STAR ADVERTISER / 2021 Beachgoers bask in the sun in front of Wailea Resort. Properties slated for conversion include 782 units at Wailea Resort in South Maui.
1 /2 STAR ADVERTISER / 2021 Beachgoers bask in the sun in front of the Wailea Resort. Properties slated for conversion include 782 units at Wailea Resort in South Maui.
JAMM AQUINO / APRIL 23 “This bill aims to achieve the clear goal of prioritizing housing opportunities for our residents over the interests of offshore investors,” Maui County Council member Keani Rawlins-Fernandez said May 2 .
2/2 JAMM AQUINO / APRIL 23 “This bill aims to achieve the clear goal of prioritizing housing opportunities for our residents over the interests of offshore investors,” said Maui County Council Member Keani Rawlins-Fernandez at May 2.
STAR ADVERTISER / 2021 Beachgoers bask in the sun in front of Wailea Resort. Properties slated for conversion include 782 units at Wailea Resort in South Maui.
JAMM AQUINO / APRIL 23 “This bill seeks to achieve the clear goal of prioritizing housing opportunities for our residents over the interests of offshore investors,” Maui County Council member Keani Rawlins-Fernandez said May 2.
Note: First of two parts coming Monday: Despite being targeted by lawmakers, Hawaii’s short-term vacation rental supply is expanding. A luxury condo hotel, a $4 million beach house, and condominiums on a resort golf course typically are not. form worker housing in Hawaii, but they are the target of a plan on Maui aimed at converting short-term vacation rentals into long-term housing for residents.
The Maui Planning Commission on Tuesday will kick off its multi-level regulatory review of Maui Mayor Richard Bissen’s proposal to phase out the current legal short-term rental uses of approximately 7,000 units in apartment districts on Maui and Molokai, including approximately 2,200 units in West Maui.
Significant debate is expected over the highly charged proposal, which was largely motivated by the loss of about 3,500 homes in the Lahaina wildfire on Aug. 8.
Bissen has described his proposal as a move to convert the 2,200 units in West Maui into workforce housing, which he said most or all of those units were originally designed and built for.
“Our goal is to return them to their intended purpose,” he said during a May 2 presentation announcing the plan.
However, an analysis of all the units that would be converted in West Maui under Bissen’s proposal shows that most were originally condominiums developed for resort use.
Representatives of the mayor were unable to identify buildings to be renovated that had been developed as workforce housing last week.
Real estate mix West Maui properties slated for conversion include: Three condo projects at Kaanapali Beach Resort totaling 568 units, including the oceanfront 258-unit Hale Kaanapali, now known as the Aston Maui Kaanapali Villas. But it opened in 1967 as the Hilton Hale Kaanapali, just before the units were sold separately as part of a luxury condominium hotel that the developer said would become “the Kahala Hilton of Kaanapali.” – Three condo projects at Kapalua Resort – Bay Villas, Golf Villas and The Ridge – totaling 488 units that sold out as part of the resort’s initial development in the mid-1970s. – Papakea, a 364-unit beachfront condominium complex in Kaanapali that is the largest single development slated for conversion in West Maui and was originally offered for sale to first and second home buyers before being completed in 1977.
There are also about 860 units across about 20 properties in the Napili-Honokowai area between Kaanapali and Kapalua. The largest of these is the 100-unit Kuleana II, where units were offered for sale in 1972 as a resort apartment investment opportunity and came with vacation exchange privileges under a program called Club Mondiale.
Outside of West Maui, properties targeted for conversion include six 782-unit projects at Wailea Resort in South Maui, 479 units at eight projects in Maalaea, the 30-unit Kuau Plaza in Paia and a 19-unit property in Hana called Hana Kai-Maui.
There are also two projects on Molokai: the 120-unit Ke Nani Kai condominium that was completed in 1983 as part of the Kaluakoi Resort, and the 126-unit Wavecrest condominium that was developed in 1975 and initially sold primarily to residents of Hawaii who wanted to get away from it all. Molokai.
Most of the properties on the conversion list are in Kihei, where about 3,000 units are spread across about 50 properties.
Kihei’s properties include several single-family homes, including the beachfront Indo Lotus Beach House, built in 1970 and valued for property tax purposes at $4.2 million.
The largest property on the entire conversion list is also in Kihei: the 440-unit Kamaole Sands was built in 1983 as a resort condo that was described at the time as the largest property in Hawaii with fully equipped kitchens, extensive guest activities and daily maid service. employ.
Many of these same projects have been described by proponents of the conversion plan as apartment homes bought up by outside investors who have displaced local families by renting the units to vacationers.
Ricky Cassiday, a researcher and consultant on the local housing market, said many of the properties slated for conversion were produced to take advantage of the booming tourism 50 or 60 years ago, with less financial risk than traditional hotel development, because condo units could be sold to individuals for resort use. buyers before construction.
At the time, condo-hotel projects were allowed under Maui’s condominium zoning ordinance.
Changing ordinances Under Bissen’s proposed legislation, the Maui County Code did not clearly define the use of short-term vacation rentals until an ordinance was created in 1980 that defined the term as rentals for less than 30 days in multi-unit buildings. Even then, temporary vacation rentals could still be built in apartment and hotel districts.
Maui County enacted another ordinance in 1989 to no longer allow vacation rentals in areas with condominium zoning, but recognized that this change would not apply to properties that had received development approvals before 1989.
Such “grandfathered” properties became lawful nonconforming uses on what became known as the Minatoya List, after then-Deputy Corporation Counsel Richard Minatoya, who drafted a legal opinion on the recognition of nonconforming uses.
Now Bissen’s proposed legislation seeks to “defund” the approximately 7,000 properties on the Minatoya list.
“Apartment districts are intended, among other things, to provide residents with higher density and long-term housing,” the bill states. “The purpose of this ordinance is to return all condominium properties to their intended long-term residential use.”
Support for such an ordinance was provided by state lawmakers this year through Senate Bill 2919, which would allow temporary lodging in any zoning district to be phased out through county zoning ordinances. SB 2919 was signed into law by Governor Josh Green on May 3.
Under Bissen’s draft ordinance, legal short-term rental use in apartment districts would end on July 1, 2025 in West Maui, and on January 1, 2026 for the rest of Maui County.
Challenges Ahead Cassiday said it’s conceivable that Minatoya List properties could become part of Maui’s workforce housing stock if the legislation passes, but not without challenges.
First, unless the county compensates property owners for the loss, there will almost certainly be a lawsuit over the county’s cancellation of a long-term legal use of property, which opponents of the legislation say violates the U.S. Constitution .
Such lawsuits can take years to resolve, and Bissen, a former judge, anticipates the legal challenge.
If that hurdle is overcome, Minatoya-listed units could be used as primary or secondary residences by existing owners, subsequent buyers or as long-term rentals that expand Maui’s housing supply for residents. But it is difficult to predict to what extent sales or rental prices will fall.
Sales prices for units in the three Kapalua Resort projects on the list have mainly ranged from about $1 million to $3 million since 2023. At the three Kaanapali Resort projects, the range mainly ranges from $650,000 to $2 million, but less for leasehold units in one of them, the Maui Eldorado.
According to the Council for Native Hawaiian Advancement, the average assessed value for all properties on the Minatoya list is $954,450. This means that half are assessed at more than that figure and the other half at less.
Maintenance costs can exceed $1,000 per month for some of the most expensive units at Minatoya List projects.
Cassiday said it is doubtful how many workforce housing units will be added if the renovation is successful, but that negative impacts on the county’s tax revenues, the tourism industry and the economy overall are certain.
“I think it will be harmful to the general public overall,” he said.
Still, supporters vow to press ahead with legislation to defend Maui residents amid a housing shortage and condo owners profiting from the tourism industry.
“This bill is intended to achieve the clear goal of prioritizing housing opportunities for our residents over the interests of offshore investors,” Maui County Council member Keani Rawlins-Fernandez said during the May 2 presentation. “We will see this to the end.”
The bill is to be discussed by the province’s various island planning committees and later by the County Council.
