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A fund established to help Maui County deal with the impacts of climate change and sea level rise will be paused for three years and the money earmarked for it in the 2025 fiscal year used instead for the Pulelehua housing project north of Lahaina.

Introduced by County Council member Yuki Lei Sugimura, , which suspends new payments into the and frees up the money, passed unanimously on second and final reading Wednesday.

The fund was created in 2022 at the of council member Tamara Paltin, a former ocean safety officer who represents West Maui. It got seeded with 20% of the county’s transient accommodation taxes — fees that tourists pay to hotels and other lodgings — and contained $12 million in fiscal year 2024. It was due to get another $12 million infusion in the fiscal year that begins July 1, according to Budget Director Lesley Milner.

“The original 2022 legislation that created the Managed Retreat Revolving Fund was innovative in that it was the first of its kind across the state and acknowledged Maui County’s interest in prioritizing retreat as one of our coastal management tools,” said Tara Owens, a Maui-based coastal scientist specializing in climate change and managed retreat, who works for Hawaii Sea Grant.

But considering last August’s fires that killed 101 people and displaced some 13,000 others in Lahaina, many on the County Council want to use the managed retreat fund for building permanent, affordable housing and for other aspects of wildfire recovery.

Sugimura said she’s not against Maui having an account dedicated for purposes like moving roads and infrastructure mauka or making the shoreline more resilient to climate change impacts. But in light of what happened in August, the county has more pressing needs, Sugimura said in an interview.

Managed retreat involves gradually moving buildings and infrastructure inland to protect them from rising seas, king tides, storm surges, coastal erosion and other climate-induced hazards.

“Every year … you don’t know what is going to happen so to tie up funds for something that might happen in the future, I was concerned about it.” Sugimura said.

Maui County has larger, ongoing problems to solve, she said.

During budget deliberations in April, council members discussed how the managed retreat fund could be used to address wildfire needs, namely housing.

Talk of suspending contributions to the fund and reallocating the money arose at the April 26 meeting of the council’s Budget, Finance and Economic Development Committee, which Sugimura chairs.

County Council Chair Alice Lee urged members to vote to give the $12 million intended for the managed retreat fund to Texas real estate developer Paul Cheng for phase one of his proposed Pulelehua affordable housing project. Phase one entails the construction of 240 affordable rental units.

“This project has a tremendous amount of potential,” Lee said at the meeting. “The people of Lahaina have asked for it. They have lobbied for it.”

She was speaking in favor of a motion by Paltin that would transfer the money earmarked for the managed retreat fund into the Affordable Housing Fund, along with $2 million from the Department of Oiwi Resources and a little less than $1 million already in the housing fund for a total grant of $15 million for Cheng.

A majority on the council agreed with Paltin’s measure. Nohelani U‘u-Hodgins, Tasha Kama and Sugimura voted no.  

The three have said on several occasions that they oppose funding Cheng and his project because Pulelehua has no guarantee of water or wastewater services and they have reservations about his past. Cheng spent six years in federal  prison for white collar crimes in the early 1990s during the savings and loan scandal, a fact he didn’t disclose when he approached the council for money.

While Sugimura wanted to free up the managed retreat funds for other purposes, she said she is not in favor of giving the money to Cheng.

“If a developer came to the council and said, ‘I have no water, I have no wastewater and I have no money,’ would you give them money to develop? The answer is no,” said Sugimura, who represents Upcountry.

But last week, the council took the first step toward making that happen.

On a 6-3 vote, the council approved on first reading a measure to rescind $18 million the council had previously awarded Cheng in 2022 that he didn’t use and reallocate it along with $15 million more for a total grant of $33 million. U‘u-Hodgins, Sugimura and Kama voted no.

The council on Wednesday made it final.

In adopting Bill 78 and passing the overall fiscal year 2025 budget, the panel unanimously voted to pause new contributions into the managed retreat fund and to reallocate the $12 million Mayor Richard Bissen’s administration had proposed for it starting July 1. That money will now go into the affordable housing fund, conditioned for use at Pulelehua.

Napili resident Mark Deakos said it’s unfortunate that new infusions into managed retreat fund are being suspended in light of the serious threats Maui is facing from climate change and with the need to rebuild an entire coastal community.

“It’s concerning,” he said. “If Lahaina is ready to rebuild, and they’re going to do it right so that you have a natural shoreline and you don’t have buildings falling into the ocean that you have to armor every year and protect, I’d like to know where the money is” going to come from.

“What’s the plan?”

Owens, the Sea Grant coastal scientist, said she hopes policymakers seek to balance the need and urgency to rebuild with resilience-focused approaches, and without losing sight of progress already made.

Maui faces enormous challenges with respect to coastal hazards and sea level rise.

“Ultimately, the funding priorities rest with the decision-makers, and this is a very difficult time to be in that role and to take on that enormous responsibility,” Owens said.

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

Civil Beat’s coverage of environmental issues on Maui is supported by grants from the Center for Disaster Philanthropy and the Hawaii Wildfires Recovery Fund, the Knight Foundation and the Doris Duke Foundation.