MAUI VACATION RENTAL ASSOCIATION

							                        MAUI VACATION RENTAL ASSOCIATION
                                  4320 Une Place, Haiku, HI 96708
                       Telephone (808) 573-0066 FAX (808) 573-2217

                Statement of Public Position on Affordable Housing
                                          Oct. 24, 2005


    MVRA is concerned about the shortage of affordable housing for residents. Most of our
members are residents, and we feel a connection and commitment to our community. While we
do not wish (or deserve) to be blamed for the high cost of housing, we are doing what we can to
assure that our operations will not fuel more price inflation in the housing market.

   1. County-sponsored research studies suggest that vacation rentals have a minimal
       impact on affordable housing.
    MVRA has reviewed the existing data relating to the impact of small-scale visitor
   accommodations on availability and cost of housing. In particular, we reviewed the
   methodology and conclusions of a Vacation Rental Study commissioned by the Maui
   Planning Department in 2002, and conducted by SMS Research of Honolulu. The SMS
   Study was concerned with impacts of Bed and Breakfast Homes and Vacation Rental Homes
   which accommodate visitors in single-family dwellings. (Note: the study did not evaluate
   impacts of other types of visitor accommodations such as Condos or Time Shares. MVRA
   does not represent these types of operations, and they are neither the subject of currently-
   proposed legislation, nor this Position Statement). The SMS Research data is summarized in
   Exhibit A, and it suggests that our operations have an impact on affordable housing
   which is considerably smaller than previously believed. This impression is corroborated
   by a more recent, independent Survey performed by the Kauaian Institute in the summer of
   2005.

   2. Despite reassurances from these studies, MVRA does not believe that these numbers
       “tell the whole story.”
   We have heard verbal reports of at least one family who was evicted from a long-term rental
   so that an owner could begin to use the property for vacation rental. We have heard
   numerous reports of realtors showing prospective buyers a home and justifying a high asking
   price by “the income stream you can expect from vacation rental.” We have heard public
   testimony at hearings that “vacation rental income is priced into the market” for home
   resales. Our approach to the legislative process has been consistent, regardless of the issue:
   for any negative perception raised (regardless of whether we believe the perception is
   accurate) we attempt to incorporate a mitigative measure in our proposed ordinance.

   3. Accordingly, MVRA has included the following six provisions in its proposed
      ordinance which are designed to offset potential housing price inflation resulting
      from our operations.

           a. Permits shall be non-transferable. Since the new owner will have to apply for a
              new permit, this will make it risky for a prospective home buyer to “count


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              on” vacation rental income, and should help to offset price inflation resulting
              from that anticipated income. Since the permit process will be lengthy and
              costly, a new owner would have to invest time and money in applying for a
              permit, then wait for the review of their application, with no guarantee of the
              outcome.

           b. No application will be accepted for short-term rental of a property which has an
              existing long-term tenant. This would prohibit an owner from applying for a
              vacation rental permit, and then evicting a long-term tenant if the permit is
              granted. It would introduce a negative financial incentive against converting
              from long-term to short-term rental use, because the owner would need to carry a
              vacant property (with no long- or short-term rental income) throughout the
              lengthy and costly permit process – again, with no guarantee of the outcome.

           c. No new housing shall be constructed expressly for vacation rental use. This
              provision is designed to prevent visitor accommodations from competing with
              residents for new housing inventory.

           d. Vacation rental dwellings will be subject to increased real property taxation,
              including improved residential, commercial , and hotel rates, depending on the
              type of vacation rental. We suggest that the County dedicate this additional tax
              revenue to financing infrastructure on lands which are designated for
              development of affordable housing.

           e. Non-resident vacation property owners can qualify for the simplified permit
              processes if they provide both housing and employment for a resident (onsite)
              manager.

           f. Month-to-month rentals for residents would become legal. (Under current
              definitions, a lease of six months or longer is required for a long-term rental to be
              legal).

   Our operations create around 600 full-time equivalent jobs for Maui residents, helping them to
afford housing for their families. Many short-term rental operators would not be able to afford
their own homes without the income from short-term rentals, and without it, they would be
competing for more-affordable housing.




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Exhibit A




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