Mayor Richard Bissen of Maui proposed a plan to phase out vacation rentals in order to address a severe housing shortage exacerbated by the 2023 wildfires. A report by University of Hawaii economists found that while this policy would increase housing affordability, it would also result in job losses, income reductions, and decreased tax revenues.
The report highlighted that visitor spending would decline significantly as a result of this proposal. Bissen emphasized that the economic models do not fully capture the hardships faced by residents who are struggling with housing insecurity.
The Maui County Council’s Housing and Land Use Committee is considering taking up the bill that incorporates the mayor’s proposal. There are concerns about the legal implications and costs associated with implementing such a policy. It is estimated that about one-third of visitors to Maui use vacation rentals, which have become a source of tension on the island.
The mayor’s proposal would add over 6,000 vacation rental units to Maui’s long-term housing stock, which would increase the supply by 13%. Condo prices are expected to drop significantly as a result. However, this policy would also lead to a decrease in visitor accommodations, jobs, and overall economic output.
The report suggested alternative strategies such as increasing taxes on vacation rentals, taxing empty homes, and adopting zoning and permitting reform. Auctioning off vacation rental licenses was also proposed as a way to manage the market more effectively. The study was conducted at the request of the Hawaii Community Foundation.
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