If you’re the owner of a  short-term vacation rental (also known as a transient accommodation) on Maui, the value of your property could soon be impacted by new county policies aimed at managing tourism.

 What are the details? First, some background...

When a county ordinance known as the Maui Island Plan was approved in 2012, it set a limit for Maui’s daily visitor count at one-third of the resident population (which has remained fairly stable for the past decade, at around 150,000). By 2019, the Valley Isle had exceeded this visitor cap, prompting the county council to begin discussions about how to decrease the visitor-to-resident ratio.

In the view of the Maui County Council, the island’s remarkable tourism growth in recent years essentially represents “too much of a good thing,” straining county resources and infrastructure, creating negative environmental impacts, and decreasing quality of life for residents. In response, the council first committed to cracking down on illegal short-term vacation rentals. By December 2019, the county had set the initial fine for operation of an unpermitted transient accommodation at $20,000, with a $10,000 fine for each additional day of operation.

In May 2020, native Hawaiian leaders from across the state joined together to introduce the `Aina Aloha Economic Futures Declaration. The plan was intended to emphasize residents’ kuleana (responsibility) to demonstrate love of the land by caring for (rather than stressing) its resources. Along with the Hawaii Tourism Authority, the mayors of the four major Hawaiian Islands, and the Kaua`i and Hawai`i County Councils, the Maui County Council endorsed the declaration.

As 2020 continued, many saw the devastating effects of the COVID-19 pandemic on the local economy as another indication of the Aloha State’s overreliance on tourism. By February 2021, the Maui County Council had approved Resolution 21-18, a commitment to “sustainable and strategically managed tourism - rather than an increasing quantity of tourists - to promote economic well-being, enhanced quality of life for residents, preservation of natural and cultural resources and high-quality experiences for visitors.”

In an even more recent sign of shifting focus from promotion of tourism to management of tourism, the Maui County fiscal year 2022 budget redirected funds from visitor marketing to addressing visitor impact. The county council has now also formed a temporary investigative group (TIG) within the Budget, Finance, and Economic Development Committee, to delve further into tourism management. The TIG’s top priority will be a substantial reduction in approximately 7,000 transient accommodations currently permitted on Maui, steering visitors back to hotel and resort accommodations.

According to the REALTORS®️ Association of Maui, legislation drafted in August 2021 would enable current owners to continue to operate their legal short-term vacation rentals, but it would disallow such use of the properties for anyone who became an owner after December 31, 2021. By some estimates, affected properties could lose as much as half of their value if the legislation passes.

And finally, as of October 1, 2021, the Maui County Council approved a county Transient Accommodations Tax (TAT) of 3%, effective November 1, 2021. Although Maui rental property owners have been accustomed to paying the state TAT (which was established in 1987), the county TAT represents a new (and most likely unwelcome) expense.

So, what’s the bottom line?

As the owner of a short-term vacation rental, you’ve likely appreciated the income generated by your property, as well as perks like diversification of your financial portfolio and tax-deductible vacations of your own. As the  landscape of Maui tourism continues to shift, though, you’ll need up-to-date information from experienced real estate professionals with knowledge of evolving local policies and their effects on the market.

If you’re concerned about the possible depreciation of your property under new county measures - or if you’re simply thinking about taking advantage of Maui’s incredibly hot seller’s market before it cools down - the team at Romvari Realty is ready to answer your questions and guide you through informed decisions about your options.