Bill 159 and Short Term Rentable Condos

How Bill 159 Will Affect Short-Term Condo Owners on Maui

Update May 2024: The County is now trying to ban short term rental condos in apartment districts.

With the primary objective of establishing a means to limit tourism on Maui, the Maui County Council recently passed Bill 159. The desire to limit tourism on the island comes from environmental groups seeking to reduce the impact that growing tourism is having on Maui as well as from local residents who are growingly concerned about overcrowding and an ongoing housing crisis. 

The bill was originally introduced for discussion in January 2022 and addresses the total number of legally allowed transient vacation accommodation units on the island. These accommodations include hotel rooms, short-term rentable condos, bed and breakfasts, as well as camper vans and recreational vehicles. 

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$1,100,000

Piilani Villages I

832 Mahealani St, Kihei

3 Beds 2.5 Baths 1,591 SqFt Residential MLS® # 410528

Days on Market: 31

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Coldwell Banker Island Prop-Ku Cell: 808-250-6754

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4030 Lower Kula Rd, Kula/Ulupalakua/Kanaio

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Days on Market: 32

Equity One Real Estate Inc (M) Cell: 808-283-9918

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Peahi

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Kihei

2165 Iliili Rd, Kihei

3 Beds 2 Baths 1,460 SqFt Residential MLS® # 410512

Days on Market: 32

Coldwell Banker Island Prop(S) Cell: 808-344-0180

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The Number of Transient Vacation Rentals on Maui Is Now Legally Capped

Effectively, Bill 159 caps the number of transient vacation rentals (TVRs) on Maui at the number that were existing prior to January 7th, 2022. We also call these short-term rentable units, of which approximately 16,000 currently exist on Maui. A TVR is defined as any rental of a housing unit for less than 180 days. 

While TVR use is already prohibited outside of hotel districts by Maui County Code Chapter 19.37, there exists a permitting process to operate outside of the hotel districts. The Minatoya opinion, originally adopted in 2001, established which condo associations on Maui can legally operate short-term rentals in apartment-zoned properties.

These complexes will continue to be allowed to offer transient accommodations and be legally rented as TVRs. The bill also specifically allows for existing TVRs built before the January 7th, 2022 date to renovate as long no new TVR units are added in the complex. Relating to hotel development, new construction will be allowed as long as they are built landward of what would be 3.2 feet of sea level rise expected to happen in the next 50 years. 

Clearing The Confusion For Short Term Condo Owners

The Planning and Sustainable Land Use Committee took testimony from the public and discussed Bill 159 on October 20th, 2022. During the testimony, it was obvious that the impacts on owners of short-term rentable condos were unclear to many. It’s unfortunate that the council does not use the testimony time to answer the serious questions raised by the bill and several council members seem to be arrogantly dismissive of legitimate concerns by property owners. I can see where that could consume a lot of extra time, but I think many of the testifiers wouldn’t have needed to make a statement had the council addressed their concerns earlier in the meeting. 

Several property owners on Maui and even clients of mine gave testimony during the meeting. The main concern we have is that Bill 159 could have prohibited the future use of a condo as a transient vacation rental in a previously approved short-term rentable condo complex that had not been actively used as a vacation rental prior to the January 7, 2022 date.  

Fortunately, Maui County Planning Director Michele McLean was able to address this concern specifically around the 2 hour 39 minute mark of the meeting when she said “

“The way that the bill reads now, you have the existing language that allows vacation rental use, under the “Minoytoya ordinances” the new language says the number of units allowed for TVR use may not increase beyond those allowed for such use as of January 7th, 2022…So, if you have an apartment or condo complex that has 100 units and 75 of those units are doing TVR use, we consider the other 25 units also allowed to do TVR use even if they are not exercising it. And this language says the number of units and rooms allowed may not increase, so you can’t add more units (to the complex), but the 25 units could start if they wanted to.”

Whew. That’s a relief. While I am personally in support of Maui managing its tourism industry with consideration given to the environment and the local population, the County needs to carefully consider its economic impact on the community and its property owners. Bill 159 was heavily debated between the public and the council and was heavily amended since its introduction by Vice Chair Keani Rawlins-Fernandez. 

What Does Bill 159 Mean For the Island and Investors?

I think the debate was productive and the final result is a net positive for Maui, it’s also great for short-term rentable property owners who have the reassurance of limited supply for these units in the future which will certainly help property values rise. Bill 159 could have had a bigger impact against the development of new hotel rooms, but it ultimately succeeded by enforcing a ban against the development of new TVRs while establishing slightly stricter guidelines for hotel development.

After some revision, Bill 159 also provided guidance on the allowed usage of recreational vehicles and camper vans and limited their use to designated areas such as the Haleakala National Park in Kipahulu and Olowalu Campground. 

Maui Is a Place For Balance

Maui is a place that attracts visitors from all over the world and many of our visitors end up purchasing property on the island, in the form of moving here to buy a primary residence, buying a second home, or buying TVR as an investment. What they love about the island are the same things local residents love about it.

The beauty, the beaches, and the island life. These transient vacation rentals generate significant tax income for the County to use for infrastructure improvements along with environmental protection initiatives. Balancing the economic needs of locals needing jobs provided by tourism with how we care for the land is extremely important. If you have any questions about Bill 159 or other related Maui County Planning Department questions, I would be happy to do my best to answer them or to connect you with the right person to speak with. 

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