Maui Council sends new hotel zoning for vacation rentals to planning commissions

Maui County Council members voted 8-1 Wednesday to move forward with a proposal to create new hotel zoning districts for thousands of vacation rentals, a measure designed to soften the economic blow of the county’s controversial short-term rental phase-out.

The approval of Resolution 25-230 refers a proposed bill to the Maui, Molokaʻi and Lānaʻi planning commissions. The legislation would establish H-3 and H-4 hotel districts, providing a “like-for-like” zoning category for approximately 4,500 units currently located in apartment zones. Under the recently enacted Bill 9, those units would otherwise be forced to stop operating as transient vacation rentals starting in 2029 for West Maui and 2031 for the rest of the county.

The effort to phase-out vacation rentals in residential apartment zones grew out of the Aug. 8, 2023, Lahaina wildfire disaster. More than 2,200 structures, mostly housing, were destroyed and at least 102 lives were lost. The disaster worsened Maui’s already dire housing shortage into a crisis.

A ‘clean bill,’ or amendments?

The referral to the planning commissions for their review and recommendations followed a lengthy debate over whether the bill should be sent to commissioners “clean” or with environmental conditions attached.

Council Member Tom Cook, who introduced the resolution, said he wanted the bill referral to the planning commissions to be kept “basically simple.” Sea level rise and other concerns raised by council members could be conveyed to planning commissioners in ways that would not amend the bill, he said.

Otherwise, “my concern about doing anything other than creating a new zoning category . . . makes it difficult for anybody and everybody to determine what it is and what it’s for,” he said.

Council Member Yuki Lei Sugimura agreed with Cook, noting that he served as a member of the Temporary Investigative Group that reviewed ways to implement Bill 9 and its impact on affected properties. “He’s heard more than all of us put together,” she said, although she quickly added that other council members served on the panel as well.

The 4,500 units targeted for the new hotel zoning were identified by the Temporary Investigative Group as appropriate for continued visitor use. These properties, often referred to as those on the “Minatoya List,” have operated as vacation rentals for decades under grandfathered status.

Environmental safeguards rejected

The Council’s action Wednesday followed a deadlock in late December during which members were split over amendments proposed by Council Members Tamara Paltin and Keani Rawlins-Fernandez — both leading proponents of phasing out vacation rentals in favor of long-term residential housing. Their amendments sought to prohibit shoreline armoring, mandate the removal of human-made structures like seawalls and pools as coastlines erode, and require property owners to contribute 10% of their profits to a managed retreat fund.

“Sea level rise is happening now,” Rawlins-Fernandez said, echoing comments from Paltin who predicted some shoreline properties won’t last another 10 years.

“What’s happening in Hawaiʻi is not unique,” Rawlins-Fernandez said. “Many coastal towns are experiencing the same thing and are all trying to figure out how to deal with development that was built too close to the coastline decades ago without it being considered a taking.”

However, the amendments failed to garner enough support, with majority members arguing that such environmental policies should be applied countywide rather than piecemeal.

Council Member Kauanoe Batangan agreed with sending the planning commission’s a “clean bill,” without amendments — “not because I don’t want the planning commissions to have the discussions on shoreline hardening or beach access. I think those are important conversations to have. I just don’t want to have those conversations on a zone-by-zone basis. I would rather us have a separate bill and discuss them comprehensively throughout the island.”

Legal challenges and recovery costs

The push for new hotel zoning comes as Maui County faces significant legal and financial pressure. A lawsuit was filed in 2nd Circuit Court on Dec. 19, 2025, by owners at the Kāʻanapali Royal, seeking to block Bill 9. The lawsuit alleges that the phase-out constitutes an unconstitutional “regulatory taking” of property rights.

At the same time, the county is grappling with a recovery cost estimate that has climbed to nearly $7.7 billion as of March 2025 and up from an original estimate of $5.5 billion. While Bill 9 aims to reclaim housing for residents, officials are wary of the potential loss in real property tax revenue if thousands of units lose their high-value vacation rental status.

Next steps

While the environmental amendments failed, the Council did approve technical updates to the bill, including a chart of permitted accessory uses and a correction of the legislative year to 2026.

The Maui, Molokaʻi and Lānaʻi planning commissions are expected to take up the resolution in late February at the earliest. Council Member Nohelani Uʻu-Hodgins, chair of the Housing and Land Use Committee, committed to sending the commissions a full transcript of the Council’s deliberations to ensure they are aware of the environmental concerns raised during the debate. Her committee deferred action on the bill earlier this week.

The resolution passed with Rawlins-Fernandez casting the lone dissenting vote.