Mayor Bissen’s Proposal and Economic Consequences for Maui Vacation Property Rentals

Mayor Bissen’s Proposal for Maui Vacation Property Rentals

Maui’s Mayor Richard Bissen has proposed a significant reduction in Maui vacation Property rentals, a move that has generated considerable resentment among Maui visitors and the local community.

The Travel Technology Association, in collaboration with economic consultants Kloninger & Sims, presented findings indicating that short-term rentals (STRs) generated $2.2 billion in direct spending by guests on Maui in 2023 alone.

The report warns of substantial economic repercussions if Mayor Bissen’s plan to phase out approximately 7,000 STRs is implemented, predicting significant losses in both annual tax revenue and substantial job cuts across the sector.

Mayor Bissen has challenged the credibility of the study, emphasizing that it was commissioned by an organization with direct interests in the survival of the STR industry. In response, he has endorsed a forthcoming study by the Hawaii Economic Research Organization (UHERO) to provide a more balanced and favorable economic analysis.

Feedback from residents and visitors, gathered from comments on previous articles, paints a complex picture, with many expressing deep concerns about the potential for job losses and a decrease in visitor spending. Critics argue that this change is extremely optimistic and ignores the special attraction and practicality that vacation rentals provide to the many types of visitors to Maui.

Study Findings

A recent study conducted by the Travel Technology Association in collaboration with Hawaii economic consultant Kloninger & Sims reveals significant potential financial consequences for Maui County if all short-term rentals are discontinued.

The study projects that the county could face a loss of up to $91.8 million in annual tax revenue, contributing to a total tax loss of $280.9 million. Short-term rentals contribute significantly to the state of Hawaii’s economy in 2023, $2.2 billion and $11.3 billion, respectively, were recorded for Maui and Hawaii.

Phasing out short-term rental units, particularly those on the Minatoya list, could result in severe annual economic and fiscal losses for Maui County. These losses include an estimated $53.3 to $91.8 million in real property, transient accommodations, and general excise tax revenues.

Additionally, the county could see a reduction of $1.3 billion in economic output and the loss of approximately 23,000 jobs. On a broader scale, if all short-term rental units throughout the state are phased out, Hawaii could face annual tax losses ranging from $803.3 to $955.9 million.

Alternative Solutions

To address the economic and housing challenges associated with short-term rentals, several alternative solutions have been suggested. These include tighter regulation of STRs, incentives for owners to voluntarily convert their properties into long-term rentals, and stricter enforcement of compliance with existing laws to ensure responsible operation and fair tax revenues.

The Travel Technology Association has urged Maui County to consider using grandfathered apartment units for residential housing, a concept known as the “Minatoya List” of properties. The association’s study suggests that utilizing these units could help address Maui’s housing shortage.

The association’s study found that short-term rentals, which generated $4 billion in economic activity in 2023, were a significant contributor to Maui’s economy. However, reducing the number of short-term rentals could limit accommodation options, decrease visitors, and result in job losses across various sectors of the economy.

The group is hoping that leaders in Maui and Hawaii would look into different ways to strike a balance between the demand for housing and the financial advantages of short-term rentals. They expect a more balanced economic analysis before the County Council takes up the measure, stating that the economic impact from phasing out the Minatoya STRs will likely be significantly less than reported by the study.

Proposed Bill and Economic Forecast

A travel industry group-funded study has forecasted tax revenue and economic losses for Maui County if Mayor Richard Bissen’s proposed bill to phase out 7,000 vacation rentals in apartment-zoned districts is enacted.

The study, funded by a group representing “travel technology innovators,” including short-term rental platforms, was commissioned by the Travel Technology Association, which has a clear financial interest in a robust STR industry and no compelling interest in housing Maui’s residents.

The bill referred by the mayor to Maui County planning commissions would switch to long-term housing for residents as of July 1, 2025, for West Maui, and January 1, 2026, for the rest of Maui County. The conversion of short-term rentals to residential apartment dwellings would cost Maui County between $53.3 million to $91.8 million annually in real property, transient accommodations, and general excise taxes.

The study also projects $1.3 billion in annual economic output and 7,800 jobs could be lost. If other counties in Hawaii were to follow Maui County’s lead, the phase-out of short-term rentals statewide could lead to losses of $554 million in annual tax revenue statewide.

Additional Considerations

The recent study on vacation rentals in Maui, which claimed lost tax revenue, did not fully consider the impact on residents’ tax revenue and the ownership of vacation rentals by Maui residents versus off-island corporate owners. Vacation rentals are a major factor in the lack of affordable housing, and profiting from necessities is seen as immoral by some critics.

The study also highlights the importance of addressing climate change and promoting sustainable practices. It underscores the need for a more balanced approach to economic development, focusing on factors such as college rankings, financial aid, and job opportunities. The study encourages readers to share their thoughts on this topic and contribute to the conversation on Maui’s economic landscape.