Maui mulls its future as leaders consider restricting vacation rentals popular with tourists

HONOLULU (AP) — Alicia Humiston bought her condo in Lahaina after visiting Maui and falling in love with its rainforests, lava fields and the whales that congregate offshore. She goes there about three times a year and rents her place for short periods when she’s not in Hawaii.

“Maui was my dream place,” she said in a telephone interview from her home in Coeur d’Alene, Idaho.

But now Maui’s mayor wants to stop Humiston and thousands of other condo owners from renting their properties to tourists. Instead, he wants to rent them long-term to Maui residents to address a chronic housing shortage that reached a new crisis point after the deadly fire of last August burned down the houses of 12,000 inhabitants.

The mayor’s proposal faces multiple legislative and bureaucratic hurdles, starting Tuesday with a meeting of the Maui Planning Commission. Yet it has fueled an already heated debate over the future of one of the world’s best-known tourist destinations: Will Maui continue to welcome tourists, who fuel the local economy? Or will he curb tourism to address persistent complaints that visitors are crowding the island’s beaches and roads and making housing unaffordable?

About a third of Maui visitors use vacation rentals. They tend to cost less than hotels and are easy to book on websites like Airbnb and VRBO. Many have a kitchen so families can prepare their own food.

They also became a source of conflictsespecially after last year’s fire in Lahaina – the deadliest wildfire in the United States in more than a century. The fire ravaged the historic town, killing at least 101 people and leaving only rubble and ashes for the blocks. Thousands of displaced residents were temporarily hosted in hotels usually reserved for tourists, and most survivors still lack stable housing.

Even before the fire, the University of Hawaii say researchers So many landlords were renting to tourists – and so little new housing was being built – that Maui County has suffered a net loss of housing since 2019.

An analysis of property tax records shows that 85 percent of Maui County’s condominiums are owned by out-of-state residents, said Justin Tyndall, an assistant professor in the Economic Research Organization at the University of Texas. ‘Hawaii. Their transition would increase Maui’s residential housing stock by 13 percent, which Tyndall said would almost certainly lead to lower purchase prices and rents.

Maui Mayor Richard Bissen believes that under his proposal, these lower rents would keep residents on Maui because absentee landlords would be forced to either sell their homes or convert them to long-term rentals.

There are 7,000 condominium units in apartment areas, including 2,200 on West Maui near the Lahaina burn area, and they account for about half of the legally operated short-term rentals on Maui. If passed, the change would take effect in West Maui no later than July 1, 2025, and January 1, 2026 elsewhere.

“We understand that there is going to be some give and take. So the question is: what is more important? Bissen said at a news conference last month. “My priority is housing our local residents, especially now.”

Humiston, president of the Hawaii Rental By Owner Awareness Association, which opposes the bill, will not sell her one-bedroom oceanfront condo she bought two decades ago if the bill becomes law. She also has no plans to rent it long-term.

“It would require my ability to use my property. And I bought it for my use,” she said. “I love it there.”

Some warn that reducing the supply of lodging for visitors will ruin the tourism industry on which Maui’s economy depends, although supporters of the mayor’s bill say many vacation rentals will remain and hotels will have empty rooms for visitors to stay in.

Hawaii economist Paul Brewbaker estimates that changing the rules for the affected units, which make up a third of Maui’s tourist accommodations, would result in a 33 percent decrease in tourists and cost Maui 14,000 jobs. He called it a “slow-motion train wreck” that would lead to an “economic crash and fire.”

Maui County Chairwoman Alice Lee said that while housing for residents is a real concern, the council must also consider legal challenges from property owners and the potential impact on tax revenue.

The county collects $500 million in property taxes each year and more than 40 percent comes from short-term rentals, which are taxed at a higher rate than owner-occupied residences, she said.

“We are being sued by over 600 people regarding the fire. We have just as many lawsuits going on. Do we really want to put ourselves in a position to invite thousands more? Lee said. “I really don’t think so, because my main concern right now is paying the bills and keeping the lights on.”

The county has budgeted $300,000 to study the bill’s impact on tax revenue and businesses such as landscaping and cleaning services.

Jeremy Stice, a real estate agent born and raised on Maui, and his wife spent 12 years building a business that today manages more than 40 vacation rental properties, mostly for other owners. About half of them would be affected by the measure, said Stice, who is also president of the Maui Vacation Rental Association.

Stice isn’t sure local residents would buy — or could afford — short-term rental units, even if they became available for permanent housing.

For example, a studio in Papakea, one of the targeted condo complexes, would sell for about $600,000, he said. A 30-year fixed mortgage at current interest rates, plus homeowners association fees, would total about $5,000 a month for a small space, he said.

If locals don’t buy them and tourists don’t rent them, it’s possible that the homes will remain mostly empty and serve as second homes for wealthy absentee landlords – an even worse outcome.

To avoid that, the county should increase taxes on second homes, create incentives to promote long-term rentals and prioritize new housing construction, said Matt Jachowski, a Maui housing data consultant.

“The only way out of this housing crisis is to do everything we can to add more housing for residents,” he said.