Hawaii lawmakers are targeting vacation rentals after the Lahaina wildfire intensified Maui’s housing crisis

HONOLULU (AP) — Amy Chadwick, a single mother of two, spent years saving and saving to buy a home in the town of Lahaina on the Hawaiian island of Maui. But after a devastating fire leveled Lahaina in August and reduced Chadwick’s home to white dust, the cheapest rental she could find for her family and dogs cost $10,000 a month.

Chadwick, a gourmet waitress, moved to Florida where she could save her homeowners insurance money. She worries that Maui’s exorbitant rents, driven in part by vacation rentals with limited housing supply, will erode her close-knit city.

Most people in Lahaina work for hotels, restaurants and travel companies and can’t afford rent of between $5,000 and $10,000 a month, she said.

“You’re pushing an entire community of people out of the service sector. So no one is going to be able to support the tourism that you put in front of your community,” Chadwick said by phone from her new home in Satellite Beach on Florida’s Space Coast. “Nothing good is going to come out of it unless they take a serious stand, put their foot down and really regulate these short-term rentals.”

The August 8 wildfire killed 101 people and destroyed homes for 6,200 families, exacerbating Maui’s already acute housing shortage and exposing Lahaina’s vast vacation rental presence. It reminded lawmakers that short-term rentals are a problem across Hawaii, prompting them to consider bills that would give counties the authority to phase them out.

Gov. Josh Green became so frustrated that he blurted an expletive during a recent news conference.

“This fire has exposed a stark truth, which is that we have too many short-term rental properties owned by too many individuals on the mainland, and it’s b———t,” Green said. “And our people deserve housing here.”

Vacation rentals are a popular alternative to hotels for those looking for cuisines, lower costs and opportunities to get a taste of everyday island life. Supporters say they boost tourism, the state’s largest employer. Critics blast them for driving up housing costs, upending neighborhoods and contributing to the forces pushing locals and Native Hawaiians to leave Hawaii for cheaper states.

This migration has become a major problem in Lahaina. The Council for Native Hawaiian Advancement, a nonprofit group, estimates that at least 1,500 households — or a quarter of those who have lost their homes — have left since the August wildfire.

The fire burned single-family homes and apartments in and around downtown, the core of Lahaina’s residential community. An analysis by the University of Hawaii Economic Research Organization found that as of February 2023, a relatively low 7.5% of units there were vacation rentals.

The Lahaina neighborhoods spared by the fire have a much higher percentage of vacation rentals: About half of the homes in Napili, about 7 miles north of the fire zone, are short-term rentals.

Napili is where Chadwick thought she found a home to buy when she first went house hunting in 2016. But a Canadian woman secured it with a cash offer and turned it into a vacation home.

Also outside the fire zone are dozens of short-term apartment buildings built decades ago on land zoned for apartments.

In 1992, Maui County explicitly allowed owners of these buildings to rent units for fewer than 180 days at a time, even without short-term rental permits. Since November, activists have occupied the beach in front of Lahaina’s largest hotels to push the mayor or governor to use their emergency powers to revoke this exemption.

Money is a powerful incentive for owners to rent to travelers: A 2016 report prepared for the state found that a vacation rental in Honolulu generates 3.5 times the revenue of a long-term rental.

State Rep. Luke Evslin, chairman of the Housing Committee, said Maui and Kauai counties have suffered net housing losses in recent years thanks to a lack of new construction and the conversion of so many homes to short-term rentals.

“Every alarm bell we have should be ringing if we are literally going backwards in our goal of providing more housing in Hawaii,” he said.

In his own district of Kauai, Evslin sees people leaving, becoming homeless or working three jobs to stay afloat.

The Democrat was one of 47 members of the House of Representatives who co-sponsored a version of legislation that would allow short-term rentals to be phased out. One goal is to give counties more power after a U.S. judge ruled in 2022 that Honolulu violated state law when it tried to ban rentals for less than 90 days. Evslin said this decision gave Hawaii counties limited tools, such as property taxes, to control vacation rentals.

Lawmakers also considered increasing housing supply in Hawaii by forcing counties to build more homes on individual lots. But they watered down the measure after local officials said they were already exploring the idea.

Short-term rental owners said a phaseout would violate their property rights and take their property without compensation, potentially forcing them into foreclosure. Some predicted legal challenges.

Alicia Humiston, president of the Rentals by Owner Awareness Association, said some areas in West Maui are designed for travelers and therefore don’t need schools and other infrastructure that families need.

“This area in West Maui that’s kind of like this resort apartment area — that’s all the way north of Lahaina — was never built for local living,” Humiston said.

One housing advocate argues that just because a community allowed vacation rentals decades ago doesn’t mean it’s still necessary today.

“We are not living in the 1990s or 1970s,” said Sterling Higa, executive director of Housing Hawaii’s Future. Provinces “must have the authority to look at existing laws and reform them where necessary to meet the public interest.”

Courtney Lazo, a real estate agent who is part of Lahaina Strong, the group occupying Kaanapali Beach, said tourists can now stay in her hometown, but many locals cannot.

“How do you expect a community to recover, heal and move forward when the people who make Lahaina, Lahaina, are not even there anymore?” she said recently at a press conference, her voice shaking. “They’re leaving.”

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