Hawaii lawmakers target vacation rentals after wildfires exacerbate housing crisis

Amy Chadwick, a single mother of two, scrimped for years to buy a home in the town of Lahaina on the Hawaiian island of Maui. But after a devastating fire leveled Lahaina in August, turning Chadwick’s home to white dust, the cheapest rent she could find for her family and dog was $10,000 a month.

Chadwick, a waitress at a fine dining restaurant, moved to Florida where she could save money on her homeowner’s insurance. She worries that Maui’s exorbitant rental prices—due in part to vacation rentals taking up a limited housing supply—will hollow out her tight-knit town.

She said most people in Lahaina work in hotels, restaurants and tourism companies and cannot afford the $5,000 to $10,000 a month in rent.

“You’re driving away an entire community of hospitality workers,” Chadwick said by phone from her new home in Satellite Beach, Florida. “So no one can support tourism that you’re prioritizing over community.” coastal. “Unless they take a serious stance, stand firm and actually regulate these short-term rentals, nothing good will come of it.”

The Aug. 8 wildfire killed 101 people and destroyed the homes of 6,200 families, exacerbating Maui’s already severe 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 legislation that would give counties the power to phase out short-term rentals.

Gov. Josh Green is so frustrated that he blurted out profanities during a recent press conference.

“This fire shines a light on the fact that we have too many short-term rentals on our continent, owned by too many individuals, and that’s bad,” Green said. “Our people deserve to have homes here.”

Vacation rentals are a more popular option than hotels for those looking for a kitchen, lower costs and the opportunity to experience island daily life. Supporters say they boost tourism, the state’s largest employer. Critics accuse them of driving up housing costs, upending communities and prompting locals and Native Hawaiians to leave Hawaii for less expensive states.

This immigration has become a major problem in Lahaina. The nonprofit Native Hawaiian Advancement Council estimates that at least 1,500 families, or a quarter of those who have lost their homes, have left since the August wildfires.

The fire destroyed single-family homes and apartments in and around downtown, the core of Lahaina housing. An analysis by the University of Hawaii Economic Research Organization found that the share of vacation rental apartments was relatively low at 7.5% as of February 2023.

Lahaina communities not affected by the fire have a much higher share of vacation rentals: In Napili, about 11 kilometers north of the fire zone, about half of the homes are short-term rentals.

When Chadwick first went house hunting in 2016, she thought she’d found a place to buy in Napili. But a Canadian woman got it with a cash offer and turned it into a vacation rental.

Outside the burn zone are dozens of short-term rental apartment buildings built decades ago on apartment sites.

In 1992, Maui County explicitly allowed owners of these buildings to rent out their units for no more than 180 days at a time, even without a short-term rental permit. Activists have occupied the beach in front of Lahaina’s largest hotel since November, urging the mayor or governor to use emergency powers to revoke the exemption.

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

State Rep. Luke Evslin, the housing committee chairman, said Maui and Kauai have suffered a net loss of homes in recent years due to little new construction and a large number of homes converted to short-term rentals.

“When we do go backwards on our goal of providing more housing in Hawaii, that should sound alarm bells,” he said.

In his own area of ​​Kauai, Eveslin has seen people leave, become homeless or work three jobs to make ends meet.

The Democrat is one of 47 House members co-sponsoring 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’s attempt to ban rentals of less than 90 days violated state law. Eveslin said the decision leaves Hawaii counties with limited means to control vacation rentals, such as property taxes.

Lawmakers are also considering trying to increase Hawaii’s housing supply by forcing counties to allow more homes to be built on individual lots. But they downplayed the measure after local officials said they had been exploring the idea.

Short-term rental owners say the phase-out would violate their property rights and take their property away without compensation, potentially leading to foreclosure. Some predict legal challenges.

Alicia Humiston, president of the Landlord Rental Awareness Association, said some areas in West Maui are designed for travelers and therefore lack schools and other infrastructure needed for families.

“This area in west Maui is kind of like this resort condo area — north of Lahaina — it was never built for locals to live,” Humiston said.

Just because a community allowed vacation rentals decades ago doesn’t mean they still need to do so, according to a housing advocate.

“We’re not living in the 1990s or the 1970s,” said Sterling Higa, executive director of Hawaii Housing for the Future. Counties “shall have the authority to review existing laws and reform them as necessary to achieve the public interest.”

Courtney Lazo, a real estate agent at Lahaina Strong, which occupies Kaanapali Beach, said tourists can now stay in her hometown, but many locals can’t.

“How do you expect a community to recover and heal and move forward when the people who created Lahaina, Lahaina, are no longer here?” she said at a recent news conference, her voice shaking. “They’re moving out.”