New Hotel Zoning Proposed to Preserve Select Vacation Rentals Amid Maui Housing Crisis

A Maui County Council investigative group has recommended creating two new hotel zoning districts to allow certain short-term vacation rentals to continue operating in apartment-zoned areas. The proposal, intended to strike a balance between economic interests and the urgent demand for housing, has sparked strong public debate.

The Bill 9 Temporary Investigative Group (TIG), formed to examine the implications of legislation phasing out short-term vacation rentals in A-1 and A-2 apartment districts, submitted its final report to the Housing and Land Use Committee on Tuesday. The group held seven meetings throughout September in response to Bill 9.

As currently drafted, Bill 9 would phase out more than 7,000 vacation rentals—previously grandfathered in under what is known as the “Minatoya List”—over the next three to five years. These units are located in apartment-zoned areas originally intended for long-term residential use. The bill passed out of the Housing and Land Use Committee on July 24 by a 6-3 vote, and its first reading is scheduled for November 12.

Recommendations Do Not Amend Bill 9

Council Member Nohelani Uʻu-Hodgins, chair of the TIG, emphasized that the group’s recommendations do not include amendments to Bill 9. Instead, the goal is to clarify zoning and land use rules and to support a smooth transition for properties affected by the potential phase-out.

The recommendations propose establishing new hotel zoning designations—H-3 and H-4 Hotel Districts—to differentiate between properties that may continue vacation rental operations and those that should revert to long-term residential use. These new hotel zones would align closely with the A-1 and A-2 Apartment Districts but would permit vacation rentals outright. Rezoning would be available to properties where ongoing vacation rental use is deemed appropriate.

Uʻu-Hodgins explained that these new zones would “eliminate any gray areas” regarding where hotel uses are allowed. She added that the objective is to ensure that properties no longer allowed to operate as vacation rentals will return to serving as long-term homes for local families. The recommendations also aim to mitigate potential losses in real property tax revenue and minimize the impact on the local hospitality sector.

Two-Phase Zoning Recommendation

The TIG proposed two actions to support the transition:

1. Legislation for New Hotel Zones: The Department of Planning would be tasked with introducing legislation to establish the H-3 and H-4 Hotel Districts. This would create a zoning path for properties that, even under Bill 9, could be considered suitable for continued vacation rental use.
2. Targeted Rezoning for Specific Properties: The Council would initiate zoning changes from apartment to hotel designations for selected properties listed in the TIG’s report (Exhibit 2). These include properties with market values beyond the reach of most local residents, those located within Sea Level Rise Exposure Areas, and properties primarily composed of timeshare units.

To accelerate the process, rezoning applications may bypass the County Council and be sent directly to planning commissions.

The TIG conducted site visits across Maui and engaged with county officials, real estate professionals, housing advocates, and finance experts in crafting its final recommendations.

Mixed Public Reactions

Public response to the proposal has been sharply divided.

Critics questioned the rationale behind preserving shoreline properties, especially amid the growing threat of sea level rise. Resident De Andre Makakoa argued that the urgent need for housing outweighs long-term environmental concerns, especially in the aftermath of the August 2023 wildfires that worsened Maui’s housing crisis.

“So to carve out thousands of units in the town where we need housing the most is a little bit concerning,” Makakoa said. “The need for housing right now outweighs the fear of shoreline rise, which is kind of decades down the road.”

Others emphasized the connection between housing policy and recent disasters. “Lahaina needs to stay Lahaina… We’re losing our people,” said Junya Nakoa.

On the other hand, property owners and managers praised the TIG’s approach and supported the idea of distinguishing between properties.

David Diven, a Napili Ridge owner, supported retaining hotel uses for properties that function as such, while converting true apartments to long-term housing. Steve Meyer, of Maui Sunset, noted that his property accommodates traveling nurses and construction workers in need of midterm stays, advocating for continued flexibility in zoning.

Economic Concerns and Owner Testimonies

The TIG report acknowledged potential economic repercussions, including reduced tourism, job losses in the hospitality industry, and a decrease in property tax revenue—especially if affected units shift to owner-occupied status.

Several owners submitted testimony describing the financial burdens they face and expressing concern over the fallout of the proposed vacation rental ban.

Brian Whittman, a condo owner, warned that the bill could force owners to sell at lower prices, driving further displacement of local families. “If current owners end up selling their places cheap because you folks pass Bill 9, and they can’t do their short-term rentals anymore, I guarantee the new buyers are not going to be local families,” he said.

Marilyn Steinmetz echoed those concerns, stating, “I’m just worried that Maui County is going to go bankrupt or put a burden on the residential people to make up for the loss. These people paid a lot of money for their units. And I don’t believe that this is helping anyone.”

As an alternative, Ruel Metcalf proposed using the estimated $7 million in monthly tax revenue from current vacation rentals to purchase ten homes per month for local families, which the county could offer as affordable rentals.

Next Steps

The Housing and Land Use Committee deferred decision-making on the TIG’s recommendations. Under Hawaiʻi’s Sunshine Law, council members were only permitted to receive the report and public testimony during the meeting. A minimum six-business-day waiting period is required before deliberation can begin. Further discussion will be scheduled at a future, publicly noticed meeting.

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