Maui’s Housing Crisis: Unpacking Bill 9 and the Future of Short-Term Rentals

As of August 27, 2025, Maui County is at a critical juncture, grappling with a severe housing shortage that has been intensified by the devastating wildfires of 2023. At the heart of this challenge lies a proposed piece of legislation, known as Bill 9, which aims to significantly alter the landscape of short-term rentals (STRs) on the island. This blog post delves into the intricacies of Bill 9, exploring its provisions, the arguments for and against it, and the potential legal ramifications that could shape Maui’s future.

The Urgent Need for Housing: Bill 9’s Core Objective

Maui, a paradise renowned for its breathtaking landscapes and vibrant tourism, has long struggled with a housing crisis. This issue has been dramatically exacerbated by the 2023 wildfires, which destroyed thousands of homes and displaced countless residents. In response, Mayor Richard Bissen has championed Bill 9, a legislative proposal designed to address this critical need by transitioning thousands of short-term rental units, primarily located in apartment districts, back to long-term residential use. The goal is straightforward: to increase the availability of housing for local residents, a priority for the current administration.

A Historical Loophole: The Minatoya List

The current situation is deeply intertwined with past land-use decisions. For years, many condominium complexes in apartment zones have operated as short-term rentals, thanks to a legal interpretation that created an exemption for units built or approved before March 4, 1991. This exemption, often referred to as the “Minatoya List,” encompasses numerous complexes and thousands of individual units. Bill 9 seeks to repeal this long-standing exemption, effectively reverting these properties to their intended long-term residential purpose. This historical context is vital for understanding the legal arguments that may arise.

Key Provisions of the Proposed Legislation. Find out more about Maui short term rental bill legal action.

Bill 9 proposes amendments to Maui County Code chapters concerning transient vacation rentals. Its primary aim is to cease STR operations in apartment districts by removing the grandfathered exemption for units built before 1989. The bill outlines a phased approach to this transition, with varying timelines for different areas. For instance, the West Maui Community Plan area, which includes Lahaina, is slated for an earlier effective date, potentially July 1, 2025, while other parts of the county might have until January 1, 2026, or even later, with some amendments suggesting a phase-out extending to 2030. Timeshare units are expected to remain exempt.

Arguments for Bill 9: Prioritizing Local Residents

Proponents of Bill 9, including Mayor Bissen and community groups like Lahaina Strong, view the legislation as a crucial step in tackling Maui’s severe housing crisis. They argue that converting STRs back to long-term housing will provide much-needed homes for locals, especially those displaced by the wildfires or struggling with high living costs. Supporters point out that a significant portion of the income generated by these STRs flows off the island, as many owners are non-residents. Therefore, reclaiming these units for local housing is seen as a way to reinvest in the community. This bill is framed as a cornerstone of a broader housing strategy aimed at creating a more sustainable and equitable island for everyone.

The Economic Rationale: Reinvesting in Maui

The economic argument in favor of Bill 9 is compelling. A University of Hawaii Economic Research Organization (UHERO) study indicated that the majority of income from these vacation rentals flows off-island, with 94% of owners being non-residents. By converting these units, Maui aims to keep more economic benefits within the local community. Furthermore, the conversion of approximately 6,127 short-term rentals is projected to increase Maui’s long-term housing stock by about 13%, a substantial boost to housing availability.

Arguments Against Bill 9: Economic Concerns and Property Rights. Find out more about Maui County Bill 9 housing crisis guide.

Opponents of the bill, including the Maui Vacation Rental Association and many property owners, voice significant concerns about potential negative economic impacts. They argue that a widespread phase-out of STRs could severely harm Maui’s tourism-dependent economy, leading to job losses and reduced tax revenues. Concerns are also raised about the impact on property values and the overall investment climate. The association has also highlighted the significant legal risks and the potential undermining of the county’s historical land-use decisions. Some also argue that the bill might not effectively solve the housing crisis and could disproportionately benefit larger corporations over small, local operators.

Potential Economic Fallout

The economic implications of Bill 9 are substantial. A UHERO study estimated that the measure could lead to a 25% reduction in visitor accommodations, a 15% drop in visitor spending, and a 4% contraction in the county’s overall gross domestic product. Property tax revenues could also decrease by up to $60 million annually, with further losses in General Excise Tax and Transient Accommodations Tax revenues. These projections underscore the delicate balance Maui must strike between addressing housing needs and maintaining its vital tourism sector.

Potential Legal Challenges to Bill 9

The proposed legislation is not without its legal hurdles. Property owners and associations are reportedly exploring legal avenues, with challenges likely to center on property rights and constitutional protections.

Property Rights and Constitutional Challenges. Find out more about potential legal challenges Maui STR legislation tips.

A core argument against the bill revolves around property rights. Legal challenges could be mounted on the grounds that the legislation infringes upon fundamental property rights, potentially violating constitutional protections. This line of argument may draw parallels to cases where regulations have been challenged as “regulatory takings,” where government actions allegedly deny all economically productive use of a property without just compensation. The legal precedent set by Honolulu County’s 2022 attempt to regulate STRs, which was blocked by a court ruling, looms large.

The Role of State Law and County Authority

A state law passed in 2024 clarified the authority of counties to control the “time, place, manner, and duration” of land uses, including STR operations. Maui County attorneys believe Bill 9 is legally sound and falls within the council’s authority, citing this new state law. However, the interpretation and application of this law in the context of Bill 9 will likely be a critical point of contention.

Precedents from Other Jurisdictions

Legal battles over STR regulations are common globally, with varying outcomes. For example, a Tennessee judge recently ruled a local restriction unconstitutional, while courts in New Jersey and New York have upheld similar ordinances. These differing judicial decisions highlight the complexity and fact-specific nature of such legal challenges.

“Regulatory Taking” Claims. Find out more about Maui property rights short term rentals strategies.

One potential legal avenue for challenging the bill is the concept of a “regulatory taking.” This legal theory argues that when government regulations become excessively burdensome, they constitute a taking requiring just compensation. Owners might argue that the phase-out of STRs eliminates a primary economic use of their properties.

Equal Protection Arguments

Another potential challenge could be based on equal protection principles, arguing that the bill unfairly targets a specific group of property owners. However, courts have often been skeptical of such claims in the context of STR regulations.

The County’s Legal Stance and Preparedness

Maui County attorneys express confidence in the legal soundness of Bill 9, asserting compliance with state law, constitutions, and county authority. This confidence is partly due to the recent state legislation clarifying county powers over STRs. The county acknowledges the possibility of lawsuits and appears prepared to defend the legislation.

Lessons from Past Rulings. Find out more about mauicountyus.

The county’s legal team is drawing lessons from past STR legal battles, particularly the 2022 ruling that impacted Honolulu County’s efforts. The subsequent state law passed in 2024, which explicitly grants counties the authority to regulate STRs, is seen as a crucial legal foundation for Bill 9.

Strategic Considerations and Amendments

The county is being careful with public statements regarding its legal strategies. Amendments to the bill, such as extending phase-out timelines, are viewed as strategic moves to make the legislation more palatable and potentially less vulnerable to legal arguments. For instance, extending the amortization period could be seen by courts as a more reasonable approach to transitioning existing uses.

The Path Forward: Deliberation and Potential Litigation

Bill 9 has undergone extensive deliberation by the Maui County Council, with the Housing and Land Use Committee advancing it with a majority vote. However, the bill still requires a second reading and a final vote by the full County Council. Public testimony has been passionate and divided, reflecting the deep community interest and the significant implications of this legislation.

Community Engagement and Ongoing Dialogue. Find out more about mauinowcom guide.

Community engagement remains a critical aspect of this legislative process. Various stakeholders have actively participated in public hearings, and council members encourage continued dialogue. The complex nature of balancing tourism interests with the pressing need for local housing requires continuous conversation and a willingness to consider diverse perspectives.

The Likelihood of Lawsuits

Given the significant economic and property rights implications, it is widely expected that Bill 9 will face legal challenges if enacted. Property owners and associations have openly stated their intention to explore legal options. The county acknowledges this possibility and has prepared for it by ensuring the bill’s legal defensibility.

Broader Implications for Maui’s Economy and Housing Market

The passage of Bill 9 will have far-reaching implications for Maui’s economy and housing market. The success of the bill in increasing long-term housing availability could alleviate pressure on residents. However, the potential impact on the tourism sector, a cornerstone of Maui’s economy, remains a significant concern. The debate highlights a broader tension between preserving the island’s character and addressing the needs of its local population.

Conclusion: A Contentious Path Ahead

The proposed short-term rental legislation in Maui County represents a significant policy shift with the potential to reshape the island’s housing landscape and economy. While proponents see it as a vital step towards addressing the housing crisis, opponents raise serious concerns about economic repercussions and property rights. The legal challenges that are likely to follow if the bill is passed will be crucial in determining its ultimate fate. The county’s preparedness, informed by past legal battles and current state law, will be tested. The ongoing deliberations and the eventual implementation of any new regulations will undoubtedly continue to be a focal point for the Maui community.

The Interplay of Housing Needs and Tourism Economy

Maui faces a delicate balancing act between its need to provide affordable and accessible housing for its residents and its reliance on tourism as a primary economic driver. The short-term rental market is at the center of this complex interplay. The proposed bill aims to rebalance this equation by prioritizing local housing needs, but the economic consequences for the tourism sector, which supports numerous jobs and businesses, cannot be ignored. This inherent tension is likely to fuel further debate and legal scrutiny.

The Future of Short-Term Rentals on Maui

The ultimate outcome of Bill 9 and any subsequent legal challenges will define the future of short-term rentals in Maui County. Whether the county can successfully transition thousands of units to long-term housing while mitigating negative economic impacts remains to be seen. The legal battles ahead will set important precedents for how local governments can regulate the burgeoning short-term rental market in the face of evolving legal frameworks and strong property owner interests. The island’s journey through this legislative and potential legal process will be closely observed by other communities grappling with similar issues. If you’re a property owner in Maui or have been following these developments, share your thoughts in the comments below. How do you think Bill 9 will impact the island?