Maui County to sell first GO deal since fires decimated Lahaina

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Maui County plans to sell by competitive bid Wednesday $301.8 million of general obligation bonds, its first GO deal since before the 2023 fires decimated Lahaina on the island's western side.

An estimated 102 people died in the West Maui fires that burned 20 square miles nearly wiping out the town of Lahaina in August 2023.

"Investors have an opportunity to buy into Maui's very robust recovery story," said Curt de Crinis, a managing director at Columbia Capital, and the county's financial advisor.

The deal also means a return to the county selling debt competitively. Its last deal, in 2022, was a negotiated deal, but it sold debt in 2012, 2014, 2015 and 2018 competitively, according to the Department of Finance.

Though the fires resulted in financial struggles for the state, de Crinis said it didn't effect county revenues as much, because the assessed valuation on properties continued to rise.

"Lahaina's [destruction] — terrible as it was — was only 5% of housing stock," de Crinis said. "The county received a tremendous amount of money from FEMA (Federal Emergency Management Agency) and from grants. A lot of money came pouring into the county and they are probably financially stronger than they were."

The State of Hawaii Department of taxation estimated the state lost nearly $50 million in annual income from the roughly 1,000 residents who didn't return after the fire. The total represents a little over 1% of total annual income Maui residents reported on state tax returns the year before the fires. That money would have been spent in Maui and generated general excise tax (GET) revenue for the county and the state.

The loss of sales tax, which Hawaii calls a GET, for the county isn't as significant as the gain in property taxes, money received through private donations and the $1.7 billion grant it received from the federal government to rebuild, de Crinis said.

In fiscal year, 2024-25 real property assessed values were $73.3 billion, a 4.2% increase from fiscal 2023-24 despite the negative impacts from the Maui wildfires, according to data in the preliminary offering statement. GOs are paid with revenue from the assessed valuation on properties.

"The county is as well off financially as it has ever been," he said. "We think that is a pretty good story for investors."

"The county's strong bond ratings have been recently affirmed by three credit rating agencies — and it reflects Maui's resiliency, liquidity and strong financial management," County Finance Director Marcy Martin said in a statement.

Those ratings are Aa2 from Moody's Ratings and AA-plus from both S&P Global Ratings and Fitch Ratings. All assigned stable outlooks.

The county tapped its own emergency reserves in the days immediately following the fires, but it also "leveraged all available federal and state resources to address the longer-term needs, which has contributed to both physical and economic resilience and recovery," Fitch analysts wrote in a July 10 ratings report.

Fitch also said the county's emergency fund usage was minimal compared to the enormous financial resources provided by the federal and state governments, including $1.6 billion from the federal government for additional fire response costs for the next few years.

The rating agency noted possible changes in federal policy mean the burden for future fires will likely be borne by the county.

"This shift could cause financial stress on local and state governments when responding to future disasters, given the uncertainty regarding the severity of future disasters and the readiness of local and state governments to take on disaster responsibility previously overseen by the federal government," Fitch analysts wrote.