In June, hundreds gather at a Maui County Council committee meeting to support Bill 9, which would phase out thousands of short-term rentals. (Chris McKeown, Chrismckeownphotography.com)

On Maui, tensions are running high as residents once again debate a historic bill to phase out over 6,000 transient vacation rentals, or TVRs, in an effort to reclaim long-term housing for Hawaii residents. If the bill passes, Maui County would cut the number of available vacation rentals in half.

Mayor Richard Bissen introduced Bill 9 last June in response to Maui's worsening housing crisis, intensified by the August 2023 Lahaina wildfire that destroyed over 2,200 structures and displaced more than 12,000 people. The bill has had long delays due to procedural issues, amendments and the need for economic impact studies. The measure targets over 6,000 units on the Minatoya List: transient vacation rentals in apartment-zoned areas, built before 1989 and grandfathered in under a permit exemption.

TVRs are only supposed to be operating in hotel-zoned areas. If the bill passes, the condo units will be phased out by July 1, 2030. Owners wishing to keep their vacation rentals will be allowed to apply for hotel district rezoning. More than 6,800 TVRs, located in hotel-zoned areas, would still be available as vacation rentals.

Since its inception, the bill has sharply divided fire survivors, housing advocates, owners and real estate agents. This month, over 200 people signed up to provide public testimony before the Maui County Council's Housing and Land Use Committee. The committee is hoping to wrap up listening to testimony on June 23. If the bill passes the committee, then it would go before the full council for a decision.

"We are not here to divide our community. We are here to preserve our community," said Mayor Richard Bissen during a presentation at the top of the meeting.

Maui Mayor Richard Bissen stands during a media tour on Front Street, showing recovery efforts after 2023's wildfire, Wednesday, June 26, 2024, in Lahaina, Hawaii. (Mengshin Lin/AP)

The presentation by several members of his staff addressed many concerns often voiced by the opposition and outlined in a recent economic analysis by the University of Hawaii Economic Research Organization, or UHERO. Concerns include 1,900 job losses, steep declines in property tax revenue and transient accommodation taxes, high costs of units, a lack of suitability for long-term housing, and the need for more enforcement against illegal TVRs.

Bissen promised his administration was prioritizing diversifying the economy to reduce its reliance on tourism by focusing on jobs in education, agriculture, health care and technology. Steep declines in property tax revenue, which was said to add up to around $60 million dollars, could be mitigated with public policy and strategic tax incentives, which would make the transition easier for both owners and renters.

"The reason why we're even looking at condos is because the situation with our single-family homes is so out of control for our residents," said Matt Jachowski, a data scientist and assistant to the mayor who was also part of the presentation.

The median home price on Maui is $1.2 million. Jachowski said that in the late 1980s, 69% of families could afford to buy a home, compared with a mere 9% by 2023, based on Real Property Tax data.

Maui residents argue that phasing out short-term rentals will help with Maui's housing crisis. (Chris McKeown, Chrismckeownphotography.com)

Jachowski also cited that UHERO's analysis predicted that condo prices on Maui would decrease by 25% by 2027 as a result of the phaseout. However, he said that projected price tag - which involves carrying costs, mortgage, insurance, maintenance, homeowners association fees and taxes - still remained at around $4,600 a month, which some later argued was still unaffordable.

UHERO data also showed that a phaseout of these units - 85% of which are owned by individuals with an out-of-state address - could lead to a 32% drop in tourists, which Jachowski said would then put Maui in alignment with the Maui Island Plan, which aims to have one tourist for every three residents.

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The UHERO analysis also showed a $900 million decline in annual visitor spending, or 15% of the total spending.

"Economic models, as valuable as they are, do not tell the full story," Bissen said. "They cannot quantify the heartbreak of yet another local family forced to leave their homeland. They cannot calculate the loss when kupuna [elders] are separated from moopuna [grandchildren], or when cultural knowledge disappears because the next generation simply cannot afford to stay." He added that is the true cost of what they are hoping to prevent.

People depart tourist sailboats along Kaanapali Beach, a popular tourist destination, on Aug. 5, 2024, near Lahaina, Hawaii. (Mario Tama/Getty Images)

"This provides a clear and lawful path to restore neighborhood integrity, address our housing shortage, and realign land use policies with the values and intent of our community," he said.

Following the presentation, those in opposition spoke out in hours of testimony; many speakers owned several vacation rentals. Some were concerned about the loss of jobs and the projected drop in tourism.

"Whether you like it or not, this is a tourist economy," said Aaron Keller, who manages 50 vacation rental properties and also owns several. He alleged he lost 45% of business after the fires, when the administration tried to halt the tourism economy during recovery, and that negative messaging about short-term rentals has made this continue.

The Maui County Council committee is hearing testimony from over 200 people. (Chris McKeown, Chrismckeownphotography.com)

Others were concerned about long-term affordability for local residents, saying the $4,600 projection for monthly rent was not affordable and could potentially attract more wealthy outsiders to the island.

"The bill will do more harm than good," said Lynette Pendergast, who testified on behalf of the Realtors Association of Maui, which represents over 2,000 Maui real estate professionals. She said the measure would lead to costly litigation absorbed by the taxpayers and that it would not accomplish the intended goal of opening up more affordable housing units, citing the high carrying costs, such as HOA fees, maintenance, mortgage, insurance and taxes.

Pendergast also said the realtors association surveyed 614 short-term rental owners, both on- and off-island, and only 8% of them said they would convert their properties to long-term rentals, saying they would use them for their own families or sell because of high maintenance costs.

SFGATE reached out to the realtors association for more information and did not receive a response.

Like many others in opposition, however, Pendergast said the realtors association supported the building of more affordable housing.

A tourist stops to read signs at the Lahaina Strong "Fish-in" on Friday, Dec. 1, 2023, in Lahaina, Hawaii. (Ty O'Neil/AP)

According to Jachowski, construction rates are extremely slow - which is due to lengthy permitting, application and regulatory processes - and what has been built in the past decade didn't go to local residents. He explained that existing single-family homes built between 2010 and 2023 in West Maui were 51% non-resident occupied, while in South Maui, 62% were also non-resident occupied. He said this phaseout would be the best bet to accelerate available inventory.

Several also cited concerns involving water availability, referring to the recent case of Pulelehua, a 340-acre housing development 6 miles from Lahaina that was ready to start construction but cannot move forward because of lack of water. This development was supposed to have 1,000 units devoted to long-term affordable rentals for workforce housing.

Others who were in opposition spoke about how the Minatoya properties, which are mainly one- and two-bedrooms, would be too small for families. However, data Jachowski presented showed that one- and two-bedroom units see the highest demand, and 72% of Maui households consist of one to three people.

"We are tired of watching our communities get carved out for outside gain while we are left fighting for scraps, but we will continue to do so for and with the generations to come," said Shannon Ii, one of the bill's several supporters. Ii is part of the community organization Lahaina Strong, which held a news conference prior to the event.

Work continues at the Ka Lai Ola temporary housing development, which will eventually hold 450 modular residential units for up to 1,500 fire survivors, during a media tour on Aug. 2, 2024, in Lahaina, Hawaii. (Mario Tama/Getty Images)

Ii lost her family's home in the fire and is currently staying in a temporary Nano Nest home that is 500 square feet. "Ohana have moved away, with Kanaka [Native Hawaiians] living in tents on the beach, or parked in their cars, living in parking lots. We are in a housing crisis, one that existed long before the fire, and I can tell you right now, any local family would gladly live in one of those condos that sit empty most of the year when they get rented out to tourists."

Ii added, "This bill is not about anti-business; it's community. It centers aloha aina [love of the land] and the understanding that the land is not a commodity but a living relative, one that calls us to care for each other, collectively, not individually."

Editor's note: SFGATE recognizes the importance of diacritical marks in the Hawaiian language. We are unable to use them due to the limitations of our publishing platform.

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