Infrastructure-improvement rules will make Lahaina recovery more costly

by Jonathan Helton, Grassroot Institute

The rebuilding of Lahaina could be a lot more expensive than anyone is expecting if Maui County officials do not waive an obscure infrastructure rule.

County law allows the Department of Public Works to require anyone building a new structure to make improvements to the adjacent infrastructure, such as adding sidewalks, widening the street, improving storm drains and relocating utility lines.

There are limited exceptions for single-family homes and storage sheds, but in general, whenever someone builds a new building or makes alterations worth 50% or more of the existing building’s value, the department can require these improvements — which aren’t cheap.

For example, a February report from the county estimated that roads, sidewalks and signage sustained $11 million in damages from the 2023 wildfires. About 150 commercial properties in Lahaina were damaged or destroyed in the wildfire, and if each had to pay a portion of that $11 million, it would work out to $70,000 per business.

And that’s not counting water and sewer lines or any other improvements that might be required. If the county requires electrical utilities to be placed underground, that could add a substantial expense. Undergrounding electric lines can cost as much as $10 million per mile.

It’s also important to consider the cost of delays related to uncertainty. So far, some owners of the destroyed or damaged properties in Lahaina have been told they need to widen the adjacent streets and underground the electric lines. But those who haven’t applied for permits yet don’t know exactly what improvements they might be required to make.

The January 2022 West Maui Community Plan gives a hint. Its goal of “a complete, balanced and connected transportation network” includes an emphasis on sidewalks, bike lanes and the county bus system, confirming that at least some level of improvements are likely to be required.

There is also the risk that such improvements could be required in an arbitrary, haphazard fashion. After all, the Department of Public Works isn’t mandated to require improvements — only authorized to do so.

For what it’s worth, county officials seem aware of — but have been slow to address — this issue. For instance, Council member Tom Cook proposed a year ago in Bill 110 (2024) that the county’s infrastructure-improvement requirements simply be waived for anyone whose properties were destroyed or damaged by the 2023 fires, but the measure remains stuck in committee. It could, however, be revived and passed to give Lahaina residents clarity.

Another option could be to waive the improvement requirements for any rebuilding that doesn’t exceed the footprint of the original building.

Yet another way would be for Mayor Richard Bissen to issue an emergency order suspending the improvements statute. Or he could use his existing powers to direct the DPW to waive the rule.

No matter how it’s done, removing this provision for property owners who want to rebuild in Lahaina would result in lower costs and less time spent navigating the county’s permitting process.

Another reason for the county to amend the law would be to avoid the threat of litigation. That’s because a growing body of case law has determined that local governments can impose fees and other exactions only when there is a “nexus” between the fee and the proposed construction.

In the case of the Lahaina wildfires, it is entirely possible that a court could find the need for new infrastructure to be caused by the fires — not the rebuilding work itself — and strike down any required adjacent infrastructure improvements as unconstitutional.

Maui County taxpayers are already likely to be on the hook for significant litigation expenses, so county leaders would be wise to avoid murky legal waters and conserve tax revenues for truly important work.

For victims of the 2023 wildfires who lost their homes and businesses through no fault of their own, waiving the county’s infrastructure-improvement rules would be the right thing to do.