Tax exemptions will likely be extended to people who lost their properties in the August 2023 Maui wildfires and to owners of homes renting to survivors displaced by the disaster.

Two bills aimed at achieving this goal were approved by the Maui County Council’s Budget, Finance and Economic Development Committee and will next go to the full council.

Bill 147 makes some changes to the Maui County Code.

Properties destroyed or located within burn zones were completely exempt from property taxes for the fiscal year beginning July 1. Under this bill, these exemptions would be extended for a second fiscal year ending June 30, 2026.

The exemption costs the county $21.1 million a year, county Finance Director Marcy Martin told the board.

About 1,400 landlords who rented to people displaced by wildfires with leases of one year or more also received a full tax exemption for the current fiscal year, at a cost of $12.3 million. dollars for the county. If they extend their lease by at least six months, they will benefit from a long-term rent waiver of $200,000 for the next fiscal year beginning July 1, 2025.

This includes short-term rental properties rented long-term to displaced survivors.

“For this financial year, their taxes were zero; they didn’t even pay the minimum tax,” Martin said at the committee meeting last week. “For the following financial year, they would join our long-term rental program. So while their taxes wouldn’t be reduced to zero, they would be significantly reduced.”

For the current fiscal year, landlords renting to people displaced by fire with leases of at least six months, but less than a year, were eligible for a $300,000 exemption. This program cost the county $2 million. But most of those six-month leases have expired, and without current demands, the program is expected to cost considerably less next fiscal year, Martin said.

Council Member Tamara Paltin questioned whether a rent cap to qualify for a tax exemption could be added to the bill, given that some landlords are charging thousands of dollars more than the rental assistance provided by the Federal Ministry of Housing and Urban Development.

“It’s a political decision,” Martin said, adding that it’s “unfortunate that this is happening, but at the same time, even losing a few rentals would be a hardship.”

The second tax measure, Bill 153extends the deadline for wildfire survivors to maintain their tax year 2024 exemption for properties where improvements were destroyed or made uninhabitable by wildfires. This exemption was previously scheduled to expire at the end of this year.

Paltin said there has been a varied response to the completion of debris removal in residential areas of Lahaina. Some people are already installing roofs, while others are still going through the permitting process. Even those whose homes were spared had to spend large sums removing carpets, curtains and furniture, she said.

“I think this is a very prudent measure to try to keep our residents, who are also homeowners, and their properties and to take the burden off those businesses and other properties for another year,” she said .

Jonathan Helton, a policy researcher at the Grassroot Institute of Hawaii, said extending the deadline recognizes that cleanup and rebuilding have been unpredictable and slow.

“Lahaina property owners should not run the risk of paying property taxes on land or buildings that they cannot legally rebuild or inhabit,” he said in his testimony.

Committee Chairman Yuki Lei Sugimura said the focus is on Lahaina for “obvious reasons” but the two bills will also help the upcountry region where 26 homes burned during the wildfires of 2023.

The proposals faced no opposition from Mayor Richard Bissen’s administration, which asked the council to expedite work on the bills so they could be passed before the end of the year.

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