Maui Vacation Rental Update

The Maui Planning Commission this week succumbed to the loudest voices in the room and voted to phase out approximately 7,000 short-term vacation rental units.  The bill now goes to the full County Council for their vote on the matter.  If the council passes the bill, it will then go to the mayor, who has already stated his full support and will sign the bill into law.

Despite the bill, if passed, to take effect on July 1^st, 2025, that’s not a done deal.  Once the bill is signed into law, the lawsuits will be filed.

We all recognize that Maui, and actually everywhere across our state, has a severe housing shortage.  But the approach Maui has taken by targeting short-term rentals is poorly thought out and the consequences have not been fully considered.

By banning owners from renting on a short-term basis, lawmakers have publicly stated that their goal is to force owners to either convert to long-term rentals or sell.  With the high cost of ownership and high monthly expenses including HOA fees, most owners won’t be able to switch to long-term rentals and still be able to cover their expenses.  If they are then forced to sell - the real goal of Maui’s politicians, most of the people demanding they get first crack at the units to purchase don’t earn enough to qualify to buy them.

Then there’s this little issue regarding the 5^th Amendment to the US Constitution – specifically the “taking’s clause”.  It’s simple.  The government can’t take something from you without just compensation.  These 7,000 units have been granted the right by Maui’s government to be used for short-term rentals.  If the government takes away their rights, the owners will suffer an economic loss.  The government can do it, but then they are responsible for that economic loss.

Maui’s mayor is an attorney and retired judge.  I am sure he is aware of the legal ramifications.  If passed, this bill will end up costing Maui huge legal expenses and if they win, even more in compensation to the condo owners.

And last, there’s the economic loss that no one in government seems to be addressing.  Did the politicians on Maui forget that their number one economic engine is tourism?  If you take 7,000 units out of the tourist market, how much do you think that will impact Maui’s economy?  One of Hawaii’s foremost economists, Paul Brewbaker, knows and has been sounding the alarm.  He got so frustrated testifying this week that he let his emotions get the best of him.  I can’t blame him.  It’s insulting to get ignored when you have the facts to prove your point.  It’s even worse when the counter-point to the facts is racist calls for non-Hawaiians to go back where they came from.

I said this before, and I believe it warrants repeating.  I believe that the people of Maui are being hoodwinked in believing that the mayor and the council are really trying to help them.  I believe the political leaders know that the 7,000 units will never get converted because of the huge cost to Maui to compensate the owners.  It is just another example of political shibai by the government to make us believe they are doing something.  Sadly, they should focus on incentivizing developers to build versus trying to take from others.

 

Where have You Been?

It’s heartwarming to receive emails from readers wondering why they didn’t get my newsletter the past two weekends.  The answer is quite simple, I was traveling with my son Ascher to a baseball prospect camp at Vanderbilt University in Nashville Tennessee.

Despite being amid a heatwave the week we were there, spending time in the South was a real eye opener for this born and raised Keiki O Kai ‘Aina.  No matter where we went or what we were doing, everyone we met was as friendly as can be.  And the prices!  I even had time to go grocery shopping.  Almost everything was cheaper – except meat!  I found the prices at Kroger for beef and chicken to be what you’ll find at Safeway here.  I don’t even want to mention the real estate, as most of you would cry comparing home prices here to what you’d get there.  The silver lining of the home price difference is what so many people that have left Hawaii have found.  When they sell their home here, the equity they have built will go a long way anywhere on the mainland, setting them up for an easier tomorrow.

And lastly as a proud dad, I did want to share a couple of photos of my son at camp.  Vanderbilt is an amazing university, and the baseball program has one of the best coaches in the country, Tim Corbin.  My son is a pitcher, and Vandy is known for their pitching.  It’s where my son wants to go to school and play baseball.