Important Information Regarding Vacation Rentals

It is once again up to us to voice our opposition to the upcoming legislative proposal to phase out TVRs in the Apartment Districts and gut the protections outlines in the Minatoya codified opinion. I just recently Co-Hosted a radio show with the REALTORS Association of Maui’s Director of Government Affairs, Jason Economou and the Director of the Maui Vacation Rental Association, Jen Russo; that explains the situation, so if you want all the details on the preliminary proposal, please watch starting at the six minute mark here: https://youtu.be/b_rVU4Uia7Y

The proposal would affect the approximately 7,000 condo units that are allowed to conduct vacation rentals by virtue of their zoning. Under this proposal, current owners of these units would be allowed to continue vacation rentals in their unit, but once the unit transfers ownership the new owner is no longer allowed to short term rent that specific unit. 

This gift to the hotel industry would create a myriad of problems for the island. As Jen Russo points out, the Short Term Rental tax classification  brings in the largest amount of Real Property Tax (RPT) revenue, with a Certified Value in FY21-22 of $12,791,760,050, or roughly $12.7 Billion. That was a $2.5 billion increase over FY20-21, or about 25% increase in raised revenuei. That is equal to 17% of the operating budget, and 37% of the entire RPT revenue. For comparison, the Hotel classification raised $29M, and our residential homeowners in the Owner Occupied class only brought in $33M. It is worth noting, the non owner occupied, Hotel and Resort and Timeshare classes all saw decreases in Certified Value last year, which resulted in lower revenues being generated in those categories for FY21-22. Yet the county was able to increase revenue by $20M this year largely with levies of STR class. There are 13,466 units/TMKs in Short Term Rental Classification. The average amount of Real Property Tax paid  per unit is $10,576. So, using a broad estimate, losing those 7,000 units = $74 million in lost Real Property Tax revenue! For perspective, our Operating budget this year is $843,483,660. This is 8.77 % of their operating budget (if this bill passes and revenues drop from STR class, where do you think taxation will increase?)! 

From the perspective of Transient Accommodation Tax (TAT), in 2019 Maui’s tax base (the amount on which taxes were levied) was $2,027,057,842. This was 33% of the State’s total base of $634,355,669. This raised $207,773,430 in TAT, of which the State usually kicked back $23 Million to Maui County. Leaving the State with $184,773,430 in earnings leftover. This year the state will keep all of the TAT earnings, and let the county levy their own 3% surcharge on the TAT. Visitor Unit #’s between hotels and STRs total 21,037, So if we average the TAT tax revenue by 21,037 units, that means each unit brings in $9,877 in TAT. A loss of 7,000 units may mean a possible loss of $69,139,000  in revenue.

The immediate devaluation of equity on these vacation rentable properties is not only a concern for reduced tax income, but also a nightmare for these buildings to pull loans to repair aging infrastructure that was never intended or designed for long term accommodations. This means that even if ownership of these properties were to move to lower income individuals and families, these disadvantaged demographics would be stuck with these multimillion dollar repairs as they would not have the equity, nor income stream, to make the repairs. Properties that were never designed with the storage nor parking that full time residents need.  

While the intent of the bill is to increase available inventory for the residents of Maui, it would likely create greater scarcity as those who own these 7,000  units are disincentivized to sell a money making asset for a depreciated sale value. With this loss in sellable inventory, buyers would come to Maui and buy residential units as there would be few other options to consider. 

The changes made through this legislation, and the removal of these vested property rights, would likely constitute regulatory taking and that condemnation would inevitably lead to decades of legal battles in the form of both individual and class action lawsuits. These suits would cost millions of dollars in legal fees and burden a county that will already be missing millions of dollars in tax income.  

We need your help to reach out to all of the Maui County Council so that when Tamara Paltin and Keani Rawlins-Fernandez draft bills like these, they understand the impact they have on you. The intent of this bill is to help those who need affordable housing so please don’t get angry, they simply don’t understand the devastating and far reaching effect that this would have on Maui. You need to make it clear that they can no longer skirt their responsibilities to create infrastructure so that REAL affordable housing can be built, not dismantle the rights of property owners in areas that support a host of local businesses. 

In addition to privately emailing the council members below, please publicly bring attention to the issue by commenting on this facebook post and tagging any Council member of friend you see fit. 

Alice.Lee@mauicounty.us, Council Chair
County Council Member Alice Lee
Keani.Rawlins@mauicounty.us, Council Vice-Chair
Council Member Keani Rawlins-Fernandez
Tasha.Kama@mauicounty.us, Presiding Officer Pro Tempore
Councilmember Tasha Kama 
Gabe.Johnson@mauicounty.us, Councilmember 
Gabe Johnson for Maui County
Kelly.King@mauicounty.us, Councilmember 
Kelly King – Maui County Council
Mike.Molina@mauicounty.us, Councilmember 
Tamara.Paltin@mauicounty.us, Councilmember 
Council Member Tamara Paltin
Shane.Sinenci@mauicounty.us, Councilmember
Council Member Sinenci, East Maui
Yukilei.Sugimura@mauicounty.us, Councilmember
Council Member Yuki Lei Sugimura

Covid Surge Causes New Rules

Making sure all are aware of the new rules while the Covid Surge continues:

Masks required when entering the gym, family lounge, lobby, elevator, and parking garages by State and County emergency orders.

Social gathering indoors is now max 10 people

Social gatherings outdoors limited to 25 people.

For managed by events planning 50 people.c

Restaurants are now 50% of max capacity.

CDC Mask Update For Teachers And Students

Posted via The Maui News, the CDC has updated their guidelines for teachers and students returning to school. The CDC advises those who are vaccinated do not need to wear a mask inside. 

The CDC says masks outside are not needed for those unvaccinated unless in a large crowd for an extended period of time. Schools are encouraged to space students out into smaller groups and continue hand washing and ventilation.

Depending on state mandates, some schools will continue to require masks come fall. Should more changes occur, we will keep you updated.

Hawaii Covid Update

Fully vaccinated domestic travelers will not have to do pre-testing and quarantine starting on July 8th. If you have been vaccinated you will need to upload your vaccination card on the Safe Travels system plus bring the card with you.

Also announced for a July 8th start, restaurants may increase to 75% capacity and social gatherings can accommodate 25 people indoors and 75 people outdoors. Physical distancing requirements will still be in effect.

The governor hopes for Hawaii residents to be at a minimum of 60% vaccinated when these changes take effect. When and if the state reaches a 70% vaccinated rate the hope will be to lift all remaining restrictions.

Hansen Ohana Newsletter

Hansen Ohana’s Maui Newsletter June 22, 2021

                                Maui Luxury Real Estate LLC

We are proud to announce the increasing popularity of our Real Estate Radio program featuring Clint Hansen and a number of changing guests.  The latest guest of note is Paul Brewbaker (the most highly regarded Hawaii economist)  Tune in to 1110 AM KAOI or visit online every Monday at 7:00 am Maui time https://radio.securenetsystems.net/v5/index.cfm?stationCallSign=KAOIAM

Maui continues to be one of the most sought-after vacation destinations in the world.  Prices of real estate continue to rise.  Low interest rates coupled with low inventory is moving the market higher.  Median home prices as of June 1, 2021, were up 29.9% since a year ago at $1,039,000.  The median price means that there are as many below the million-dollar price as there are above it.  On the other hand, condos down 9.6% from last year at $615,000.  Total inventory of homes went down 53.9% from last year for homes.  Condos supply decreased 62.2%.  One very interesting statistic for me is the percent of listing price realized which over the years has remained relatively similar in the 97% range.  This means a million-dollar asking price on average would close at about $970,000.  Well priced properties are receiving multiple offers.  Most economists feel that this hot market does not have an end in sight any time soon.

Regarding Condominiums the average visitor spends $3,800 per person. On Vacation home rentals the average tourist spends $3,400 on Maui vs. hotel visitors spend around $2,900 per person.  Due to Covid19 restrictions on travel last year vacation rental income was down.  This year the vacation rental market has been very busy and visitors are coming back.  People need to relax in a safe place with good weather and Maui is the place.  Coming to Maui is getting easier with Covid19 on its way out but there are reasonable restrictions.  Check the www.hawaiicovid19.com website for more information.

If you’re interested in something new, there are quite a few projects in a variety of price ranges planned for the next 10 years across Maui. Last month we saw renderings of some workforce housing being conceptualized in Kapalua across from Pineapple Grill and another approved in South Maui across from The Five Palms.  Updates on Wailea projects are as follows.  (1) Makalihi (across from Farimont) scheduled for completion by July.  (2) Andaz 19 villas completion in almost done.  (3) AC Hotel by the Wailea Town Center is now open.  (4) The Wailea Community Association new office has been delayed for now.  (5) Ledcor’s 23 acre parcel with 57 single family homes is scheduled to start in 2023.  (6) The Piilani Highway is set to be partially widened in 2023.  (7) The new traffic light on Piilani and Okolani is scheduled fall of 2021.  (8) The remainder of 400 feet of sidewalk from The Gateway Center to The Residence Inn looks like it will start soon.   If you would like to view any new project virtually, please call or let us know at: dad@mauirealestate.net and we will keep you updated and send you the links if available.  

Announcing our live beach cam will be down for a few days for upgrading.  As a reminder it now has sound.  Take a little time to see and hear the waves, birds and the like on https://www.mauirealestate.net/video.php?Size=Large.  In my opinion it really is the best beach camera around.

With so many potential buyers now glued to social media we have significantly increased our advertising online by offering additional video tours, virtual open houses, and tours as you can see by the links below:

Virtual Home Tours: 

https://youtu.be/OUfL3Qxq6Z0  14 Kulani, Paia

https://youtu.be/7XKkolW5kPw  75 Opalipali, Kula

https://my.matterport.com/models/JFEVS7c6ktV  11 Huli Kelu, Kihei

https://youtu.be/_Sau0XyBVJU  43B Wailea Ekahi, Wailea

 Click here for more Videos and Tours     All VR Tour Matterport Links

Please feel free to call any one of us for more information or email us at dad@mauirealestate.net

May all good things come your way – laughter, gratitude, good health and good friends

            Bob Hansen PB R(B)            Clint Hansen BIC R(B)       Donna D. Hansen R(S)

                808-283-9456                           808-280-2764                     808-280-1650

                     RB-17532                                RB-21616                           RS-49765               

MAUI LUXURY REAL ESTATE LLC

The Hansen Ohana