Maui County weighs phasing out vacation rentals
A Maui fire marshal ordered officials to thin the crowds inside a Maui County Planning Commission hearing Tuesday to review a proposal from Maui Mayor Richard Bissen to phase out thousands of vacation rentals.
The initial turnout inside the eighth-floor hearing room at the Kalana o Maui Building was so robust that attendees spilled into the side and back aisles and were standing outside the hearing-room doors. People also were gathered on the lawn of the county building to watch the proceedings on a screen, and at the morning peak more than 900 people had tuned into the meeting virtually on Cisco Webex.
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Some 130 testified in person; another 30 or so testified virtually. Though the meeting began promptly at 9 a.m., some 50 people were still on the list to testify at about 8 p.m. when the commission recessed the meeting until July 9. Those who did not have have a chance to testify will be able to do so at the next meeting after the testifiers who were already on the list are given their turn. The Planning Commission will not make a decision until working through all the testifiers, who by then could grow.
The crowded conditions were a sign of the importance of the hearing, which is the first test of Senate Bill 2919, which became Act 017 on May 3 and clears up issues of state preemption of vacation rental management by allowing counties to craft their own policies, which “regulate the time, place, manner, and duration in which uses of land and structures may take place.”
Those in support of the state and county legislation hope to use vacation rentals to play a larger role in solving Hawaii’s housing crisis, which was made worse by the devastating Aug. 8 Maui wildfires. However, others warn that removing vacation rentals will result in large economic trade-offs, including decreases in tourism and visitor spending, lost jobs and reductions in tax revenue.
The commission is the first official group to hear Bissen’s proposal, which would phase out 2,200 vacation rentals in West Maui apartment districts by July 1, 2025, and eventually all 7,000 units in apartment districts across Maui.
Bissen rolled it out May 2, the day before Gov. Josh Green signed Act 017 into law. He was flanked by Maui Council member Keani Rawlins-Fernandez. Also present were members of the advocacy group Lahaina Strong, who called for a ban on Maui short-term vacation rentals in the aftermath of the Maui wildfires.
The Maui County Council tried to limit short-term vacation rentals to hotel districts in 1989, but an opinion written by then-Deputy Corporation Counsel Richard Minatoya exempted units built before March 5, 1991. Bissen’s bill seeks to repeal these units, which are known as the “Minatoya list.”
Bissen told the Planning Commission on Tuesday: “Our housing crisis stems from a myriad of complex issues that have challenged our community for decades. Paired with the displacement of approximately 12,000 people and 5,400 households due to the Maui wildfires, this crisis has resulted in an estimated 4,000 residents leaving Maui.
“This is a consequence we cannot accept. The system is broken and long overdue for change,” he said.”And while this is only part of the solution, we have to continue to seek innovative ways to address our housing crisis.”
Bissen has said that he expects some legal challenges. However, his testimony Tuesday indicated he remains steadfast in his resolve to see his bill through.
“Today you will hear concerns from nonresident owners, booking platforms, property managers, mortgage lenders and Realtors — all of which stand to lose money on their investments. I would remind you that all investments involve speculation and risk,” he said. “In contrast, you will also hear from our residents, who are being priced out of their homes, struggle to make ends meet and are simply fighting to take care of their ohana. We simply cannot continue to prioritize offshore investments over the needs of our people.”
Kate L.K. Blystone, Maui County planning director, recommended that the commission support Bissen’s proposal by amending Maui County Code Chapters 19.12, 19.32, 19.37, removing transient vacation rentals as a permitted use within the A1 and A2 apartment zoning districts.
“Our job in the planning department is to protect health, safety and general welfare, and all three are deeply affected because our local residents do not have the housing that they need,” Blystone said. “Making this change to the code is one way we can help address this problem more quickly, while working through the real constraints to developing new housing created by our county’s lack of supporting infrastructure like water and wastewater.”
She added that county staff looks forward “to the opportunity to discuss this item and consider ways to address concerns that come up in testimony.”
Bissen’s proposal also needs to go before Planning Commissions on Lanai and Molokai before it heads to the Maui County Council, which must wade through the commissions’ recommendations as well as a range of statistics, public opinions and strong feelings to determine whether it becomes law.
People on both sides of the issue shed tears or displayed other heightened emotions Tuesday.
Andrew Church, who owns three properties on Maui’s Minatoya list, said he hasn’t slept since Bissen announced his plan, and was disappointed that the mayor didn’t stay to hear Tuesday’s testifiers.
“All of my retirement is in these vacation rentals. My daughter would inherit nothing if this happens,” he told the Honolulu Star-Advertiser. “We would have to leave Maui. I hope I could afford a plane ticket out of here.”
Church also expressed concern that the Minatoya list phaseout would eliminate work for the cleaning service and other vendors that he uses.
Numbers were flying throughout Tuesday’s hearing.
Paul Brewbaker, principal of TZ Economics, has estimated that Maui would lose 5,000 to 10,000 jobs conservatively by extinguishing 7,000 vacation rentals. Brewbaker said with induced effects Maui could lose up to 14,000 jobs, and other islands could lose 2,000 to 3,000 jobs.
Brewbaker, who estimated Maui also would lose some $2 billion to $3 billion in gross domestic product, questioned “how Maui workers who lose their jobs in pursuit of performative anti-tourism denialism masquerading as ‘housing policy’ pay their rent if they don’t have a job. We’re all dying to hear how workers pay for the ‘new’ housing that Maui will magically create by extinguishing their jobs and their businesses.”
Brewbaker’s position is that Maui should get out of its housing crisis by “building more housing.”
However, Matt Jachowski, a housing data consultant, provided data showing that transient vacation rentals on Maui could have a role to play in addressing Maui’s housing crisis.
Jachowski said Maui is only the third-largest county but has the most vacation rental units actively listed of any county at 10,084, which comprises 14% of its housing stock. Jachowski said that after the phaseout Maui would fall back to the third-place spot among counties for vacation rentals with 5,512 actively listed vacation rentals, comprising about 8% of the housing stock.
He argued that tourism is resilient and that there is enough vacant lodging for visitors without the Minatoya list.
Moreover, Jachowski said Maui County has the highest rental costs in the state, leaving at least 53% of families rent-burdened and 28% of families severely rent-burdened.
A full analysis from the University of Hawaii Economic Research Organization is still in the works. However, UHERO released a blog post Tuesday that said the proposal “would increase Maui’s long-term residential housing stock by 13%, representing a dramatic increase in housing supply.”
Courtney Lazo, a Lahaina Strong member whose family lost their home in the fires, said she is ready to see the Minatoya list phased out, although as a Realtor she said that in the past she had represented buyers and sellers on the list.
“After watching Matt’s presentation, I knew that the housing crisis here on Maui was bad; I just didn’t know it was that bad,” Lazo said. “People are here worried about their investment or their commission. But there are people who don’t even have a first home, let along a second, third, fourth and fifth home.”
