui Arts & Cultural Center, Maui Film Festival and support for a Cultural Resource Training enter to perpetuate traditional Hawaiian research and education.

“Investing in arts, culture and recreational facilities yields a double return on investment by generating economic activity while contributing to our quality of life,” the mayor remarked.

“I look forward to working with the Council during the upcoming budget process. We share the same desire to ensure the needs of our citizens are met, now and in the future. Our partnership will lead Maui County of recent dark days into a brighter tomorrow,” concluded Mayor Victorino.

Throughout the month of April, the County Council’s Budget and Finance committee will review the Mayor’s proposed budget and in late April will make their own proposal for Real property tax rates. We will keep you informed when it would be appropriate to send in testimony concerning tax rates, later this month.

https://www.mauicounty.gov/DocumentCenter/View/126246/FY-2022-Synopsis_Mayors-Proposed