The Federal Emergency Management Agency will continue to reimburse the state for Maui fire survivors’ housing for another month, picking up the tab for people temporarily housed in pricey resort hotels and condos.

The state would have been on the hook starting Thursday for paying the costs of all fire survivors still living in the hotels. But FEMA will continue to pay until May 10, officials announced Monday.

As of Monday, 2,694 fire survivors are living in 11 hotels. They make up 1,068 households, which is 16 fewer than a day earlier and 100 fewer than a week ago, according to the American Red Cross, which has a $500 million contract with the state to run the program.

The Legislature is in the midst of its budget process and already wrestling with how to deal with the escalating Maui fire recovery expenses that the state budget director said in February were expected to cost the state $600 million this year.

Gov. Josh Green’s office said in a statement Monday that he’s encouraged by the deadline extension, “as we have been in constant collaboration with FEMA and other federal partners in efforts to get our displaced residents into longer-term housing.”

FEMA expects to have most of the people who are eligible for its direct-lease program moved into the more stable and less expensive housing by May 10, said Bob Fenton, who leads FEMA’s Maui fire recovery efforts.

But to do so, the program will have to greatly pick up its pace.

As of Monday, more than five months after the program launched, there were 697 households that had moved into a direct lease, a little more than half of the 1,300 or so eligible households. FEMA pays for the rent, utilities, maintenance and homeowner association fees for at least a year and possibly up to two years.

That leaves hundreds more households still having to complete or even start the lengthy process, which involves matching people to properties, having people accept the match, criminal background checks, property inspections, paperwork and coordination to get the keys.

The state already is responsible for people who are not eligible for FEMA assistance, but Fenton said that group no longer includes about 150 to 200 Compacts of Free Association households who hail from Micronesia, Palau and the Marshall Islands.

Fire survivors whose insurance for emergency lodging runs out may also become eligible for a direct lease.

Many of the hotel rooms cost more than $500 per night and some property owners of condos were paid $20,000 per month, and this does not include the program costs of providing other services and three meals a day because of the lack of kitchens.

As the non-congregate shelter program winds down, Fenton said he expects survivors will be consolidated into one to two hotels to cut down on expenses.

Green said during a recent press conference that he expects all people displaced by the fires will have moved out of the hotels by July 1, when FEMA and state group housing sites in West Maui are anticipated to be ready to house survivors, including those who didn’t qualify for FEMA assistance or didn’t pass criminal background checks.

Housing on an island that had an existing affordable and long-term housing shortage has been a challenge from the start, Fenton said.

But while it took a lot of effort to secure units in the first couple months after the launch of the direct-lease program in October — including the need for the county to provide tax exemptions for owners with short-term rentals to convert them to long-term — there are enough units to accommodate everyone in the direct-lease program, Fenton and Green both said.

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