FEMA is still spending millions on hundreds Of empty housing units for Maui fire survivors

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The agency has found available housing but is struggling to get people to move in. On Friday, it ends its support for the emergency hotel program.

Nearly 500 empty condos, apartments and houses are being paid for by the Federal Emergency Management Agency as part of its program to house Maui wildfire survivors.

A Civil Beat review of federal contracting records and interviews with FEMA officials show the agency has so far committed to pay nearly $200 million to three out-of-state property management companies. Those companies oversee 1,335 direct leases with Maui property owners to house people who lost their homes in the Aug. 8 fire in Lahaina.

Each month, FEMA is writing checks to North Carolina-based Aesthetic Home Investments, California-based Lima Charlie and Florida-based Fedcology/Parliament to cover the costs of all the properties participating in the program, regardless of whether anyone is living in them, according to FEMA officials. Those companies keep a percentage of the money in fees and other costs and then in turn pay the property owners who are leasing their homes out, generally under one-year contracts.

FEMA officials would not provide a breakdown of how the money is being spent or how much has been paid to date. Civil Beat has repeatedly asked FEMA why public money is still being spent on so many empty units.

The Hyatt Regency Maui Resort and Spa in Kaanapali is one of many resorts that has been housing Aug. 8 wildfire survivors for months through FEMA’s emergency sheltering program. (Cammy Clark/Civil Beat/2024)

As of last week, fire survivors had moved into 835 of the 1,335 units the agency has leased directly from property owners, Curtis Brown, FEMA’s deputy federal coordinating officer, said in an interview with Civil Beat.

That left 500 vacant units at that time that FEMA was paying for. Brown has said at public Lahaina recovery update meetings for the past few months that people are still getting paid for empty units.

Data posted on the federal website usaspending.gov indicates total costs including rent, property management fees, utilities, maintenance and other expenses average more than $12,000 per month per unit.

One of the contracts with Lima Charlie, for instance, shows FEMA has paid the company $59,000 since January. The agency has committed to pay up to $420,000 through next January, according to the federal data. But it’s unclear how many properties that includes, where they are located or if anyone lives in them yet because FEMA would not provide the individual contracts.

Federal data online shows one of the numerous contracts FEMA has awarded Lima Charlie to house Maui fire survivors through its direct-lease program. (USASpending.gov/2024)

With 500 or so vacant units as of last week, FEMA would have spent more than $5 million on empty housing in April alone.

There were roughly 600 vacant units one month ago being paid for by FEMA as the agency tried to quicken its pace. And most of the vacancies date to January or February when the majority of the contracts were signed, the point at which the payments begin.

The program started in November as an interim solution to move thousands of fire survivors out of pricey and cramped hotel rooms and into longer-term, more comfortable homes with kitchens. Property owners signed up for the relatively lucrative deal, but it was still a challenge to get people to move into the units — largely because most are outside of West Maui, away from jobs, schools, doctors and their community.

FEMA officials, property managers, fire survivors and others say it has taken months to successfully match survivors with units.

In addition to location issues, overly strict federal regulations governing living arrangements have been a problem. In some cases, larger families have been required to have units with more bedrooms even though they would accept smaller places. Some people have been unable to pass background checks or had problems getting them.

Roughly 13,000 people were displaced by the Aug. 8 fires in Lahaina and Upcountry Maui. Nearly 1,600 are still living in hotels set up as emergency shelters while hundreds of other households have moved into FEMA’s direct-lease units. (Nathan Eagle/Civil Beat/2023)

FEMA would not provide the individual contracts with the companies, but Bob Fenton, who has been leading FEMA’s Maui fire recovery efforts since August, told Civil Beat last month that property owners in the program were being paid an average of $6,000 per month.

But without the contracts, it’s impossible to tell how much is going to the property owner versus the management company and other costs.

Local property managers say the average monthly rate for property management of long-term leases on Maui is 10% to 15%, with a higher first month rate for setting up the account, conducting background checks and inspections.

“Obviously, anything with government has additional costs; we have to meet certain protections,” Fenton said when asked why FEMA was paying so much more than the going rate for property management.

FEMA would not provide a breakdown of the number of units managed by each company, but according to federal data, the agency has committed to pay Lima Charlie $128.3 million, Fedcology/Parliament $46.9 million and Aesthetic Home Investments $23.7 million for a total of $198.87 million. That figure fluctuates day to day based on how many property owners are contracted, as some have dropped out of the program and new ones have been added.

Curtis Brown, FEMA’s deputy federal coordinating officer, says of about 1,300 units contracted with the direct-lease program, about 500 were still sitting empty as of this week. (Kevin Fujii/Civil Beat/2024)

David Greenburg, who heads Fedcology/Parliament, and David Waldbauer, president of Lima Charlie, did not respond to repeated calls and emails. Iesha Carmichael, president of Aesthetic Home Investments, declined an interview request.

R. Austin Oyler, an attorney representing Aesthetic’s president, said in an email last month that “AHI processed over 180 units in the prior three months, which it believes to be a tremendous result.”

All three companies provided property owners a list of requirements to make sure their unit could pass a FEMA inspection — including changing out double beds for single beds in some rooms, providing a specific type of fire extinguisher and installing smoke alarms. Several property owners said they took care of these requirements themselves before a lease was signed.

An owner of a two-bedroom, 1.5-bath home on South Kihei Road received two rent payments of approximately $9,000 each while the property was sitting empty. Fire survivors have since moved in, the owner said. The owner asked not to be named for this story.

With about 13,000 people losing their homes in the fires on Maui, which already was experiencing a housing crisis, the direct-lease program was set up to convert short-term rentals into long-term housing fire survivors for at least a year, and possibly up to two years, while new housing projects are built in Lahaina and elsewhere on Maui.

County, state and federal officials have said for months that the biggest reason many units have sat empty is the challenge of getting fire survivors to move away from West Maui.

Gov. Josh Green said last week at a press conference about housing that some people have turned down matches “four, five, six times.”

From left, Maui Mayor Richard Bissen listens to Gov. Josh Green as an ASL interpreter relays a message from FEMA’s Bob Fenton during a press conference in October in Wailuku. The state will have to pick up the tab for housing fire survivors in hotels after Friday unless FEMA again extends the deadline. (Kevin Fujii/Civil Beat/2023)

In an effort to more quickly move survivors out of the resorts, the Hawaii Emergency Management Agency on March 14 announced a policy that limits the number of times survivors can turn down federal or state-provided housing options and still remain in the emergency temporary program.

“We’re just at a point now where more people are engaged in filling out the paperwork,” Fenton said. “We have the units. It’s a matter of them completing the background checks. It’s a matter of matching people up. It’s a matter of them being responsive.”

The direct-lease program also has had difficulty securing enough units that could accommodate pets and people with disabilities.

Brown, of FEMA, said the process is now being expedited by having all three property management companies use the same background checks and a “deeper communication with the survivor.”

He said about 27 households per day are now being moved into a direct lease home.

People like Joy Newman, a 71-year-old with medical problems whose Lahaina apartment was destroyed in the Aug. 8 fire, have appreciated what the program offers. She said she had tried to find a place on her own, but after a fruitless search, she gave up and went through the FEMA process for a direct lease.

It took months, but finally two weeks ago, Newman, who uses a walker and had recently undergone surgery for cancer, was matched with a unit in West Maui that could accommodate her needs and her Chihuahua named Malia. The unit had been sitting empty for a couple of months.

Fire survivor Joy Newman, 71, and her dog Malia were happy to move out of a resort hotel and into a condo in West Maui through FEMA’s direct-lease program. (Cammy Clark/Civil Beat/2024)

While Newman wishes it had happened sooner, she said it has been a relief to move out of the hotel room at the Hyatt Regency Maui Resort and Spa, her sixth lodging since the fire, and into a condo along the beach with turtles.

“Oh my heavens,” she said. “I can cook the food I can eat. With my rheumatoid arthritis, there’s so many things I can’t have. This is making a huge difference in how I feel. And my dog is finally settling in.”

It almost didn’t happen because FEMA personnel were concerned about Newman having to negotiate three stairs into the condo. But Newman said she convinced them she could handle it.

And while she is planning to have her bed moved into the living room because the wind and street noise in the bedroom make it difficult to sleep, she said everything else is wonderful.

“It’s not the perfect system, but it’s a system we’ve been able to make work,” Fenton said.

Meanwhile, FEMA is also funding approximately 135 households still living in the resorts through its temporary emergency housing program that it contracted with the state and is being run by the American Red Cross. The program was at one point costing an estimated $1,000 per day per household, but likely is less now that the survivors are being provided two less meals per day.

Green said last week that the state thinks the remaining households eligible for the FEMA program living in the hotels is closer to 400 and is continuing to discuss this with FEMA. For months, the state has been paying for the households who are not eligible for FEMA housing.

As of Tuesday, there were 629 households representing 1,596 people and 149 pets living in the hotel program at seven locations. Friday is the deadline for FEMA to stop reimbursing the state for its eligible households in this program.

FEMA has extended the deadline several times, but it has not said if it will do so again, which would leave the state to pick up the tab while it tries to find homes for those still staying in the hotels.

Green has said he expects to have almost everyone out of the hotels by July 1.

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