Renters Fear Unintended Consequences Of Tax Breaks To Help House Maui Fire Survivors

A series of government initiatives aimed at helping displaced Lahaina fire survivors find housing is sending shockwaves through the community of long-term Maui renters unaffected by the Aug. 8 inferno.

Amid the island’s severe housing crisis, they fear that landlords will opt for generous tax breaks and financial incentives being offered, kick them out and rent to people who lost homes in the wildfire that killed at least 100 people.

“With some of the financial incentives and subsidies, we are concerned that it’ll fuel the displacement of people who are just simply long-term renters,” said Jordan Hocker, tenant organizer with Maui Housing Hui.

It’s already happening, according to Sergio Alcubilla, executive director of Hawaii Workers Center.

“There was a case the other day where someone mentioned that they were getting a notice to vacate because the landlord wanted to get the $11,000 rather than the $5,000,” he said.

Two long-term renters interviewed for this story later asked to retract their statements for fear their landlord would evict them or not renew their leases if they shared their concerns publicly.

Advocates, renters and policy watchers point to a housing crisis reaching epic proportions with nearly 6,300 people still living in hotel rooms or Airbnbs more than four months after the fires.

In hopes of easing the crunch, Maui Mayor Richard Bissen, Gov. Josh Green and the Federal Emergency Management Agency have proposed or implemented a series of measures designed to coax property owners into renting to fire survivors instead of tourists until permanent housing opens up or new homes are built.

The measures include tax breaks for short-term vacation rentals, timeshare units and non-owner occupied homes, as well as above-market value rents for other homes.

These tools are in addition to FEMA’s direct leasing program which covers housing for fire survivors for up to two years. The properties must be within 40 miles of Lahaina and can include single- or multi-family homes, apartments, cooperatives, condominiums and townhouses.

Green recently discussed a draft proposal he’s formulating in which federal, state and private funds would be used to pay landlords top dollar to house fire victims: $5,000 per month for a studio or one-bedroom home and up to $11,000 a month for a four-bedroom dwelling.

Green told Civil Beat late last month that the program would cost an estimated $272 million. Some $146.9 million of that would come from FEMA and $82.6 million from the state. The Hawaii Community Foundation would be asked to contribute $43.2 million. 

As an added bonus, participating property owners would not have to pay the state’s 10.25% transient accommodation tax for two years. 

Green is expected to announce further details at a news conference Friday.

The goal is to get up to 3,000 housing units available for fire survivors for two years.

Maui Housing Hui continues to hear from people concerned their leases won’t be renewed because landlords will be motivated to house the displaced and take advantage of higher rents FEMA is offering, Hocker said.

Alan Lloyd, organizer with Maui Tenants Association, said desperation levels among long-term renters have reached new heights based on what he hears from calls to his hotline.

“Most people are either moving off the island or just not looking and dealing with what they got right now,” Lloyd said.

That often means putting up with substandard conditions or rent hikes because tenants have nowhere to go, especially those with pets.

Lloyd said he spoke to a woman recently who has been dealing with a mold problem and an unsympathetic landlord. When she raised concerns about the mold, the property owner told her he would not renew her lease because he planned to house an immediate family member.

A portion of the woman’s rent is covered by the U.S. Department of Housing and Urban Development, which makes finding a new place even harder because some Maui landlords choose not to accept HUD payments.

“There’s so few options for her because she hasn’t been affected by the fire,” Lloyd said.

A temporary eviction moratorium is in place under the governor’s emergency proclamation.

But landlords get around it by saying they intend to house an immediate family member, Lloyd said, when in reality they just want the existing tenant gone so they can jack up rents and attract new tenants who are willing to pay.

“People are getting evicted because landlords know they can get more money. And so that’s the short-term impact. The long-term impact is — because the rents will be so high after FEMA stops paying — will those landlords reduce the rent and what will they reduce it to?”

FEMA spokeswoman Debra Young deferred to the county when asked if the agency was concerned about inadvertently adding to Maui’s housing crisis.

The mayor’s spokesperson did not respond to a request for comment. Nor did anyone with the Joint Information Center.

In an interview with Civil Beat on Monday, FEMA Region 9 Administrator Robert Fenton said 50 households have already taken advantage of the agency’s direct leasing program.

He expects about 100 units will soon become available for rent through the program, the majority of them in West Maui. Fenton said the number will likely rise quickly as more property owners become aware of the program and take advantage of it.

Fenton acknowledged that the rental market is constricting as more displaced residents search for and secure housing.

Even with legal protections in place, Alcubilla said many renters are unaware of their rights and are putting up with evictions and leaving the island.

Other would-be tenants contend with $40 application fees from landlords who pocket the money with no intention of renting to them.

Alcubilla said some landlords are asking to see homeowners’ insurance policies from fire victims. The policies sometimes pay many thousands of dollars per month in rental assistance for occupants of destroyed homes or ones that are unlivable due to smoke or structural damage.

The landlord will decide the rent based on what the homeowners’ insurance will pay, which often exceeds the norm, Alcubilla said.  

In October, Hawaii Attorney General Anne Lopez said her office was investigating reports of illegal evictions and rent hikes. Her special assistant, David Day, said Thursday that “we continue to receive complaints.”

“The purpose of the rent and eviction restrictions in the Emergency Proclamation is to address the unprecedented humanitarian crisis caused by the August wildfires. If you believe that a landlord on Maui is acting illegally under the Emergency Proclamation, report what you know to the Department of the Attorney General,” Lopez said in her news release.

One of the main tools Maui County is currently counting on to alleviate some of the island’s housing pressure is Bill 131 proposed by Bissen.

If adopted, the legislation would exempt short-term vacation rentals, timeshare units, and nonowner-occupied dwellings from all property taxes through fiscal year 2025 if they are rented for at least 12 months to tenants who lost their homes in the blazes in Lahaina and Upcountry Maui. If adopted, the program will launch on Jan. 1 with applications accepted through Jan. 31, 2024.

Families could be housed as early as Feb. 1, according to a news release.

The Maui County Council is expected to pass the bill on Friday. The proposed legislation was amended by Council member Tamara Paltin to include a provision that bars landlords with long-term renters from evicting existing tenants to take advantage of the property tax incentives.

Because of Paltin’s amendment, Michael Wilson, president of Maui Tomorrow Foundation, said he doesn’t think the tax incentives will prompt evictions of existing long-term tenants.

Nor does mortgage loan originator Alan Van Zee, president of Hawaii Mortgage Co.

“It’s not really going to affect the long-term renters because they didn’t go (to short-term vacation rentals) anyway,” Van Zee said. “Those units weren’t marketed to them.”

At a Dec. 5 County Council meeting where Bill 131 passed on first reading, Lahainaluna High School Title 1 coordinator Victoria Zupancic spoke of the desperate situation she and other staff find themselves in these days.

The school recently tried to hire five new teachers but they all turned down the jobs because they couldn’t find housing, said Zupancic, vice president of the Maui chapter of the Hawaii State Teachers Association.

The housing emergency isn’t just affecting new hires. Existing staff who have been displaced by the fire are also having trouble finding anywhere to live, she said.

“If there is not an immediate solution, we will not be able to run schools,” Zupancic said. “There is culpability if we are not able to provide a free, appropriate public education for all students on Maui.”

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