Maui Real Estate Blog

Maui County Passes New Vacation Rental Bill

As of June 1st, Maui County homeowners will be able to apply for permits to legally vacation rent their homes. The new permit system offers a simplified process that attempts to preserve the residential and community feel of island neighborhoods while fostering an economic engine that benefits towns inside and outside the resort communities of Maui. Here are some of the key elements of the new legislation:

  • There will be a cap on the number of short-term rentals at 100 in Kihei-Makena, 88 in West Maui, 88 in Paia-Haiku, 48 in Hana, 40 in Makawao-Pukalani-Kula and 36 in Wailuku-Kahului.
  • A simplified application process for short-term rental operations that allows the Planning Department director to approve applications administratively.
  • Short term rentals are to have quiet hours from 9 p.m. to 8 a.m., with no amplified sound allowed beyond property boundaries.
  • A property manager will handle check-ins and checkouts. The manager will live within 30 miles of a rental’s location and be able to respond to a complaint within an hour.
  • Short-term rentals can have no more than six bedrooms.
  • Rentals will be required to have off-street parking.
  • Applicants for a short term rental must have a 4-foot-square sign displayed to inform neighbors.
  • All neighbors within 500 feet must be informed that an application has been submitted for a short-term rental operation.

This has been a long and politically contentious process that has spanned over a decade. County zoning restricts legal vacation rentals to areas zoned hotel resort. Hotel resort areas are confined primarily to the traditional resort communities on the leeward side of the island. Over the last 15 or so years, demand for home based accommodations exploded both near the resort communities and away from the resorts in Windward communities like, Paia, Haiku and Hana. While the county tried to develop a process to permit individual residences for vacation rentals in the early 2000s, the process proved to be ineffective. Few received permits despite years of efforts and thousands of dollars in fees. For a period of time, the county implicitly and in some cases explicitly allowed people to vacation rent their homes as the county council made efforts to improve the permit process. As those efforts stalled, an illegal vacation rental market grew exponentially. This was a major issue in the 2006 mayor election with all candidates arguing that a reformed permit process was needed. When former Mayor Charmaine Tavares was elected, she took a different tact and began the process of shutting down any non-permitted rentals. The results were mixed to be generous. While some residents welcomed the efforts to preserve the residential character of neighborhoods, the island economy took a hit with many small town businesses seeing a significant downturn. The timing was particularly bad as it proceeded the broader national recession which further impacted tourism and the Maui economy.

The county partially addressed the issue in late 2008 when they passed a bill allowing for the establishment of Bed and Breakfasts on island. This legislation allowed owner occupants to rent out rooms or an accessory dwelling on their property short term with a permit. Since the new law was implemented, there have been a number of new bed and breakfasts permitted on the island. By most accounts, it has been a success. The void over the last couple of years was the rental of private homes with no onsite owners or managers. While county enforcement became less stringent during the weakened economy, there was still a strong demand for an improved formal process for those that wanted to rent legally.

It will be interesting to see the impact on the real estate market if any. The permits will not impact resale values as they don’t specifically run with a property on change of ownership. You can see the Maui News article on the bill here. There is also a pdf with the full vacation rental bill in its entirety.

Pete Jalbert

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