This proposed ban is one of the most significant Hawaii regulatory changes we’ve witnessed. It touches on a myriad of potent issues, legal, economic, and social. The changes afoot will in part define the future of Hawaii tourism and more.
This proposed ban is one of the most significant Hawaii regulatory changes we’ve witnessed. It touches on a myriad of potent issues, legal, economic, and social. The changes afoot will in part define the future of Hawaii tourism and more.
This will end very badly.
How will the units be made affordable? The only answer is by crashing the entire market or government subsidy. But how can they subsidize when they are eliminating a huge % of their tax base?
There is ample case law applicable to newly prohibited land uses, and the standard is a phasing out period, not an instant prohibition. Consequently STRs will be permitted for years even if outlawed.
It may be feasible to outlaw STR over an extended period, but that period will be too long as a short term remedy to housing supply.
It appears everyone understands this except for the promoters. Too bad, because this initiative will extend the misery of the Lahaina victims.
I live on the West side of Maui in an apartment. Joe was my neighbor before he was priced out and moved to Oahu. I work at a condo resort and here is what I do not understand about the plan. An average one bedroom condo listed for our resort is $900,000. A mortgage at 20% down, $180,000.00, and 6.8% interest on 30 year fixed would be about $4,693.00. Then there is Maintenance Fees of maybe $2,280.00, which does not cover electric. I am unsure which of my neighbors can afford about $7,500.00 a month payment on a one bedroom?
Hi Heather!!
Aloha Joe!
Heather, in Kahului there are some nice clean condos for sale for two bedroom at $450,000. It is not like that everywhere on Maui
Tom, I think you are missing the point.
Now additionally assume that the land the condo is on is a leasehold property. Ours is. We pay roughly $2000 per month to a local family for their ownership of the land upon which our unit sits. Adopting Heather’s math means that leasehold properties could cost close to $10,000 per month. Many condos in Hawaii are leasehold. Several properties on the Minatoya list are leaseholds. These properties are certainly not even close to meeting the term “affordable housing”.
I believe that this is going to blow up in the Mayor’s Face, as well as Maui’s balance sheet before all of this becomes settled law. My fervent hope is that the lawsuits include the venerable Governor Green. Regardless of what he thinks he has avoided by authorizing “others” to choose how to proceed, he’s the catalyst of it all. Possibly this will be the wakeup call that the Voters need to elect trustworthy, honest, people across every office large and small. They have all perpetuatd the Lies of Affordable Housing.
I believe the “catalyst for this thing” is Lahaina Strong. They are the ones looking to remove STR so that they can have housing.
At first I was supportive, but when many of them wouldn’t take Free Government Housing in Kihei because it was too far, they kind of lost me.
Yes, I agree. At first, I contributed, but then quickly realized they weren’t satisfied with tens of millions of dollars pouring in; they want a land/property grab. In the words of their spokesman, “we’re going to take it all back, neighborhood by neighborhood.” But as a previous commenter said, you have to be financially literate to see how their plan will fail.
Again, I don’t really understand what is new about this State law promulgating authority to restrict STVRs to the Counties. The BI already regulates them, and from this article it sounds like Maui does too. So, how does this law change anything?
My understanding is the BI actually enforces their STR regulations whereas Maui has been kind of lax on enforcing their STR regulations. I also understand a larger number of residents on the BI are not necessarily in favor of eliminating STRs. I dont know if Maui is doing anything to build affordable housing. Where we stay in Waikoloa Village, they have been building affordable housing, although I am certain more is needed.
No they don’t really. I live here and I am all for STVR’s. Enforcement happens if there is a neighbor complaint or if the STVR is an easy target.
Kim F:
I thought the same about Kauai. Our STR manager explained to me that the county has (or had?) to submit it’s land use/zoning plans to the state for approval every decade or two. For example, Kauai has 5 (I think) so called Visitor Designation Areas (VDAs) that Kauai last vetted with the stated back in the mid-2000s. STR permits from that point forward were only allowed within these VDAs. An exception-compromise (primarily to avoid the litigation expenses and uncertainty) was to “grandfather” existing STRs located outside of the VDAs. This new law apparently gives Kauai more leeway to reduce STRs both inside and outside existing VDAs without seeking new approval from the state. Something like that.
Seeing our family’s favorite condo on the chopping block. As a family of 5, hotels don’t want us unless we book an over-priced suite.
Maui won’t miss us; but, we don’t vacation anywhere unless we can cook some or all of our meals.
The Op Ed stated: “Temporary vacation rentals are the largest single revenue source in the Maui County budget. For fiscal 2024, the TVR property class accounted for $212.5 million of all county income, or 39.9%.”
How do Maui officials propose to make up the lost revenue and/or pay for legal court challenges?
The Op Ed hit the nail on the head…IF the courts uphold this plan, politicos take a W and if the courts decline this plan, politicos take a smaller W and say “They tried.”
Aloha, I recently purchased a STVR on the Big Island. I didn’t know about this ongoing controversy at the time of purchase. We have loved the islands since 1987 and have been coming back almost every year since then. The complex where I purchased was the first place we stayed in Hawaii! I thought purchasing the unit would be a good thing for the local economy and I wanted to have an affordable STVR so that others may come and enjoy the aloha in Hawaii without paying exorbitant hotel prices. Just knowing I have a very small part of this beautiful place makes my wife and I happy. We know we can come back and stay in our own little piece of paradise. Thank you Beat of Hawaii for your ongoing communications regarding this important subject!
Depending where it is, you may be fine. If it is on a rural place, you could run into issues. I live here on BI, I know
Youtube.com/watch?v=6TnpGtq-iE8
Many other countries are solving housing problems. Chile recently had back to back disasters destroying housing. They met the challenge. A few years ago I personally saw so much public housing being built there. We traveled 1000 kilometers and saw many of these projects. We stopped at one that was just winding down. I asked why they were stopping. The answer was, “Everyone that needs a home in this area has one. When more homes are needed we will continue to build.”
Singapore has a similar solution.
The Governor’s solution I believe will create larger problems as many have stated.
The US is an embarrassment when it comes to housing its people.
There are two sides to this story. Young families with children are moving to the mainland because they can no longer afford to live on the islands They are being replaced by wealthy retirees.
Who is going to work in the restaurants, stores and other service businesses? Everyone just wants what benefits themselves.
No one wants to look at the big picture.
They mostly move away for better opportunities. They may return when the kids get older but school systems are terrible and job options are limited.
Exactly. The STR gamblers think that they are “job creators” and “helping the economy”. The only “economy” they care about is their own “economy”.
And it is not just lower income families leaving the islands, or not in-migrating. It is at all levels of the pay-scale, doctors, nurses, engineers, planners, mechanics……….everyone. There are huge shortages everywhere.
If the housing prices available are not commensurate with incomes, people out-migrate and do not in-migrate.
The funny thing is that the retirees that have moved here don’t realize how screwed they are with medical services and everything else, until after they arrive. And it is just getting worse and worse as each month and year passes…
Gee Bill, have you ever considered the fact that High State Taxes have anything at all to do with Professionals exiting Hawaii’s Paradise Lost? Possibly the Fact that necessary Supplies and Equipment might have something to do with it also? These are Real Facts via Exiting Polls taken. Chew on those Facts and see how you address them. Bill, less than 3% have identified cost of housing, or lack of it, as a consideration 🤔
Bill, the local economy I’m referring to are the realtors who sold me the condo, the property management team who take care of the condo, the HOA I pay for the grounds and buildings to be kept up, the local restaurants, bars, tour companies etc. All of these people benefit from me purchasing a STVR. As a business move, it is not the most lucrative, as I have lost money every month and the way tax law works, I can not write off the expenses against any other income.
Hi, Lee,
Of course we need housing for working people and families. The point of this article is that the government should be providing subsidized housing, since few locals can afford market value properties. What isn’t a good idea is to eliminate the STR’s that pay 40% of the county revenue. That money should be building workforce housing, but poor leadership has collected STR property tax, TAT, GET and county TAT and failed to wise it wisely.
Bissen: “these units were originally built for housing, and became short-term rentals”. This is untrue. They were built as vacation homes. Statements such as this cause the media to make incorrect statements themselves, such as:
1) BOH: “Minatoya properties have been operating as STRs for 35 years.” Incorrect – it has actually been 45 years.
2) BOH: “…. seeks to convert these short-term Maui vacation rentals back into long-term housing stock for residents” is misleading. You can’t convert something “back” into something which has never been. These units were build as vacation homes.
There were never any “apartments” in these “apartment-zoned” units. It’s the zoning that needs to be corrected.
The condo that my husband and I live in was originally built as a hotel. The msn and lady that built it also ran it. He is deceased but she tells that she would rent the rooms (condos) out, cleaned them and met the guests. Somewhere along the line they sold the condos to individuals. Our condo complex was never for long term rental, even though some rented long term and others short term.
I put a lot of blame with the county government. We know of a complex that isn’t on the ocean that was long term rentals until just a few years ago. Were they paid off to change to TVR?
I question why they cannot live within their budget. If they do away with STR who will replace the huge shortfalls?
Illegal collusion between the extremely liberal and selfish island council and hotel association to punish and again rip-off those off island owners who fund this welfare state. I mean, an 18% occupancy tax, ridiculous property taxes, and the second highest cost of living in the 50 states? All of those taxes spent on what? Our road in Poipu waited 30 years for repaving. If I sold my condo after 30 years, I would have to pay 60% taxes. Gosh, I don’t feel welcome here even though I and my guests contribute $150,000 per year benefitting the local economy.
Salient points made by Rolf regarding collusion with the hotel lobbyists. Compared with hotel room rates well over $1,000 per night, these privately owned str condos have been the key to making travel to Hawaii “somewhat” affordable, especially for groups and families. This move to appropriate privately owned condos will be met with numerous class action lawsuits which will delay any possible short term benefits for locals. It may be years before most of these properties will be available for long term (6 months plus) rental and most would agree the monthly rents will likely exceed $3,000 for just a 1 bdrm which is Not affordable for most working locals. Additionally, here on Maui, the enforcement of STR operations has been non-existent.
I agree. The local county council on Maui and the State government is corrupt and in the hotel lobby’s pocket. The taxes are punitive to the small people that own short term rentals. Many of us are residents also who depend on the small income after the exorbitant taxes Maui charges. Shame on the local government for their incompetence.
The long term ramifications of this change in usage of TVRs will not only result in costly litigation brought by property owners, but will result in a negative economic impact. Those who have occupied TVRs over the years have spent thousands of dollars on vacation in Maui. TVRs have provided affordable vacation housing for those who could not afford hotels. This regulatory change will reduce the number of visitors to Maui resulting in a loss of revenue for Maui’s tourism-based businesses, and loss of tax dollars to the county/state. Businesses who depend upon tourist dollars will shrink or close, laying off workers, increasing unemployment and forcing workers to move off-island. Not a positive way to solve the housing crisis.
Here is a potential win-win. Presumably, the County is willing/able to exist without the property tax revenue associated with the higher tax rate for STR’s. If so, why not table this entire STR ban concept (which will have untold unintended consequences for the local economy) and instead, leave STR alone but earmark the difference between the LTR and STR tax revenue for a restricted fund that will service a Bond Issue floated to building workforce housing. Instead of blowing up the economy with a “solution” that will not satisfy the need for housing, develop a program that both supports the economy, employment And creates a meaningful fiscally responsible way to meet local housing needs.
Well thought out, George…the problem is, this is being sold as the “quickest” way to solve the housing crisis. They want to house the displaced and everyone else looking for a place…Now.
Very dramatic, impassioned and impressively bold. And, of course…illogical and legally unsound. Residents are eating it up, though. Such is the way of politics.
And, may I repeat again…this bill has nothing to do with housing. It’s all about staying in bed with the hotels. Hotels want to have all of the accommodations business, and, importantly at this point, get those protesters off the beach!
George that’s an excellent course of action for our governor and mayors if the goal is to build affordable housing. It’s a terrible idea if the goal is to satiate their private equity & corporate hotel masters.
Maui has a housing supply problem. The county should upzone the wide swaths of single family and strip-mall sprawl in Kahului and Wailuku for stacked-flat, up-to-6-unit condominiums, and mixed use, and create dense walkable neighborhoods.
Good ideas asdf,
I am thinking taking out all the golf courses also to build housing would free up a lot of land.
Golf courses put tons of fertilizer, phosphorous, and other chemicals down which ruin and kill nature. I have always been confused as to why Hawaii allows golf courses. They really do want to protect and respect nature. Then they have golf courses that kills nature(scratching my head.)
Hmmm….me thinks, cause golf courses cater to the rich tourists and greedy politician.
You want salt in the wound? Hotels have convinced the county (gotta love those campaign contributions) to classify them as “conservation land” so they pay pennies for property tax
Agree. This was a bad idea. It has already led to a glut of properties on the market with resulting softening of prices. These units will be snatched up by mainlanders as second homes. It also penalizes local who own STR units. It discourages tourism which how we butter our bread. It is also likely unconstitutional since it removes an owners right to use their property with compensation. It was pushed by the antis who are basically selfish.
I hope the State of Hawaii is sued right out of existence over this unconstitutional law. Just remember, you get what you vote for. Keep voting for these corrupt, failed politicians and all you’ll get are higher taxes, higher cost of living, lost jobs, lost jobs, lost of freedoms, and tyranny.
Amen to that
Agree completely, but don’t hold your breath. These one party states are intoxicated with the spoils of a steady stream of government control, regulation and ridiculously high taxes.
Just look at California, New York and Illinois. Horrendous spending, crumbling infrastructure and fleeing residents, yet they continue to elect special interest politicians that enjoy making things worse for everyone. It’s a vicious cycle of total incompetence.
I saw the video when Greene signed the bill. Looks to me like he had a bunch of locals standing around him giving him fistbumps and hi-fives. Ultimately he cares about getting reelected so he has to listen to the local population (the visitors dont vote). If the wrong people had his ear, then the rest of the population should have said something.
Absolutely!
Left Maui after over a decade. Starting with Victorino in ’18, the place has become the most mentally retarded place I ever lived.
This won’t end well, unfortunately too many are too stupid to understand what happened.
I live in my oceanfront condo in Honokowai, year-round, but I would hate to see the short-term rentals eliminated. The value of my property would plummet, and some of the long-term renters that are now staying here are less than ideal neighbors. Multiple oversized vehicles, thefts from the laundry room, vandalism, large family gatherings at the pool, illicit pets, etc.
Can Hawaiian Government be this obtuse to the serious ramifications of this unconstitutional legislation? Yes, of course they can. At a minimum, this will be tied up in court for many years ahead.
Guessing the mayor of Maui and the Governor should have paid more attention in their civics classes. Spoiler alert: “Laws apply to them too!”.
Of course politicians on the Left keep getting away with it, treating their citizens (or subjects as they like to think of them) with contempt, and getting re-elected by a populous that thinks more government is a blessing.
Looking forward to them getting their “hats” handed to them in court.
There is some thought whereby some of these small resorts were actually built as short term rental units, not as “Apartments” for long term rental. That may be another issue that comes up in future litigation. How will people afford over $6,000+ per month rent to cover the current cost basis of present owners in many of these units?
That is the real truth. Although the plans were to have “workforce housing” in the mix back in the early 70’s, little workforce housing was actually built. The lure of profits from higher-end vacation units, surrounded by golf courses and ocean views, was just too strong for developers and builders to ignore. The government at that time, eying the large tax revenue higher-end housing would bring, issued all the permits. Hardly anything was built for workers, which has proven to be a mistake.
The affordable housing crisis has reached a tipping point all over the country. I suspect the reason is that developer pressure to build higher-end housing probably hasn’t changed much since the 70’s, causing a lower-end housing dearth.