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Thursday, December 21, 2023
Help Maui fire victims, but not by abusing STR owners
By Keli'i Akina PhD @ 11:06 PM :: 1197 Views :: Maui County, Taxes

Help Maui fire victims, but not by abusing STR owners

by Keli'i Akina, Ph.D. President/CEO, Grassroot Institute 

(This commentary was originally published by the Hawaii Filipino Chronicle on Dec. 19, 2023.)

When you’re trying to persuade someone to help you, it’s sometimes necessary to offer them a few incentives.

The goal should be to make sure that everyone gets something they need out of the deal. But if you follow that up with threats of punishment for non-compliance, you risk turning a happy arrangement into something very bad.

That is what’s been playing out in the state’s efforts to persuade owners of Maui short-term rental properties to house Lahaina residents who lost their homes to the tragic Aug. 8 wildfires. To put it simply, state and county officials are offering carrots to STR owners, but also threatening them with some heavy sticks.

The impetus for these discussions is that many Lahaina evacuees currently are being housed in Maui hotels — and it hasn’t been cheap.

The state has been paying at least $13,000 a month per room, which is why it is now offering to reimburse STR owners $5,000 a month for one-bedroom or studio units, and up to $11,000 a month for four-bedroom homes — both for at least 18 months.

Gov. Josh Green and Maui Mayor Richard Bissen are hoping that these proposed payments will be enough “carrot” to persuade STR owners to rent long-term to fire victims.  In addition, participating STR owners would get a two-year break from transient accommodation taxes, plus a possible exemption from Maui property taxes until mid-2025.

Now, those might be attractive carrots, but on the flip side, the sticks being waved at non-participating STR owners are not so appealing.

Both the governor and mayor have suggested imposing a massive property tax hike on non-participating STR owners, and the governor has mused about banning them from the STR market altogether.

Gov. Green has acknowledged that an STR ban would probably result in legal challenges, but he shouldn’t ignore the fact that a back-door ban through a tax hike also could result in legal and political headaches.

Taken together, the government’s big carrot and big stick approach demonstrates a lack of understanding of STR owners. Foremost, they are, after all, property owners, and there are many legal protections in place for property owners. Philosophically, property is considered by many to be the linchpin of our freedoms.

Beyond the legal arguments, STR owners often are our friends, families and neighbors. They have reasons for choosing to make their properties available for short-term rental instead of long-term. In fact, courts have recognized that choosing how you want to rent your home is a valid property interest that deserves protection.

If the government’s “carrots” are a good deal for a particular owner, then he or she will participate, a displaced family will get a temporary home, and everyone wins.

But for some STR owners, it might not even be a question of money. Maybe the owner still lives in the home for part of the year and cannot rent long-term. Maybe they are already bound by other rental contracts and can’t back out of them. Maybe they are concerned about the legal and financial implications of taking on long-term tenants.

There is no question that we need to find suitable housing for those displaced by the Maui wildfires, and incentivizing STR owners to rent long-term to Maui fire victims could be a winning strategy in the effort to solve a pressing humanitarian problem.

But we all lose when the government disrespects the rights of Hawaii property owners.

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