Maui committee weighs phasing out transient vacation rentals in apartment districts to free housing stock

The Maui County Housing and Land Use Committee on July 23 considered an administration proposal to amend chapters 19.12, 19.32 and 19.37 of the Maui County Code to remove short-term vacation rental rights from properties in apartment districts and phase out those uses over a set period. Chair Tasha Kamala opened the recessed meeting and said the committee would accept written testimony as it continued deliberations.

Supporters of the proposal, including county planning and housing officials, said the change aims to increase housing available to residents by converting units now used as short-term rentals into owner-occupied or long-term rental housing. Richard Mitchell, director of the Department of Housing, told the committee, “If the bill passes, we will look at all of those programs and find ways to make them available to the community if they choose to either buy or choose to rent, or acquire the properties.”

Why this matters: Committee members and outside lenders warned the phase-out would have complex, real-world consequences. Lenders described how pending litigation, condo questionnaires and special assessments can make mortgage underwriting difficult or impossible for buyers; housing officials described constrained county program funds; and the finance director warned of a potential near-term revenue decrease tied to land-use change.

What the proposal does and who it affects - The administration’s draft targets apartment-district condominiums constructed before 1989; planning staff and the mayor’s transmittal identified roughly 6,127 units on an internal list that would be affected if the change is implemented countywide. The county’s CD1 version sets a multi-year phase-out period (the administration’s working proposal centers on three years) to allow transitions, with earlier deadlines discussed for high-need neighborhoods. - Planning staff told the committee there are roughly 90 buildings on the list and that some buildings have mixed community-plan/zoning designations, which could complicate rezoning or other relief requests.

Concerns raised at the hearing - Lending and title issues: Kara Beltran, a mortgage banker, told members that “if there is litigation in a complex, there will be difficulty” for mortgages because lenders must rely on condo questionnaires and, in some cases, consult attorneys for outstanding litigation. Jeff Gilbreth, executive director of Hawaii Community Lending, said community lenders can design deferred-payment or buy-down programs to help but that the paperwork and underwriting constraints remain real. - Assessments and insurance: Realtors and condo owners described large HOA assessments and rising insurance costs that already strain many condo budgets; committee members asked how assessments would affect buyers’ ability to qualify for loans. - Tax and budget effects: Marcy Martin, director of finance, warned the committee that the change could reduce short-term-rental tax receipts in the near term but said the administration views that as part of a broader tradeoff to expand resident housing supply. - Legal and process questions: Deputy corporation counsel Kristin Tarnstrom and other counsel advised the committee on legal limits and said municipal governments that have enacted similar restrictions generally paired changes with other programs or phased approaches. The committee also discussed how existing lawful authorizations (for example, property-specific variances) might affect whether particular units are impacted.

Administration and program responses - Housing programs and funding: The committee pressed the Department of Housing for specifics on first-time homebuyer and down-payment programs. Mitchell said the department would explore ways to expand down-payment assistance, deferred loan programs and voluntary deed-restriction incentives if the bill passes. The department reported 300 people on its current first-time-homebuyer wait list and $970,000 presently available for that program; the department said typical down-payment assistance awards have been about $30,000 each and that details would be submitted in writing. - Federal recovery funds: County staff described CDBG-DR (Community Development Block Grant–Disaster Recovery) programs that include a first-time-homebuyer opportunity of up to $600,000 and a single-family homeowner reimbursement program up to $400,000 for reconstruction after the wildfires. Staff said some CDBG-DR programs are slated to launch in August and are intended to work alongside county programs.

Options discussed and next steps - Rezoning and exemptions: Planning staff explained rezoning paths for property owners who seek to remain as visitor-serving uses (for example, rezoning to hotel/resort) and said rezoning is slower and requires planning commission and council review; the council or administration may initiate rezones. Committee members asked whether some properties — for example, leasehold properties, buildings with long-standing variances, or buildings inside sea-level-rise exposure areas — should be carved out or treated differently. Counsel said clarifying those cases may be possible but recommended careful, legally defensible criteria. - Implementation and mitigation: Committee members and administration staff discussed complementary measures the council could pursue alongside a land-use change: vacancy or “empty home” taxes, targeted down-payment assistance or interest-rate buy-downs, rental-assistance programs, deed-restriction purchases, county acquisition or ground-lease models, and streamlined rezoning pathways in limited cases.

Quotes from the meeting - “If there is litigation in a complex, there will be difficulty,” said Kara Beltran, mortgage banker, describing underwriting obstacles when condo associations are in court. - “If the bill passes, we will look at all of those programs and find ways to make them available to the community,” said Richard Mitchell, director of housing. - “It works well,” said Jeff Gilbreth, executive director of Hawaii Community Lending, describing prior deferred-payment and buy-down programs used in other counties.

What the committee did: The committee took testimony and extensive questions during the reconvened hearing and did not take a final vote. Members asked administration staff to produce requested data and to circulate written responses (including first-time-homebuyer eligibility and fund amounts, lists of properties with leasehold status or variances, and sea-level exposure lists). The committee recessed for the day and scheduled reconvening to continue deliberations and consider member amendments.

Ending: The committee recessed with direction to administration staff to provide the written details members requested — including condo questionnaire/Reserve documentation guidance, program funding availability, and lists of properties with leasehold or variance status — ahead of the next session. Members said they will use that information to craft amendments and to consider targeted mitigation measures alongside any land-use change.