Reactions mixed on bill to incentivize long-term rentals | News, Sports, Jobs

July 18, 2024

A sign gives notice of plans for a short-term rental home in a Kihei neighborhood in 2020. Maui County is considering a bill that would exempt short-term rentals from property taxes if they are rented to people displaced by the August wildfires. the Maui News / MATTHEW THAYER photo

Feelings are mixed over Mayor Richard Bissen’s proposal to offer a property tax exemption for short-term rental owners to rent long term to wildfire survivors.

Bissen submitted a bill to the Maui County Council this week that would amend a section of the County Code to immediately exempt short-term rentals from real property taxes when renting to displaced residents. If approved by the council it is set to go into effect Jan. 1.

Bissen added that he also plans to propose an increase in property taxes for all short-term vacation rentals, timeshare units and non-owner-occupied properties assessed over $1 million that do not participate in the program. The county estimated that there are currently 2,500 to 3,000 timeshare units, 12,000 to 14,000 non-owner-occupied homes and 12,000 to 14,000 short-term rentals.

The community group Lahaina Strong has been advocating for “dignified” long-term housing solutions for fire-displaced residents and has called for properties on a special list to be converted from short-term rentals to long-term rentals. The group and others are staging a “fish-in” that began earlier this month with supporters camping on Kaanapali Beach until housing needs are met.

In a statement Tuesday, the group said the Lahaina Strong Hui pointed the attention of Bissen and Gov. Josh Green “to the clear and obvious solution — our existing housing stock of vacation rentals and empty homes.”

“Now, both the Mayor and Governor have put forth proposals to compel or force the conversion of these homes,” the statement said.

The Honolulu Star-Advertiser reported Green saying on Tuesday that Bissen has the authority to impose a countywide short-term rental moratorium under post-fire emergency powers.

But, Lahaina Strong was not sounding victory by any means.

“The Lahaina Strong Hui plans to continue its occupation until it has confidence that these proposals will result in solutions, actions will become words, and the uncertain and displaced victims have security,” the statement said.

The group and community members have said that some residents were given notices to leave their hotel rooms this week as contracts for the shelter services are expiring.

The Maui Vacation Rental Association could not be reached for comment Wednesday on Bissen’s short-term rental proposal.

Tom Croly, an outspoken bed and breakfast owner, called Bissen’s bill “a start,” as he also advocated for tax breaks for those who rent long term to survivors. But he said other incentives are needed to entice short-term rental owners, such as having the federal government ensure rent will be paid.

Croly said that owners that use short-term rentals for their income will probably not opt in to the proposal. He added that short-term rentals may already have bookings into part of March next year and are under contract with clients, so it would be difficult to start a long-term rental now.

But, he said that those who own second homes on Maui and may only use them for part of the year are the ones to target, as the owner could possibly be convinced to not visit the island for a year and rent the home to fire survivors for a tax break.

As for raising taxes on short-term rentals that do not rent long term, Croly said he understands where the mayor is coming from but that the taxes are already high.

Short-term rental units, also known as transient vacation rental properties, are taxed at a rate of $11.85 per each $1,000 of the property’s assessed value, the second highest of all tax rate classifications.

Council Chairwoman Alice Lee acknowledged Wednesday that the bill will be taken up on first reading Tuesday. She reserved comment until the meeting.

Council Members Tamara Paltin, whose residency seat is West Maui, said she supports the mayor’s proposal. She said that the bill will call on voluntary compliance, but if data shows that there are many unwilling to rent long term, then there will be consequences.

The bill does not mention “short-term” rentals converting into long-term rentals; rather it will be a long-term rental exemption for those who rent to wildfire survivors.

Maui County Communications Director Mahina Martin explained that the bill does not specifically say “short-term” rentals, but that it “was designed to have owners consider converting their short-term units to long-term rentals.”

When asked if there are protections for current long-term renters not affected by the fires who could be displaced by landlords who may want the tax exemption, Martin said that landlord-tenant laws are in the state’s jurisdiction.

She added that Green announced Tuesday that he plans to issue an emergency proclamation that would prevent evictions of existing tenants by landlords who want to take advantage of programs that offer more favorable rates.

To view the bill, go to mauicounty.us/agendas and click on the Dec. 5 council meeting.

* Staff Writer Melissa Tanji can be reached at mtanji@mauinews.com.

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