Future of 4,500 Maui vacation rentals uncertain following planning commission’s ‘no’ vote

A proposal to establish new hotel zoning districts — a move that would allow roughly 4,500 short-term vacation rentals to survive a looming phase-out — faces an uncertain future after the measure was resoundingly rejected last month by the Maui Planning Commission.

On Feb. 24, the commission voted 5-1 to recommend denial of a Maui County Council resolution, introduced by Council Member Tom Cook, to establish the new H-3 and H-4 hotel zoning districts. These districts are being proposed to accommodate thousands of short-term rentals currently operating in apartment-zoned districts.

Council Member Cook’s response to the commission vote

On Thursday, Cook said he was “truly disappointed” with the commission’s vote.

“This was the first step in implementing the Council’s recommendation to allow appropriate properties to continue transient vacation rental use,” he said, noting that the Council advanced his proposal to the planning commissions by a vote of 8-1. That vote reflected “broad legislative support for a structured solution,” he said.

Cook also pointed out that Mayor Richard Bissen, who introduced the vacation rental phase-out bill, “expressed support of this proposal as an accompanying measure to the implementation of Bill 9.”

“The H3 and H4 hotel districts were drafted to specifically align with the existing A1 and A2 apartment standards,” Cook said. “This framework was recommended by the Temporary Investigative Group as a viable path for properties to continue transient vacation rental use.”

He added that the bill does not automatically rezone any property.

“It simply establishes a zoning district that is necessary for the Council to transition properties that are appropriate to continue TVR use,” Cook said.

Background on the proposed new hotel zoning

The effort to phase-out vacation rentals in residential apartment zones grew out of the Aug. 8, 2023, Lahaina wildfire disaster. It was aimed to return residential apartment-zoned housing to long-term residents and relieve Maui’s housing shortage crisis. In December, after much extensive debate, the County Council passed and Mayor Bissen signed Bill 9.

That led to a Temporary Investigative Group study of the bill’s impacts and its recommendations for implementation of Bill 9, in part to soften an expected economic blowback.

The proposed legislation, Resolution 25-230-FD1, was forwarded to the commission by the County Council in January. Based on recommendations from a Temporary Investigative Group, the measure aimed to provide a like-for-like zoning classification for approximately 4,500 grandfathered vacation rentals on the so-called Minatoya List.

That list refers to vacation rentals that have been grandfathered, or allowed to continue, even after Maui County passed an ordinance in 1989 making transient accommodations non-permitted uses in apartment-zoned districts. Most of the affected units are in South and West Maui.

Without a zoning change, these units face a phase-out under the recently enacted Bill 9, which terminates short-term rentals in apartment districts starting in 2029 for West Maui and 2031 for the rest of the county. 

Because the commission is recommending denial, the County Council will now require a two-thirds supermajority vote of six members out of nine if it chooses to disregard the recommendation and enact the new zoning districts.

Commissioners cite policy and environment

Commissioner Mark Deakos, who introduced the motion to recommend denial, said the Council and commission decided to phase-out vacation rentals after hearing many hours of public testimony.

“This commission voted. The County Council voted in favor of Bill 9, which essentially said we decided we wanted to phase those uses out of those units,” he said.

So, to look at this tied to those units and not think this is a way to undermine Bill 9… I don’t know. Maybe someone in this commission can tell me how this is not.”

Deakos argued that existing county policies do not support the creation of new hotel zones. After reviewing the Maui Island and the West Maui Community plans, he noted that the documents repeatedly emphasize capping and phasing out short-term rentals rather than accommodating them.

Deakos also pushed back against arguments that the county needs the tax revenue generated by the properties. He said transient vacation rentals have compromised public beach access and contributed to shoreline armoring, arguing that the financial benefits do not compensate for the environmental and community losses.

There have been estimates that the vacation rental phase-out might cost an estimated $60 million in revenue. However, the Bissen administration has said that amount “represents a return to prior-year budget levels and is considered manageable.”

Commissioner Crichton Lind, who seconded the motion, echoed concerns about coastal zone management and environmental impacts. Lind pointed to increased garbage issues and the threat of coastal erosion, questioning what will happen to properties located in sea-level rise exposure areas as the shoreline retreats.

Dissenting views and technical details

Commissioner Brian Ward cast the only dissenting vote against the motion for denial. Ward argued that the H-3 and H-4 zones would establish clear, restricted parameters tailored for short-term rentals. He cautioned that without the new categories, property owners might apply for existing, broader hotel zoning, which permits heavier commercial uses such as restaurants and retail stores.

During the meeting, county planning staff clarified that the resolution would only establish the two new zoning districts. Applying the designations to specific parcels would require a separate, subsequent hearing process.

In public testimony, residents and property owners were divided on whether to create a pathway for vacation rental properties to continue operating under the proposed new hotel zoning districts.

Supporters of the new zoning argued that it provides a predictable pathway that aligns land use policy with actual practice. Establishing defined classifications is a meaningful step toward providing operators, property owners, and the community with the clarity needed to plan and operate with confidence, supporters said. They added that the new framework upholds the long-standing legal use of properties on the Minatoya list.

Several property representatives submitted testimony requesting their specific condominiums be included in the new hotel districts, frequently citing environmental and financial factors.

Meanwhile, opponents of the new hotel zoning districts argued that the new classifications would undo progress made by Bill 9 to return units to the local housing market. One testifier maintained that creating H-3 and H-4 districts would amount to a “carve-out” that would legitimize hotel uses in residential apartment districts.

Planning Department recommendations

The Department of Planning recommended approval of the proposed bill because “it simply creates a new zoning district, which in the future may allow specific existing apartment district properties that had been legally operating a TVR use, and have been affected by Ordinance 5909/Bill 9, CD1, FD1, to continue that use.”

The department noted that specific apartment district properties were not before the Planning Commission, but those would be evaluated on a case-by-case basis through a request for a change in zoning and/or a community plan amendment.

The department also requested “one minor modification” regarding the list of permitted uses in hotel districts.

That proposed modification would create two sets of “permitted uses.” One set would be for existing H-1, H-M and H-2 hotel districts; and a new subsection would identify permitted uses in the proposed H-3 and H-4 districts. This would allow short-term rentals currently operating legally in apartment districts to continue to do so with current permitted uses.

Next steps

The bill to create new hotel zoning for short-term rentals also needs to be heard by the Molokaʻi Planning Commission on March 11 and the Lānaʻi Planning Commission on March 18.