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Report: 1 in 7 homes in county a vacation rental

Vacation rental group is disputing statistics

A Google map from an online vacation rental website displays the locations and daily rates for rentals available in north Kihei on Monday. A recent report says 66 percent of nonresidents who own Maui property report renting out their units. But only 16.7 percent of those owners choose to rent to residents only. Map via Google

A recent report says that with 1 in 7 residential units being used as vacation rentals, Maui has the highest percentage of such use in the state.

And along with it, 60 percent of condominiums and 52 percent of homes on Maui are sold to nonresident buyers, according to the report released last week by the Hawai’i Appleseed Center for Law & Economic Justice.

“Affordable housing is the most crucial issue affecting our residents’ quality of life and their ability to economically survive,” said Victor Geminiani, co-executive director of Hawai’i Appleseed in an announcement of the report. “Speculators and investors have been eager to take advantage of the tremendously profitable vacation rental industry at the expense of our residents. We need to establish controls to protect our communities from fragmentation.”

The report, “Hawai’i Vacation Rentals: Impact on Housing & Hawai’i’s Economy,” examines the consequences of the proliferation of vacation rentals in Hawaii, saying the rentals put a pressure on Hawaii’s already-stressed housing market by reducing the shelter available for Hawaii residents and driving up rents.

It points to Maui as “an example of what the state of Hawaii could become if we do not enact stricter regulations.”

In a Maui case study, it says that almost 9,000 estimated vacation rental units take up nearly 14 percent of Maui’s housing stock. It says that, in Lahaina, 1 of 3 housing units is a vacation rental.

The report says 66 percent of nonresidents who own Maui property report renting out their units. But only 16.7 percent of those owners choose to rent to residents only.

Approximately 9,000 vacation rental units are active on Maui, with only 223 being legal, the report notes.

While vacation rentals “offer the possibility of extra income for some residents and additional tax revenue for the state, many of the benefits go to nonresident investors, the report says.

“The adverse consequences of housing stock lost to vacation rentals far outweighs the benefits they might provide to local families and our community,” the report’s executive summary says.

But Tom Croly of the Maui Vacation Rental Association disputes the report. He says the report’s statistics are deceptive. He countered a number of the report’s points.

There are actually more than 9,000 vacation rental units, many of which are condominium units that do not need a permit to operate as a vacation rental because current zoning permits them to do so. So, it’s inaccurate to use statistics purporting to show how only a small fraction of vacation rentals are permitted, Croly said.

On Monday, Maui County Deputy Planning Director Michele Chouteau McLean said that the figure of 200 or so legal vacation rentals is accurate, but the approximately 9,000 Maui vacation rentals in the report also includes condominiums that are legally allowed to conduct short-term rentals.

Croly said condominium units have been allowed to be rented out as short-term, or vacation, rentals for decades.

So, there is no surprise that 1 in 7 residential units on Maui is being used as vacation rental, he added.

“The statistics that they choose to cite, they are bringing them up as if there are something new,” he said.

As for nonresidents scooping up condominiums and homes, Croly said many condominiums are sold between one nonresident to another, which also has been a common practice for decades. So, technically, the units are not being taken from residents, he said.

As for homes bought by nonresidents, Croly said that nonresidents could be someone planning to move to Maui, not necessarily an out-of-state property investor. Croly was one of those “nonresidents” some 20 years ago, he said.

What is leaving Maui with a lack of housing and affordable housing inventory is its inability to keep up with demand of natural births on the island and net migration, he said.

If Maui did not allow anyone to move to the island, it would still need to build 750 more homes a year, to account for growth just in the island.

This is where Croly and the report agree.

The report pointed out that since 2006, the number of housing units produced each year on Maui has lagged behind the number of new households.

In 2014, a report commissioned by Maui County shows that by 2020, Maui’s unmet housing need will reach nearly 4,000 units, the Hawai’i Appleseed Center said.

Stan Franco of the group FACE Maui, which seeks to improve affordable housing availability for residents, said he agrees with the report.

In 2016, politicians were telling the group that when they went into communities, they were finding tourists living in typically residential areas.

In Franco’s small subdivision with eight lots, there is one vacation rental, he said.

He said he understands that renting to a resident “cannot compete” with renting a home to a tourist where owners can charge over $100 a day.

While the vacation rental market could be seen in communities such as Wailea, Kaanapali and Kapalua, Franco said he is hearing of those rentals also in working-class neighborhoods in Kahului and Haiku.

FACE stands for Faith Action for Community Equity. The group works with government and the community on various issues, including affordable housing.

Maui County Communications Director Rod Antone said, “This study states the reason why a tiered tax structure was proposed to the council.”

In his fiscal 2019 budget proposal submitted to the Maui County Council on Friday, Mayor Alan Arakawa proposes a tiered scheme for property taxes designed to increase income for the county from owners of second homes and investment properties.

“We are doing this to protect the working-class residents who are having such a hard time out there,” Arakawa said. “The group that we’re planning to increase taxes for can afford to pay a little extra to help the local economy out.”

Overall, the report says Maui County has to take concrete steps to address the problems posed by vacation rental units.

Those include:

• Requiring potential vacation rental operators to obtain a permit, arrange a safety inspection and provide public signage with their contact information.

• Providing that opposition from neighbors could trigger a Maui Planning Commission review of a vacation rental operation, and a limit on the number of short-term rentals that can operate in a neighborhood.

• Requiring any dwelling approved for short-term use to have been constructed more than five years before a permit application is submitted.

McLean said the County Council took action Friday aimed at hindering people from buying homes just for investment as short-term rentals. On second-and-final reading, the council approved a bill that would require people to own their home for five years before submitting a short-term rental permit application to the county.

The Planning Department, thanks to an $80,000 appropriation from the County Council, will soon have an outside company help with a county crackdown on illegal vacation rentals, McLean said.

A contract of approximately $65,000 is being finalized. The contractor, through various methods, has ways to find illegal vacation rentals on the internet, McLean said.

Some short-term rental operators have found ways to advertise on the internet without being detected by the county, she said. Those include blocking Hawaii computer users or even advertising after county work hours, she said.

Other legislation is in the works to ease restrictions on building ohana units as a way to increase housing for island residents, she said.

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