Maui Residents Have Been Pushed Out as Landlords Profit Off Wildfire Crisis — ProPublica

A year ago, after a deadly wildfire displaced thousands of residents of Lahaina, Hawaii’s governor and lieutenant governor invoked a state law blocking most evictions and prohibiting price gouging. The emergency order soon became a tool to prevent widespread displacement of all Maui residents, including people struggling to pay rent because they had lost work due to the fire.

Despite that order, some Maui property owners have capitalized on the crisis by pushing out tenants and housing wildfire survivors for more money. Among those displaced: a couple and their two young children who, according to court records, were evicted so their landlord’s son could move in while renting his own home to the Federal Emergency Management Agency’s housing program for $8,000 a month.

Some property owners have brought in more than twice the going rate for a long-term rental by signing up with FEMA or another aid program. They have received lucrative property tax breaks for housing wildfire survivors, in some cases worth more than $10,000 a year.

Other landlords have forced out tenants and sought people who will pay more. Over the course of several months, one landlord tried to evict his tenants for different reasons, even claiming that Maui’s mayor needed to use the house as a “command center to rebuild Lahaina.” (A spokesperson for the mayor said that claim was false.) After the tenants moved out, two of them saw their ocean-view apartment listed online for $6,800 a month rather than the $4,200 they had paid. Asked about the higher price, the landlord told Civil Beat and ProPublica that the apartment has been cleaned up and is now furnished.

Complaints about evictions and rent increases have circulated for months. Housing advocates say Gov. Josh Green’s administration hasn’t moved aggressively enough to tighten the rules and that the Hawaii attorney general has overlooked abuses.

Even before the fires swept across Maui, rental housing on the island was among the most expensive in the country. The loss of so many homes was bound to increase prices. But tenants, housing advocates, government officials and even landlords say high prices offered by FEMA, the state and private aid organizations have encouraged property owners to chase the money. State Sen. Angus McKelvey, who lost his own home in Lahaina, called it “FEMA fever.”

Jo Wessel, a Colorado landlord, said she tried to sign up with FEMA after her tenants fell behind on their rent and electricity bills. She said a property management company working for FEMA offered her $6,500 a month, which according to court records was more than twice what she charged for the two-bedroom condominium in Kahului. Although the governor’s order bars evictions for nonpayment of rent or utilities, Wessel told Lea and David Vitello and their two children on Jan. 6 that they had five days to pay up or leave, according to documents reviewed by Civil Beat and ProPublica. Two weeks later, FEMA inspectors knocked on the Vitellos’ door to see if their home was suitable for wildfire survivors. “We didn’t see it coming,” Lea Vitello said.

The Vitellos refused to leave when their lease expired at the end of January, and Wessel eventually took them to court. It took until April for the Vitellos to find a new place and move out. Wessel said the delay caused her to miss out on the FEMA contract, but she was able to sign up with a nonprofit housing program willing to pay about $400 more per month than what she was charging the Vitellos. Wessel said she thought the Vitellos had taken advantage of the governor’s order and that they still owe her money. Although the Vitellos left a few months ago, Wessel’s court case against them continued until this week, when a judge dismissed it.

Those who have been forced out are contending with a housing market where the median rent has jumped 44% since before the fires, according to an Argonne National Laboratory study released last week. Some people who’ve been pushed out since the fires told Civil Beat and ProPublica that they haven’t yet found a permanent home.

Peter Sunday, whose family was evicted so their landlord’s son could move in, said he paid just $1,900 a month for their three-bedroom cottage and that the cheapest place he has found since is twice as much. He, his wife and their two young children have moved from place to place while they search for something stable.

Malcolm Vincent, the landlord’s son, said in a court filing that he lived in a garage on family property after he rented his home to FEMA and while he was waiting for the Sundays to leave. When called by Civil Beat and ProPublica, Vincent said he was busy and hung up. In response to a text message, he wrote, “Stop.” Ann Siciak, the Sundays’ former landlord, did not respond to interview requests.

State and federal officials said they didn’t intend for their housing programs to encourage landlords to kick people out to make room for wildfire survivors, but they had to offer lucrative rates in order to secure housing quickly. “We’re not incentivizing,” FEMA Region 9 Administrator Bob Fenton said in an interview. “What we’re doing is being competitive.”

The Green administration acknowledged that “some bad actors have not complied” with the governor’s order. Officials urged tenants to report unscrupulous landlords to the state attorney general.

Green said in an interview that he, too, has heard about landlords who have kicked out tenants to make more money, but he said they “represent the extreme minority.” Much more common, he said, are stories of people who did the right thing and provided shelter to thousands of people.

“I was very clear that we didn’t want to displace anybody, but there are a million different forces at play here,” Green said. “Every moment, every week, you just had to try to prevent predatory behavior. There’s a lot of that. That’s one of the lessons I learned from this crisis.”

State officials pointed to a sharp drop in eviction cases filed in court since the fire as evidence that the governor’s order is “doing what it was designed to do: stop unlawful evictions and keep families and survivors housed.”

But tenants’ rights groups and lawyers said court cases, the only public paper trail of evictions, don’t show the complete picture. It’s time-consuming and risky for a tenant to fight an eviction in court; if they lose, they’ll have a record that could make it harder to rent another place. Many tenants simply move out after getting a notice to vacate the property, even when they think their landlord is breaking the law.

“We know this is happening,” said Jade Moreno, a researcher and policy analyst for the Maui Housing Hui, a tenants’ rights organization. “We hear the stories all the time.”

“The Greed Is Sickening”

Although most people refer to FEMA when they complain that emergency housing programs have skewed the market, the state of Hawaii pays similar rates for its own program. And in November, in an effort to entice property owners, the governor revealed just how much money could be made housing people who were homeless after the fire.

Thousands of wildfire survivors were living in hotel rooms at the time, costing the state at least $1 million a day; meanwhile, vacation rental homes that would have been cheaper sat vacant. So Green announced that the state would pay a premium to anyone who housed survivors.

For landlords who typically rented to locals, the numbers offered by the state were stunning: $5,000 a month for a studio or one-bedroom home; $7,000 for a two-bedroom; $9,000 for a three-bedroom; and $11,000 for a four-bedroom.

Early on, FEMA also concluded that it would have to pay vacation rental rates. FEMA won’t publicize what it pays, saying it varies by property. But contracts reviewed by Civil Beat and ProPublica show the agency has paid $5,000 to $9,050 for a one- or two-bedroom unit. For three- and four-bedroom homes, it has paid $9,000 to $11,400, according to two landlords who spoke to Civil Beat and ProPublica.

Once people knew what they could get, Maui-based property manager Claudia Garcia started getting calls. Property owners, many of whom lived on the mainland, asked if Garcia could help them lease to FEMA or raise their rents to keep pace. She said she refused because she didn’t want to help them take advantage of the crisis. “The greed is sickening,” said Garcia, whose firm manages more than 100 rentals on the island. “It’s just not right what they’re doing.”

The Legal Aid Society of Hawaii got calls, too, but from tenants. In the first seven months after the fire, the number of Maui residents who sought help with evictions grew by 50% compared with the seven months before the fire, according to the organization.

The high prices offered by the state and FEMA forced at least one nonprofit that was sheltering victims of the fire to bump up its offers to property owners. “Short-term rental owners did shop us,” said Skye Kolealani Razon-Olds, who oversees the Council for Native Hawaiian Advancement’s emergency housing and recovery programs. “They provided us with FEMA rental rates and asked if we could match it.”

Razon-Olds said the nonprofit has received 19 complaints from tenants who said they were being forced out of their homes so their landlords could rent to FEMA. She said her organization convinced FEMA to stop dealing with those owners.

In February, six months after the fire, FEMA announced that it would reject properties if it learned tenants had been illegally forced out “so landlords could gain higher rents from the FEMA program.” Officials told Civil Beat and ProPublica that FEMA has found fewer than 10 cases in which a landlord wrongfully ended a lease in order to participate in the housing program. In all those cases, FEMA removed the properties from the program.

State and federal officials characterized their rates as a compromise between vacation rental and long-term rates. The rates publicized by the state are maximums, state officials said; in practice, Hawaii is paying significantly less — about $228 per night rather than $267. That works out to about $6,800 per month rather than $8,000.

After state and local officials raised concerns, FEMA asked the Argonne National Laboratory to study whether housing programs had caused property owners to increase rents or displace residents.

Researchers concluded that the loss of housing in the fires was the biggest factor in the rapid increase in rental prices and that there wasn’t enough data to know how much housing programs had contributed. However, they noted that the Hawaii Office of Consumer Protection received about 700 housing-related complaints from August 2023 to April, most related to lease terminations or rent increases. Those complaints and subsequent investigations, researchers wrote, indicate that the “behavior of some landlords may have changed leading to secondary displacement or increased costs for some renter households outside of the burn area.”

One landlord, however, said it wasn’t until she was approached by a property management company working for FEMA that she decided to house wildfire survivors. The company offered Mara Lockwood $7,000 a month — about $2,300 more than what she had collected for her two-bedroom condo overlooking Maalaea Bay.

Lockwood took the deal, not just for the extra income, but because she would be exempt from property taxes for at least a year, which she said will save her about $12,000 annually. But she was conflicted. As the owner of a Maui real estate company, she saw the asking prices for rentals rise, and she kept hearing stories of people getting pushed out of their homes so that their landlords could earn more money.

“Kicking somebody out to rent to FEMA to make more money is a horrible thing to do to people,” Lockwood said. “But when you’re given an opportunity and money is involved — and you have to follow the money — then some people are going to do that.”

“That’s What The Law Allowed”

For every case in which it’s clear a tenant is being kicked out so their landlord can make more money, there are many more that aren’t as obvious, said Nick Severson, the lead housing attorney for the Legal Aid Society of Hawaii. “Sometimes we’ll have emails or texts or statements from the landlord that say, ‘I need you out of here so I can rent this for $8,000 a month to FEMA,’” he said. “But usually it’s not that lucky. It’s a little bit more covert, which makes it hard to push back on.”

That’s partly because the state law prohibiting price gouging during an emergency provides landlords with some wiggle room. Renters can be evicted if a landlord or family member is moving in or if the renter has violated the terms of their lease, as long as it’s not related to nonpayment of rent, utilities or similar charges. And landlords can push people out at the end of a fixed-term lease without providing any reason. In several cases reviewed by Civil Beat and ProPublica, landlords have cited those exceptions in evicting tenants and have gone on to rent their properties to wildfire survivors for more money.

Property owners acknowledge that they’re bringing in more money through housing programs than they did before the fire. According to the Hawaii attorney general, the governor’s emergency proclamation prevents landlords from raising their rent unless it was agreed to before Aug. 9 or the landlord can show their costs have increased.

And yet the attorney general has held property owners accountable in relatively few cases. The office has concluded that landlords violated the governor’s order in just 28 of the 200 complaints of illegal evictions and rent increases it had received as of June 3. (Another 30 were still under investigation.) Fenton, the FEMA administrator, said the attorney general’s office concluded that just one of the cases FEMA referred had violated the proclamation. The attorney general’s office can levy civil penalties of up to $10,000 a day, but it hasn’t.

“We have the emergency proclamation, but it doesn’t prevent anyone from evicting tenants and raising rent,” said Anne Barber, a Maui real estate broker who works with Garcia in her property management firm. “There is no accountability.”

The attorney general’s office said in a written statement that it “provides people with opportunities to do the right thing and correct their actions. If individuals continue to choose not to comply, then the Attorney General can and will seek legal remedies.”

The Green administration said it has revised the emergency proclamation to address the needs of the community; at one point, the governor added language barring unsolicited offers to buy property in areas affected by the fires. But, administration officials said, the governor’s power is limited. For example, they said he has no authority to force landlords to extend leases. Green’s staff said lawmakers must look at the price-gouging law and make needed changes.

In one case, Maui landlord Gregory Lussier filed an eviction case against six people living in a four-bedroom home in Kahului. He told Civil Beat and ProPublica that he wanted the tenants out because some of them had left and the remaining ones had stopped paying the full rent, which was about $4,000, but he knew the governor’s order prohibited him from evicting them for not paying. In his Jan. 5 notice to the tenants and the eviction case he filed in court against them a week and a half later, he cited several violations of the lease, including prohibitions on pets, smoking, illegal activity, expired vehicle registrations, and obscene or loud language. Before the case went to trial, the tenants moved out.

Although Lussier rented the property to FEMA’s housing program for $11,000 a month, he said that’s not why he filed eviction proceedings. “There was no premeditated scheme to force the tenant to leave so we could get a FEMA rental agency lease,” he said in an email. However, court records call into question his version of events. Lussier said the lease with FEMA’s outside property manager started Feb. 1 and he believes he signed the rental agreement the day before. He said he didn’t explore renting to the housing program until after the property was vacant and that the process of signing up took “several weeks.” But video of a hearing shows that Lussier and three of his tenants appeared in court on Jan. 29, where the tenants denied his allegations that they had violated the lease. Lussier declined to explain the discrepancy to Civil Beat and ProPublica.

Maui attorney Jack Naiditch said he’s gotten several phone calls from property owners who want to exploit loopholes in the emergency proclamation so they can take advantage of FEMA’s prices. He said he’s turned them away: “I’m not going to put my name on the line for somebody who’s fibbing.”

But he has represented a number of property owners in court, including Sunday’s landlord; some of them have later rented their homes to house wildfire survivors. He declined to discuss specifics of their cases.

When Sunday appeared in court in April, he pleaded with the judge to let his family stay in their home. “Frankly, this is cold, your honor,” Sunday said. “A single man wants to evict a family of four to move into a home which he has admitted is for his own financial benefit and gain.”

“There’s nothing I can do about that,” the judge said. “That is what the law allows. So that needs to be taken on with the governor, our mayor or Legislature, because there are people who very likely take advantage of that.”

Four days after the Sundays received their eviction order, Green responded to residents’ complaints and made it harder to claim the exception that Sunday’s landlord had cited. Now, a landlord or family member who claims they need to move into a property must provide a sworn statement saying they’re not accepting money from an aid program to house survivors.

That same day, Sunday said, his family packed the last of their belongings as a process server threatened to call the sheriff if they lingered too long. They put most of their belongings in a storage unit and gave away all of their pets and backyard farm animals — 18 chickens, nine ducks, two dogs and a pair of cats. They have to relocate again this week.

Sunday doesn’t know what to tell his kids about the constant shuffling and when they’ll see their pets again. “I can’t give them any kind of peace,” he said, “without lying to them.”