The Maui County Council spent seven hours of a public hearing behind closed doors Wednesday discussing the legalities—and likely legal defense—of a proposal to convert 6, 100 short-term vacation rentals into long-term housing.
An untold number of Council members remained uncertain how to proceed before going into the executive session with Department of the Corporation Counsel attorneys.
“We’re still formulating our opinions, ” Council Chair Alice Lee said.
All nine members comprise the Council’s Housing and Land Use Commission and met in executive session to discuss what they called “the legality ” of Mayor Richard Bissen’s Bill 9 following issues raised by both supporters and opponents over four days of hearings that began June 9.
Committee Chair Tasha Kama announced Wednesday morning that she intended to hold a vote on Bill 9 at the end of the day. But in response to questions raised during the hearings, Kama said she wanted to hear first from members of Bissen’s administration, from Maui’s vacation rental and real estate industries, and from bill supporter Lahaina Strong, the grassroots group formed in the wake of the deadly Aug. 8, 2023, Maui wildfires.
When they emerged from executive session, Council members provided no hint of what they had been told by county attorneys about the legal issues raised by Bill 9. And there was only time left in the day to ask a handful of questions of Bissen’s administration and county planning representatives.
The Council then voted unanimously to suspend its rules restricting how long hearings can be held and scheduled another all-day hearing on Bill 9 for July 23, along with the possibility of another hearing July 24 to ask questions of representatives from all of the parties, including the county departments of Planning, Housing, Finance and Water Supply, who had been on standby for much of Wednesday.
Critics routinely testified during the first four days of hearings that if Bill 9 passes it would end up in years of protracted litigation that would cost the county untold money, only to end in a legal defeat for the county.
They argued that Bill 9 violates the Fifth Amendment of the U.S. Constitution mandating that government cannot “take ” property without “just compensation.”
Without going into specifics, Bissen—a former chief judge of Maui’s 2nd Circuit Court—previously told the Honolulu Star-Advertiser that Bill 9 was written to withstand court challenges, while attempts in other communities to restrict vacation rentals have failed.
Bill 9 critics frequently cited a voter-driven initiative in South Lake Tahoe, Calif., to ban vacation rentals in residential areas.
The South Lake Tahoe law was ruled unconstitutional by an El Dorado Superior Court judge in California, who ruled that it discriminated against out-of-state property owners and violated the Commerce Clause of the U.S. Constitution, according to California and Nevada media reports.
The South Lake Tahoe City Council decided not to appeal.
How the Maui County Council’s Housing and Land Use Committee votes on Bill 9 likely will foreshadow what will happen when it goes before the full Council.
Bill 9 targets 6, 100 short-term vacation rentals—mostly in West and South Maui—that are on the county’s so-called Minatoya List.
In 1989, the Council tried to restrict short-term vacation rentals to land zoned for hotel use. But an opinion written by then-Deputy Corporation Counsel Richard Minatoya exempted units built before March 5, 1991.
Bill 9 would repeal the exemption for the grandfathered units on the Minatoya List.
Several owners and managers of vacation rentals on the list insisted that they were always meant for tourists, and many said they never were told by real estate agents who sold them their units that they had been grandfathered as an exemption.
Many said they had never heard of the Minatoya List until Bill 9 was introduced by Bissen last year.
Critics of Bill 9 often referred to select portions of an analysis of the potential economic effects for Maui County by the University of Hawaii Economic Research Organization, including lost property taxes and jobs, and a drop in visitor spending.
At Bill 9’s first hearing, Bissen said the county budget can absorb much of the economic hit.
He also said the UHERO report did not tell the “full story ” of Maui’s housing crisis, including the ongoing departures of local families, kupuna and critical workers such as teachers and firefighters, in addition to children being forced to grow up somewhere other than Maui.
Critics of Bill 9 ignored UHERO’s analysis that over 11, 600 Maui households—or 21 % of all households on the island—already use 30 % of their incomes to pay for housing and could afford to rent converted units because the owners would see their tax rate fall to Maui County’s lowest rate as the value of their homes continues to drop.
The pool of Maui residents already paying even more of their incomes for housing is even greater.
An additional 15, 500 Maui households use 30 % to 50 % of their incomes toward housing, according to the UHERO analysis, and could afford to rent converted vacation rentals, meaning long-term housing for a total of over 27, 100 households.
Even without a Council decision on Bill 9, short-term vacation rental owners testified that the yearlong uncertainty about what will happen to their vacation rentals has resulted in no offers from buyers, even after some said they cut sale prices in half.