Maui Mayor Richard Bissen’s plan to convert several thousand vacation rentals to long-term housing could lower housing costs and improve affordability in Maui County, according to a study unveiled Monday by the University of Hawaiʻi Economic Research Organization.

But it could also significantly weaken Maui’s tourism-dependent economy, prompt widespread job losses and result in a drastic decrease in tax revenue, according to the study.

The study was released on the heels of Civil Beat’s story reporting that the Maui County Council’s monthslong wait to take up the proposal will likely delay its initial implementation timeline. Council Chair Alice Lee has said members wanted more information on the plan’s potential benefits and consequences.

“Our analysis finds that the policy would have far-reaching economic effects, with both intended benefits and unintended consequences,” the study’s authors wrote. The study, led by UHERO Executive Director Carl Bonham, was prepared for the Hawai‘i Community Foundation, which is overseeing millions of dollars in private donations to fund Maui’s long-term recovery from the August 2023 wildfires.

Bissen’s plan, first put forward in May, would get rid of the longstanding exemptions that allow many apartment-zoned units on the island to operate as vacation rentals. As proposed, the exemptions would expire for properties in West Maui on July 1, and on Jan. 1, 2026, for units in the rest of the county.

In a statement Monday, Bissen said the UHERO study would inform policymakers’ decision-making as the plan moves forward but cautioned against overreliance on economic models like those used by the study’s authors.

“They do not reflect the lived experiences of our residents: the families crowded into multigenerational homes because younger generations can’t afford their own, the workers commuting longer distances or leaving Maui entirely, and the growing strain on our infrastructure and sense of place,” Bissen said. “Most importantly, they fail to acknowledge the cultural loss we face when our people are forced to leave — when generations of knowledge, tradition, and aloha are displaced from the very communities that shaped them.”

The original implementation timeline is already up in the air because the council has yet to take the legislation up and mayor’s proposed budget for the upcoming fiscal year does not appear to account for the significant reduction in tax revenue that economists and others have said would result from the policy change.

Lee has said she would like the council to take up the proposed legislation soon but had been holding out for further studies. It’s unclear whether or how the new UHERO study might contribute to that.

Condo Prices Could Decline 20-40%

The affected properties are known as the Minatoya list, named after former county attorney Richard Minatoya, whose 2001 legal opinion allowed the owners of these units to operate them as short-term rentals.

While some of the more than 7,000 properties included on the Minatoya list are occupied by Maui residents who own their homes or who have long-term leases, the policy could add up to 6,127 units of those 7,000 to the long-term housing stock, according to the study.

The UHERO researchers estimated that such a large increase in the number of residential housing options — equivalent to a decade’s worth of new housing development — would prompt condo prices in the county to decline 20-40%.

The reduced value of homes would both improve housing affordability in Maui County, which has the highest home prices in the state, and reduce household wealth. As a result of changes in tax class and lower valuations, property tax revenues could fall by up to $60 million annually by 2029, according to the study.

Converting thousands of vacation rentals to long-term housing would also constitute a 25% reduction in visitor accommodations and would “negatively impact local jobs and incomes,” the study found.

Researchers estimated that total visitor spending would decline by $900 million annually and the local gross domestic product would shrink by 4%. About 1,900 jobs could subsequently be lost, according to the study.

County revenue would also take a hit as a result of reduced money brought in from general excise and transient accommodations taxes, which researchers projected would fall by 10% and 8%, respectively.

Despite the potential negative effects of the mayor’s proposed policy, researchers said, “Doing nothing also has economic consequences.”

The county’s longstanding housing shortage was exacerbated in 2023 when wildfires destroyed more than 2,000 homes and displaced 12,000 residents. The island’s high cost of living has influenced at least 1,000 people to leave the island, according to the study.

“Continued out-migration could further weaken Maui’s economy in similar ways to the projected effects of the policy — fewer filled jobs and lower incomes and tax revenues,” researchers wrote. 

Authors of the study suggested policymakers consider adjusting the mayor’s plan or pursuing alternatives such as a tax on homes left unoccupied, increasing the tax rate on temporary vacation rentals, auctioning off a set number of short-term rental permits, reforming zoning and permitting laws to encourage future development or expanding Maui’s downpayment assistance program for first-time homebuyers.

“The proposed policy represents a bold attempt to rebalance Maui’s housing market,” researchers wrote. “However, given the scale of the potential economic disruption, careful implementation, monitoring, and flexibility will be essential to maximize benefits while minimizing unintended harm.”

Mayor: It’s Not Anti-Tourism, It’s Pro-Resident

In his statement Monday, Bissen called study “a valuable first step in understanding the potential economic impacts” of phasing out vacation rentals in apartment-zoned areas.

“This is not just a matter of land use — it’s about restoring housing to residents, honoring the intent of our residential zones, and reducing our overdependence on tourism,” he said in the statement. “We welcome visitors — but not at the cost of displacing those who call Maui home. The cultural and social costs of inaction are too high. Protecting our people and preserving our quality of life is not just good policy — it’s a moral responsibility.”

Short-term rentals catering to visitors make up nearly a quarter of the housing stock, Bissen said, and the effects of that are “real, widespread, and deeply felt by our local families.”

Converting many short-term rentals into long-term housing would likely bring challenges, he said, but “delaying action only makes those challenges more severe.”

“This phase-out is not anti-tourism — it is pro-resident,” he said, adding that his plan was part of a broader strategy to address Maui’s housing crisis.

Bissen encouraged some property owners to pursue zoning changes or special use permits if their units function more like hotels than homes.

The mayor’s administration is determined to diversify the local economy and increase opportunities in more community-centered sectors including education, healthcare, construction, agriculture and traditional hospitality, Maui County spokesperson Laksmi Abraham said in a statement. It also intends to change the community’s relationship with tourists.

“Regenerative tourism favors fewer, more mindful visitors,” she said. Vacation rentals “scattered across residential zones contradict this goal, spreading tourism’s impacts without oversight and degrading quality of life for locals.”

Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.