Mayor Bissen proposes bill amendment to make short-term rentals available for displaced wildfire survivors : Maui Now

Mayor Richard Bissen submitted to the County Council a bill to amend a section of the County Code in an effort to immediately increase the inventory of housing available to survivors of the August wildfires.

“By converting short-term units to long-term rental properties, and renting them to residents who have been displaced by the disaster, owners of Maui’s thousands of short-term vacation rentals, timeshares and non-owner-occupied homes will be exempted from paying real property taxes,” said Mayor Bissen in a news release announcement.

He said the County can help more survivors in need of housing by immediately exempting short-term units from real property taxation when they are rented to displaced residents impacted by the wildfire disaster.

“I believe that a shared sacrifice is necessary at this time,” he said.

Mayor Bissen said he also intends to propose to the County Council an increase of property taxes for all short-term vacation rentals, timeshare units and non-owner-occupied properties assessed at over a million dollars that do not participate in this program designed to help Maui people secure housing.

“Owners who help our disaster-impacted families by making their units available will receive a tax waiver. While those who choose not to can help by contributing more in taxes to make up for the loss of tax revenue,” said Mayor Bissen.

The bill seeks to amend Chapter 3.48 of the Maui County Code and if approved by the Council, will go into effect Jan. 1, 2024. Property taxes would be exempted from Feb. 20, 2024 – June 30, 2025.

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

For example, if a property is assessed at $1,000,000 and is classified as TVR-STRH, taxes for this fiscal year are $11,850. If the entire property is leased, and the lease begins Jan. 1, 2024, and ends Dec. 31, 2024, the owner would receive a $5,925 reduction in this year’s taxes (2nd installment) and the full $11,850 in next year’s taxes if they apply by Jan. 30, 2024. That is an estimated savings of $17,775.

“This is one of many strategies we will use to address long-term housing needs,” Mayor Bissen said. “My team and I continue to examine all options to bring feasible interim and long-term housing solutions forward. We still face significant water, wastewater and infrastructure challenges in West Maui – conditions that were already difficult before the disaster which have made some options not immediately possible.”

Maui County currently has 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 proposed bill will be heard at the Dec. 5, 2023, County Council meeting.