Gov. Josh Green made bold proposals for how to increase housing availability during a speech Monday.
During a State of the State address Monday to mark the opening of the 2024 legislative session, Green highlighted several key issues he hopes to focus on this year and commemorated the victims of last year’s Lahaina wildfires.
Those fires, Green said, have cast into stark relief one of the state’s most pressing concerns: the lack of affordable housing available to Hawaii residents.
“Let me break down how it is on Maui,” Green said. “There are 27,000 short-term rental units on that island alone, and — if we can dedicate just 10% of these homes to displaced Lahaina families — we can house everyone (displaced by the fires).” About 6,000 of them are still living in hotels and condos.
Green urged Maui owners of vacation rental units to offer those units to the state’s Maui Interim Housing Plan, a $500 million program that aims to move all fire-displaced families into long-term housing by July. He said the state will cover the fair market value of every unit offered for two years and provide a property tax exemption for 18 months to the owners.
That isn’t the only tax break Green offered vacation rental owners. The “House Hawaii’s Ohana Plan,” which he announced Monday, would provide tax amnesty — an exemption from capital gains, conveyance and general excise taxes — to any short-term rental owner who sells those rentals to bring them into the general housing market.
That plan, Green said, will last two years and begin in the fall.
“I will sign into law any bill the Legislature sends me that will help move short-term rentals and vacant investment properties owned by nonresidents into our local housing market — to increase supply and bring down prices for our families,” Green said, adding that 52% of all short-term rentals in the state are owned by non-Hawaii residents and rented to visitors at four times the price that a local family would pay for a long-term rental.
Housing, Green said, remains the administration’s top priority. While he noted that simply building more housing won’t be enough to meet the needs of residents, he added that the supplemental budget for fiscal year 2025 includes $373 million for infrastructure and housing projects.
Green also announced other plans to address other problems throughout the state. In order to better protect the state from the affects of climate change, Green said he will once again pursue a climate impact fee to be imposed upon visitors.
Green proposed a $25 fee be charged to visitors when they check into a hotel or short-term rental. That fee, he said, would generate more than $68 million per year, which would be directed toward beach preservation, firebreaks and other measures to help prevent another tragedy like Lahaina.
“I believe this is not too much to ask of visitors to our islands,” Green said. “I am open to other proposals that would achieve the same goals, including an increase in the transient accommodation tax — but we must do something now.”
Other ongoing programs to address statewide problems should bear fruit this year, Green said. He noted that the second phase of last year’s Green Affordability Plan will kick in this year, offering up to $115 million in child and dependent tax credits to working families.
Green also praised the Healthcare Education Loan Repayment Program, which began in September and provides medical professionals up to $50,000 in loan repayments per year, which he said hopefully will alleviate the extreme shortage of doctors in Hawaii.
“Over the past five and a half months, we have shown the rest of the country and the entire world the true spirit of aloha,” Green concluded. “We’ve come together around our shared values and a common purpose — to support Maui as they begin to recover and heal, to house our people and end homelessness, and to make life in Hawaii more affordable, so that our next generation can build a future here at home.”
Puna Rep. and Vice Speaker of the House Greggor Ilagan said many of Green’s proposals already are included in the House’s majority legislative package, including the vacation rental tax exemption plan.
“Today was the first I’ve heard of that plan, but it’s all trying to address the housing issue,” Ilagan told the Tribune-Herald, adding that the majority package also will include proposals that would give the counties authority to gradually phase out the use of Non-Conforming Use Certificates, which could end the operation of short-term rentals outside of resort districts.
Ilagan said that for his constituents, he was most pleased to hear Green’s concern about health care availability, saying that a drive to the hospital for Puna residents can take more than an hour.
“We want to work closely with the governor this session and do whatever we can to fix this,” Ilagan said.