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New version of hotel moratorium gets green light from committee

However, proposal to phase out short-term rental homes deferred

The Menehune Shores Condominium vacation rentals resort is shown last week in Kihei. After an earlier proposal to place a moratorium on building permits for visitor accommodations in South and West Maui was vetoed in July, the Maui County Council is considering a new proposed moratorium that would extend islandwide. The Maui News / MATTHEW THAYER photo

After more than 50 people testified Wednesday on the hot-button topic of visitor accommodations, a council committee gave the nod to a measure that would place an islandwide moratorium on building permits for new hotels and other visitor units.

The council Planning and Sustainable Land Use Committee voted 5-2, with Council Members Yuki Lei Sugimura and Tasha Kama dissenting and Alice Lee and Kelly King excused, to recommend approval for a proposal that would maintain the number of current transient accommodation units until the council implements recommendations by a Tourism Management Temporary Investigative Group, or in two years, whichever is sooner.

Introduced by Council Vice Chairwoman Keani Rawlins-Fernandez in June, the proposal would place a moratorium on new transient accommodations — including hotels, timeshares, short-term rental homes and transient vacation rental units — across the island of Maui. A Planning Department version of the bill was recently approved by the Maui Planning Commission. The proposed moratorium now heads to full council.

Council members passed a proposed moratorium on building permits for visitor lodging in South and West Maui in July, but it was vetoed by the mayor, and the council later decided not to override the veto over legal concerns with the bill.

The majority of testifiers Wednesday, though, showed up to debate separate measures that would phase out vacation rentals in the county’s apartment zoning districts. Those proposals were eventually deferred and will be resubmitted at a future meeting, according to committee Chairwoman Tamara Paltin.

Many of the testifiers said they are owners of short-term rentals or are affiliated with the industry. Opponents to the measures said that phasing out the units would have legal and financial repercussions, along with unintended consequences.

Jen Russo, Maui Vacation Rental Association executive director, said vacation rentals are the largest contributor to the county’s Affordable Housing Fund in fiscal year 2022, with $8.5 million generated. Since 2018, they have contributed $18.9 million toward the fund, which represents more than hotels, owner-occupied properties and other businesses, she said.

“By eliminating units from this tax classification, we are gutting our county revenue source,” Russo said. “Vacation rentals represent 37 percent of our county real property tax revenue and as such are a huge part of our local economy. And they support a network of small businesses that keep their dollars spent in our local economy.”

South Maui state Rep. Tina Wildberger said she supports the hotel moratorium but asks that the council “proceed with caution” on phasing out short-term rentals in apartment districts due to unintended economic impacts.

Robin Knox, Kihei resident, testified in support of the phaseout, saying that the unfettered tourism industry dries up vital Maui resources that are already in limited supply.

“Money cannot replace the loss of water,” she said.

Cheryl Hendrickson, another Maui resident supporting the phaseout plan, said many people opposed to it are disconnected from Hawaii’s culture and community, and that housing is needed for residents.

“They don’t even know how to pronounce our words,” she said.

Currently, there are about 24,425 visitor accommodation units in the county, according to officials. In comparison, there are 27,000 homeowner exemptions, according to the county’s Real Property Tax Department.

Of the visitor accommodations approximately 8,336 are hotel rooms; 13,029 are apartments or condos (including 7,300 in apartment districts and 3,000 of those that are mauka of the sea level rise exposure area); 2,475 are timeshare units; 165 are bed-and-breakfasts; and 420 are other types of transient vacation rentals.

The measure to phase out short-term rentals in the apartment districts would focus on the apartment districts — specifically the 3,000 that are mauka of the sea level rise exposure area, according to Paltin.

“Many of these units used to be housing for everybody prior to 2014” when the county allowed short-term rental operations in the districts without a permit, she said.

Paltin said the focus of the meeting isn’t to attack the visitor industry.

“The theme for today’s meeting is centered around Maui’s General Plan objective: Maintaining a sustainable balance between resident, part-time resident and visitor populations,” she said.

* Kehaulani Cerizo can be reached at kcerizo@mauinews.com.

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