Maui County Council to hear response to vacation rentals conversion today
A key Maui County Council committee will hear testimony today on Mayor Richard Bissen's proposal to convert less than half of Maui's short-term vacation rentals into long-term housing for local residents that's expected to trigger a loss of $60 million in tax revenue while lowering sales and rental prices.
The trade-off will be worth it and lead to stable, more affordable housing for Maui residents, Bissen told the Honolulu Star-Advertiser on the eve of today's hearing by the Council's Housing and Land Use committee.
The Aug. 8, 2023, wildfires killed 102 people, destroyed more than 5, 400 households and sent 12, 000 survivors into emergency housing, exacerbating Maui's housing shortage.
'We've taken a stand we believe in, ' Bissen said. 'It's not anti-visitor. It's pro-local, pro-resident. … It's not meant to divide our community, but to preserve our community.'
Visitors remain welcomed on Maui and there still would be hotel rooms and other short-term vacation rentals available in other parts of Maui if Bill 9 passes, requiring 6, 100 rental units to convert to long-term housing for residents, he said.
Another 8, 000 vacation rentals in Maui County would be unaffected, with most of them on the island of Maui, Bissen said.
Instead of a constant turnover of guests, condominium buildings would turn into new neighborhood communities of full-time, local residents and families, he said.
Owners of vacation rentals have urged Bissen and his administration to look for alternatives to developing more affordable housing, which Bissen said he continues to do.
But finding appropriate land, getting permits approved and construction costs and time can take years compared to converting existing condos into long-term housing, he said.
'The bottom line is we need to create more inventory, ' Bissen said. 'It's an immediate problem.'
Bissen has amended Bill 9 to now call for a three-year phaseout of the 6, 100 vacation rentals to give owners time to either sell to local residents or rent to them long term.
He called sales to local residents 'ideal ' and long-term rental agreements 'also a good idea.'
The wildfires exacerbated Maui's housing shortage and led many landlords to increase rental prices.
Some landlords who had long-term rental agreements with residents evicted them in order to take advantage of higher rates they could charge by taking in fire survivors and, in some cases, nearly double their income, Bissen said.
'It's almost like looting when somebody jacks up prices when there's a need, ' Bissen said. 'I don't know how we punish all those landlords.'
Most—94 %—of the people who own the 6, 100 short-term vacation units that would be converted live outside Maui, meaning the units represent second or third homes for them, Bissen said.
Only 6 % are Maui County residents, said Bissen's executive assistant, Matt Jachowski.
Bissen's proposal has the support of many residents and received unanimous approvals by planning commissions on Maui, Molokai and Lanai.
It's drawn opposition from property owners like Loretta Ross, a 68-year-old retiree from San Diego who has owned her ocean-view, studio apartment in the three-story, 67-unit Hale Ono Loa condo complex along Lower Honoapiilani Highway for 20 years.
The short-term rental market was first hurt by the COVID-19 pandemic, then again in the aftermath of the wildfires and has continued falling ever since Bissen proposed outlawing vacation rentals last year for owners like Ross, she told the Star-Advertiser.
'Property values have dropped 30 %, ' she said.
And her business has fallen, too.
Ross used to charge $259 a night but cannot get bookings even after dropping her rate to $159.
The potential passage of Bill 9 has scared away potential buyers who also would want to use her condo as a rental business, Ross said.
'I've had it listed for over a year, but my agent said no one's buying anything, ' Ross said. 'I'm on Social Security and I'm running out of savings.'
Her monthly costs, including mortgage, taxes and association fees add up to $4, 000 a month that Ross doubts a local family could afford for a studio apartment.
'No one's going to pay that, ' she said.
So if Bill 9 passes, 'it would probably have go into foreclosure as much as I love it and I've been blessed to have it. It would be like the nail in the coffin.'
Bissen expects the Housing and Land Use Committee to hold two or three sessions of all-day hearings to listen to testimony in support for and opposition to Bill 9.
The committee's made up of all nine Council members and its vote could foreshadow how the full Council decides the fate of Bill 9.
In April, the University of Hawaii Economic Research Organization estimated that banning 6, 127 short-term vacation rentals could have profound economic implications for Maui County, including the loss of 1, 900 jobs, $900 million in annual visitor spending and $60 million in property tax revenue by 2029.
General excise tax and hotel room tax revenues also could fall, adding up to $15 million annually, according to UHERO.
But Bissen said Maui still needs workers and the county's $1.5 billion budget could be adjusted to absorb 'some losses.'
Overall, he said, 'the benefits outweigh the negatives.'
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