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Gov. Josh Green said he is considering implementing a moratorium on the operation of short-term rentals on Maui, an order that could come as soon as next month.

The reason, he said, was that the state needs 3,000 housing units to accommodate more than 6,000 people who lost their homes in the Aug. 8 wildfires that devastated much of Lahaina.

Meanwhile, the state has encountered resistance in converting short-term rentals into long-term housing.

Green’s remarks came during a four-month update on Maui recovery efforts. As of Thursday, approximately 6,297 people were still living in area hotels.

However, as Maui’s tourism industry struggles to recover, hotels want to open their doors to visitors. Displaced residents are supported through funding from the Federal Emergency Management Agency, but it’s a temporary program that Green said will eventually shift the burden of providing shelter to the state.

Offering Incentives

“I’m sure we will face litigation, but I will do it if we don’t get 3,000 units for our people who have been living in hotels,” he said Friday at a press conference at the State Capitol. “Because it’s not civilized to make people wait to get housing after they’ve lost their home to a fire. That may be viewed as fairly controversial, (but) not from the perspective of someone who’s got a family of five or six people and they’ve been living in a hotel room. They need to be helped. So I’ll do that if necessary.”

The Green administration and Maui County officials have pushed Maui legislation that would exempt short-term vacation rentals, timeshare units and non-owner-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.

The Maui County Council gave final approval to one of the measures, , with units leased by Feb. 1 getting an 18-month exemption and those leased by March 16 earning an exemption for the next fiscal year. 

The council also passed , which includes a provision aimed at the owners of short-term rentals who want to be able to use their units for part of the year by offering a partial tax exemption if rented out to a displaced tenant continuously for a period of at least six months but less than 12 months as of Jan. 31.

But the governor said Friday that, while some “STR” owners have welcomed the tax break and want to help, others have expressed fierce resistance.

“We have had multiple individuals share with us insinuating comments that they shouldn’t be forced to change their model, that that’s their right to rent to whomever they choose,” he said, adding that it angered him to hear that some people did not want to rent to local people.

“And I will just say this: You don’t have housing in Hawaii. The short-term market is occupying tens of thousands of houses that we need to put into the workforce. Working families like nurses and teachers, firefighters that live and work and help us through these crises. And so things have to change,” he said.

Threatening The ‘Nuclear Option’

Green expressed confidence that the state would find 3,000 housing units, and that he hoped the transition would come gradually. He currently has in place a moratorium on rental evictions that is set to expire early next month.

“But if we have to shutter the system to get it going, I will,” he said, describing a new emergency proclamation as “dropping the hammer” or “nuclear” option on short-term rentals.

The governor said the ultimate goal must be permanent housing for residents on Maui, where housing and rental costs are increasingly out of reach for many. It’s estimated that there are between 2,500 to 3,000 timeshares on Maui and between 12,000 and 14,000 STRs. That last figure does not include illegal units, which could raise the total by several more thousand.

Once the state reaches the 3,000 STR threshold, Green said the moratorium would be ended.

The governor also provided an update on his One Ohana Initiative, a state-coordinated settlement fund for victims of the fires. 

The program encourages families who have lost a loved one to the fires to settle for up to $1.5 million per loss from the state and participants including Kamehameha Schools and Hawaiian Electric Co. In turn, the families would drop any lawsuits against the state, the county, HECO, KS and other named defendants in multiple lawsuits that grow in number every week.

Green said settling would give families the opportunity to “heal sooner and they’ll be able to get the settlement wrapped up really quickly” rather than go through years of litigation. The governor said Hawaiian Telcom just joined the funding groups and that other entities may follow.

But Green also said no one would be pressured to settle and that it was “totally OK” if a family chooses not to participate.

The settlement process is expected to formally begin Feb, 1 and the fund administrator would be retired Circuit Court Judge Ronald Ibarra, Green said. If families need legal assistance, pro bono services would be made available.

Green will provide more updates on Maui recovery when he presents the administrations supplemental budget on Monday. It is expected to include funding request for more workers to enhance the state’s wildfire response capacity.

‘Direct Housing’ Needed

FEMA has been touting the impending tax breaks — and warnings from Green, Maui Mayor Richard Bissen and other leaders for more drastic measures including an emergency moratorium on short-term rentals — to coax more owners of vacation units to convert to long-term rentals.

FEMA regional administrator Bob Fenton said 1,500 eligible households have requested “direct housing” from the agency, either through its direct leasing program or the hundreds of modular dwellings the federal agency is planning to build on Maui to serve as interim housing until more permanent homes are secured.

Under the direct leasing program, FEMA leases units from owners for at least 12 months, then subleases the units to displaced residents. At last count 50 households have been placed in units with another 100 units expected to be leased in the coming days, Fenton said.

He expects those numbers to rise after council approval of the tax breaks and “industry days” his agency is holding to lay out how the program works and the benefits for owners and property managers. FEMA also sent letters to the owners of the 13,000 vacation rental units on Maui.

FEMA will pay rates “very comparable” to what short-term rental owners made from their units last year — on average 366% above the fair-market rents, he said. The federal agency also will pay owner association fees and will be responsible for damage and handling evictions if necessary.

In the meantime, two sites — one in Central Maui and one in West Maui — have been identified as potential locations for 1,500 modular dwellings and are going through site design and environmental review processes. The U.S. Army Corps of Engineers will construct roads and utility infrastructure and a private company will ship and build the units.

Fenton said a major drawback to the project is that it would take at least 120 days to construct the temporary homes, barring any delays, and the American Red Cross’s emergency non-congregate shelter program that is currently housing more than 2,600 households in hotels and condos is set to end in early February.

Civil Beat reporter Christie Wilson contributed to this report.

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