A new report from the University of Hawaiʻi Economic Research Organization (UHERO), commissioned by the Hawaiʻi Community Foundation, examines the economic implications of a proposal to phase out transient vacation rentals (TVRs) in Maui County’s Apartment zoning districts. The proposal, which would eliminate long-standing exceptions for pre-1989 properties known as the “Minatoya List,” aims to address Maui’s worsening housing crisis by converting short-term rentals into long-term housing.
The report estimates that phasing out these units could increase Maui’s long-term housing stock by up to 6,127 units, which is equivalent to 10 years of new construction at the current rate. However, the policy could also reduce visitor spending by nearly $900 million annually, resulting in job and income losses, declining property values and an estimated $60 million drop in county property tax revenues by 2029.
“This is a substantial policy intervention with wide-ranging implications for Maui’s economy,” said UHERO Executive Director Carl Bonham. “Our analysis shows that while the proposal could contribute to housing affordability, the resulting contraction in jobs, income and county revenues presents real tradeoffs that warrant careful consideration.”
Key findings
Visitor industry impact
- Eliminating all TVRs in Apartment zones could reduce visitor accommodations by 25% and visitor days by 32%.
- Total visitor spending is projected to decline by $900 million annually (-15%).
- The decline in spending also results in the loss of 1,900 jobs (-3% of total payroll jobs).
- Real GDP could therefore decline by 4%.
Housing market impact
- The policy could add up to 6,127 units to the long-term housing stock—a 13% increase, equivalent to a decade’s worth of new housing development.
- Condo prices are projected to decline by 20–40%, improving affordability but also reducing household wealth and property tax revenues.
- Affected TVRs are disproportionately owned by out-of-state investors (85%), but market-wide price declines also impact owner-occupants.
Tax revenue impact
- Property tax revenues could fall by up to $60 million annually by 2029 due to both changes in tax class and decreasing valuations.
- General Excise Tax (GET) and Transient Accommodations Tax (TAT) revenues are projected to fall by 10% and 8% respectively, totaling to an additional -$15 million annually.
Policy alternatives and adjustments
The report also explores alternatives to a full ban, including:
- Raising property tax rates on TVRs to encourage voluntary conversions and generate revenue.
- Auctioning a limited number of TVR permits to capture value for public use from the most profitable units.
- Gradual phase-out to reduce the risk of housing market shocks.
Complementary policies could further support housing availability, including an empty homes tax, zoning and permitting reforms, and expanded homeownership assistance.
For the full report, visit UHERO’s website.
UHERO is housed in UH Mānoa’s College of Social Sciences.
See this UHERO Focus video for more.
