The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council’s Housing and Land Use Committee on June 9, 2025.
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June 9, 2025, 10 a.m.
Council Chamber, Kalana O Maui Building
To: Maui County Council’s Housing and Land Use Committee
Tasha Kama, Chair
Nohelani U‘u-Hodgins, Vice Chair
From: Grassroot Institute of Hawaii
Joe Kent, Executive Vice President
RE: Bill 9 (2025) — RELATING TO TRANSIENT VACATION RENTALS IN APARTMENT DISTRICTS
Aloha Chair Kama, Vice Chair U‘u-Hodgins and other members of the Committee,
The Grassroot Institute of Hawaii opposes Bill 9 (2025), which would phase out short-term rental units as a permitted use in apartment zoning districts. This bill would affect 6,127 units on the “Minatoya list,” a 1989 legal document later codified as a county ordinance that allowed certain STRs to operate.
Grassroot is concerned that phasing out these short-term rentals would cause job losses for Maui residents, impede entrepreneurship, reduce county tax revenues and result in expensive litigation against the county.
In addition, Grassroot believes there are other ways the county can increase the supply of affordable housing.
For these reasons, Grassroot urges the committee to defer Bill 9 (2025) indefinitely.
>> Job losses and economic damage
Removing approximately 25% of Maui’s visitor accommodations could have a profound effect on the thousands of Maui residents who provide cleaning and maintenance services to STRs, operate rental car agencies and run restaurants, gift shops and tour services that depend on visitor spending to stay afloat.
The Economic Research Organization at the University of Hawaii has estimated that phasing out all 6,127 units on the Minatoya list would reduce visitor arrivals by 32%, resulting in visitor spending falling by $900 million.[1]
This would reduce Maui County gross domestic product by 4% and cause the loss of 1,900 jobs — 3% of Maui’s total employment.
A 2024 study by economic consulting firm Kloninger & Sims likewise found that short-term rentals provide a significant number of jobs and contribute to the tax base of Maui County and the state.[2] Its report found that a phaseout could result in 7,800 lost jobs and $1.3 billion in lost economic output.
>> Lower business creation and entrepreneurship
STRs spread visitor traffic across the island rather than concentrating it in resort zones. This helps prevent overuse of a few visitor hotspots and encourages tourists to patronize businesses in less-touristy parts of Maui.
Spreading tourism opportunities across neighborhoods and communities benefits small cleaning businesses, handyworkers, tradespeople and independent property managers. Money stays in the community with housekeepers, landscapers and other business operations, rather than going to mainland hotel owners.
Phasing out more than 6,000 units would clearly reduce the ability for small Maui businesses to participate in the county’s top economic engine.
>> Reduced county tax revenues and higher taxes for Maui residents
The UHERO study mentioned previously found that the county would lose up to $60 million annually by 2029 because of lower property values and because former STRs would be converted to other tax classes that carry a lower tax rate, such as owner-occupied and long-term rental.[3]
For context, $60 million represents more than 10% of Maui’s property tax revenue for fiscal year 2025.[4]
To replace this revenue, the county would no doubt feel the need to increase property tax rates on other classes. This could mean that businesses, farms and homeowners all pay a little more in taxes as a result of the phaseout.
Furthermore, UHERO noted that the county would see lower general excise and transient accommodation tax collections as visitor spending shrinks. GET revenues would fall by 10% and TAT revenues by 8%, resulting in $15 million less in county revenues.[5]
>> Expensive litigation against the county
Act 17 (2024) removed the state law that prohibited counties from phasing out STRs, but it should not be regarded as the end of the potential legal hurdles for Maui’s phaseout proposal.
Hawaii’s courts have specifically noted that preexisting uses are vested rights protected by the due process provisions in both the Hawaii and U.S. constitutions, and thus cannot be abrogated by later zoning ordinances.[6]
In addition, the U.S. Supreme Court has indicated its willingness to uphold property rights against government regulations. In Tyler v. Hennepin County[7] and Timbs v. Indiana,[8] the Court sided with property owners on Fifth Amendment and Eighth Amendment grounds, respectively.
This is not a simple issue, and any court battle likely would be both lengthy and costly for the county. If the goal is to address concerns about the lack of affordable housing in Maui, there are more effective ways to approach the problem that would not embroil the county in complex, lengthy and likely very expensive litigation.
>> There are better ways to increase the housing supply
The easiest and most efficient way to address Maui County’s need for more housing would be to remove the many land-use, building and other regulations that have hindered homebuilding. Several bills now before Council — including Bill 103 (2024) and Bill 104 (2024) — would expand housing options for Maui residents and result in the construction of smaller, more affordable units.
Grassroot believes these strategies would be better for Maui residents than a phaseout that would certainly result in the loss of thousands of jobs, harm entrepreneurship and cost county taxpayers dearly.
Thank you for the opportunity to testify.
Joe Kent
Executive Vice President
Grassroot Institute of Hawaii
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[1] Carl Bonham, Steven Bond-Smith, Peter Fuleky, et al., “An Economic Analysis of the Proposal to Phase Out Transient Vacation Rentals in Maui County Apartment Districts,” March 31, 2025, p. 1.
[2] “State of Hawai‘i and Maui Economic and Fiscal Impacts of the Short-Term Rental Industry,” prepared by Kloninger & Sims Consulting LLC for the Travel Technology Association, June 12, 2024, pp. 5-6.
[3] “An Economic Analysis of the Proposal to Phase Out Transient Vacation Rentals in Maui County Apartment Districts,” p. 1.
[4] “COUNTY of MAUI REAL PROPERTY TAX VALUATION for FISCAL YEAR 2024 – 2025,” Technical Branch, Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu, August 2024.
[5] “An Economic Analysis of the Proposal to Phase Out Transient Vacation Rentals in Maui County Apartment Districts,” p. 1.
[6] Waikiki Marketplace v. Zon. Bd. of Appeals, 86 Haw. 343 (Haw. Ct. App. 1997), Nov. 25, 1997.
[7] “Tyler v. Hennepin County, Minnesota, et al.” Supreme Court of the United States, May 25, 2023.
[8] “Timbs v. Indiana,” Supreme Court of the United States, Feb. 20, 2019.
