Maui County should welcome vacation rentals
Maui County policymakers have typically decried short-term rentals that are unpermitted. But rather than erect significant barriers to their operation — including a limit on their numbers — the county should make it easier for them to become legal, so as to benefit not only the short-term rental owners but the county as well.
Currently within Maui County, only 382 short-term vacation units are permitted, divided by region. Hana is limited to 30 permits; Kihei-Makena, 100; Makawao-Pukalani-Kula, 40; Paia-Haiku, 88; Wailuku-Kahului, 36; and West Maui, 88. Lanai and Molokai currently do not have quotas.
Despite the complaining about unpermitted units, some of the regions have not met their quotas. For example, 30 short-term rental permits are allowed in Hana, but so far the area counts only 18 that are legal.
This should not come as a surprise, considering the gauntlet of obstacles that short-term rental owners must surmount to achieve legality. They must fill out a 15-page form, pay a $1,850 application fee, invite government inspectors into their home, notify all neighbors within 500 feet, and submit detailed parking and floor plans, to name a few.
Additional processing fees — public hearings, $550; building permit reviews, $250; sign variances, $500; time extensions, $300; additional reviews, $550; and approval fees, $400 — can bring the total to $4,400 or more.
They may also be required to obtain a special use permit for houses zoned on agricultural land, which requires a detailed land-use history, archaeological and historical data, a traffic-impact analysis, agricultural analysis, sewage disposal analysis, identification of topographical drainage patterns, chemical and fertilizer assessment, and detailed blueprints of the property, among other requirements.
As if all those requirements and fees aren’t discouraging enough, short-term rental homeowners who successfully emerge from this maze are rewarded with a 68 percent tax hike under a tax category created just this year that lumps most hotels and short-term rentals in the same property-tax category. This could mean $2,200 in extra taxes for a typical local short-term rental home assessed at $600,000 of property value.
In addition, the host must pay the state’s 10.25 percent transient accommodations tax percent and 4 percent general excise tax and would need licenses for both.
But what about just making life easier for short-term rental owners across the board?
Allowing island families to share their homes with travelers looking for alternative or less expensive visitor experiences would certainly help them cope with Maui’s high cost of living. At the same time, it could increase fees and tax revenues for the county and state, as well as help the economy generally through increased, above-board visitor spending.
Airbnb alone hosted 43,000 visitors on Maui in the summer of 2017, while in 2015, Airbnb visitors statewide spent an average $1,302 each during their trips, including for lodging, food, entertainment, shopping and transportation. Clearly, home-sharing contributes tens of millions of dollars to the Valley Isle economy every year.
Instead of piling more regulations on local short-term rental owners trying to gain compliance, Maui policymakers should focus on making it easier for them to become legal — by reducing requirements such as forms, fees, caps and hearings, and reducing applicable taxes as well.
Doing so would, at the very least, help many local families afford to stay in the islands, while producing economic benefits for all Maui County.
* Joe Kent is vice president of the Grassroot Institute of Hawaii.