Gov. Josh Green is proposing using taxpayer and private funds to build new housing and to pay home owners well above market value if they rent long term. Short-term rentals would simply be banned.

Displaced Lahaina residents soon could be living in newly built ohana units, temporary homes and short-term vacation rentals – all paid for with federal, state government and private foundation money – under a framework drafted by Gov. Josh Green to address Maui’s housing crisis.

The governor’s preferred framework includes compensating homeowners to build accessory dwelling units to house displaced residents on their properties. It also entails enticing people to rent out properties now used as vacation rentals to displaced residents by offering premium long-term rents: $5,000 per month for a studio or one-bedroom home and up to $11,000 per month for a four-bedroom home.

A second option would allow the government to impose an 18-month ban on short-term vacation rentals on Maui. Under that plan, some $324 million of federal, state and private funds would be used to pay property owners who would give 18-month leases to displaced residents instead of renting to tourists or others for a short term. 

Governor Josh Green surrounded by members of his administration holds explains to the media the significance of the signed emergency proclamation and the historic moment
Gov. Josh Green in July announced a statewide housing crisis and issued an emergency proclamation to address it. Now the governor is attempting to help Maui County officials address a far more acute crisis following wildfires that destroyed most of Lahaina. (David Croxford/Civil Beat/2023)

Some residents, including a group called “Fishing For Housing,” have called for such a ban or moratorium. But Green’s plan notes that a moratorium could open the door to lawsuits from property owners, and Green said he prefers the first option for that reason.

“I have an appreciation for the Fishing for Housing movement,” Green said in an interview Tuesday. “We agree. We want the same thing. It just gets complicated to get the private sector to give up resources.”

Green said he plans to visit Maui on Friday to meet with fire victims and their families, as well as Maui County officials to discuss the housing solutions. It will be up to the county to decide which plan if any to use, Green said.

Officials with Maui County’s joint information center did not respond to a request for comment about the draft plan, and county spokeswoman Mahina Martin did not respond to a text requesting comment. Instead, late Tuesday the county issued a press release announcing Maui County Mayor Richard Bissen’s plan to increase housing inventory for the survivors of the August wildfires.

The mayor’s bill would provide tax waivers to owners of short-term rental units who instead rent long term to fire survivors. Bissen’s tax plan could complement Green’s proposals, and the mayor said he was looking at ideas beyond the tax breaks.

“This is one of many strategies we will use to address long-term housing needs,” Bissen said in the press release. “My team and I continue to examine all options to bring feasible interim and long-term housing solutions forward.”

The plans come at a critical time, as displaced residents seek to move from short-term accommodations in hotels to longer-term homes.

Economists say creating a new long-term housing plan is vital to prevent people from fleeing Maui, which would damage the island’s social fabric and workforce. 

“We’re at pretty serious risk for significant loss of population on Maui,” Carl Bonham, executive director of the University of Hawaii Economic Research Organization, told Civil Beat recently. “And yeah, really, that’s what keeps me awake at night.”

$50,000 For Homeowners To Build Ohana Units

Green’s two options both call for providing approximately 3,000 housing units for 18 months. Money would come from FEMA, the state and private foundations.

Both options could be complemented with up to 2,000 units of “temporary transitional housing” built in partnership with federal and state agencies and private partners, subject to county approvals.

Although both plans are expensive, they’re less pricey than the current system of paying hotels to house people. The draft study shows it would cost $702 million to keep people in hotels for another 18 months.

By contrast, Green’s “Option A” would cost $272 million, including $146.9 million from FEMA and $82.6 million from the state. It also includes a request to the Hawaii Community Foundation for $43.2 million. 

Option A’s first part involves targeting short-term vacation rentals, aiming to induce owners of some 2,000 to 3,000 units to rent long term by offering premium rents. Those would start at $5,000 a month for a studio or one-bedroom home. Property owners also would not have to pay the state’s 10.25% transient accommodation tax for two years. 

Option A’s second part involves dedicating FEMA funds of $50,000 per unit to build 1,000 accessory dwelling units, often called ohana units, on private residential properties. Property owners would be able to choose from five models pre-approved by Maui County to house displaced Lahaina residents, and any needed zoning changes would be approved within 30 days.

Option A’s final part entails expediting projects already in the works.

The plan poses no obvious potential legal issues, primarily because owners of short-term rentals wouldn’t be required to rent long term, said David Callies, a retired law professor and authority on Hawaii land-use law. Instead that part is voluntary.

“If the government is just encouraging, then there’s no issue,” he said.

Also attractive is that the option could speed up the building process for people desperately needing housing, Callies said.

Building ohana units on existing residential sites could help avoid the need to build new infrastructure, Callies said.

“The main thing that has to happen is speed, which is not something Hawaii is known for,” he said.

Gov. Josh Green’s Option B calls for a temporary ban on short-term vacation rentals on Maui, but legal experts say such a policy could invite legal challenges (Brittany Lyte/Civil Beat/2023)

Option B focuses on prohibiting short-term rentals. Property owners who opted to rent to long-term tenants would be compensated at 400% of the current fair market rate for long-term housing, starting at $5,000 for a studio or one-bedroom and rising to $11,000 per month for a four-bedroom home. The moratorium would be lifted “when housing needs are fully met and people are in contracts for 18 months,” the plan says. It anticipates needing 3,000 units.

Although Option B might seem simple, it raises potential issues involving property and constitutional law, legal experts say. Governments generally have the power to take property for public purposes through condemnation, and can even take property from one private party and give it to another private party to satisfy a public purpose.

But the government also must provide “just compensation” for the taking. Legal disputes often turn on whether compensation provided by the government is just, Callies said.

In the case of Option B, the moratorium could be analogous to condemning 18-month leasehold interests in hundreds or thousands of properties, Callies said. That would theoretically be allowed, he said, as long as there’s compensation.

“The only question is whether it’s just,” he said.

If a property owner didn’t opt into a long-term lease they wouldn’t be compensated and would fall under a legal process called inverse condemnation. A change in government policy that interferes with a property owner’s vested rights amounts to taking the property without compensation.

Robert Thomas is director of property rights litigation for the Pacific Legal Foundation, a national nonprofit law firm. He also runs a legal blog called Thomas said a moratorium would raise legal issues, but how strong a case property owners have would depend on a number of factors. These include whether the property owners have permits to operate vacation rentals or whether they’re simply renting under a Maui land-use ordinance or policy that doesn’t prohibit such rentals. 

“It’s not necessarily a slam-dunk case,” he said. 

One question neither plan addresses is what happens after 18 months, when the funding to cover leases would run out. UHERO’s Bonham said it’s important to have a broad, long-term solution in place by then. And that means new homes.

“My biggest concern is that we don’t address the housing problem on Maui in a very timely fashion,” he said. “And by very timely, I mean in the next year, year and a half. I think there’s a tremendous urgency to bring real housing on board to avoid large loss of population.”

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation.

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