Maui Fire Spells Trouble For Their Municipal Debt Service

The recent fire on the island of Maui, Hawaii was a tragedy of immense and long-lasting proportions. While the human toll was a record high, the financial impact will also be massive, not only to the individual property owners, but also, the local government.

As of their year-end 2021 financial period, the Maui outstanding general obligation debt Was $385 million and business related municipal debt totaled some $60 million. Given the extent of the erosion of property values it is hard to see how they will be able to service this debt load for the next few years. Even if property owners were insured for their losses, the assessed property values will decline to zero for many owners for the foreseeable future.