HONOLULU, Hawaii: Maui's mayor has proposed a plan to reduce vacation rentals to help with the housing shortage caused by the 2023 wildfires. However, a new report from University of Hawaii economists suggests that this plan could also harm the economy.

Mayor Richard Bissen introduced the idea to create more long-term housing after over 3,000 homes were lost in Lahaina. Researcher Trey Gordner stated that the plan would make housing more affordable but would also result in job losses, lower incomes, and reduced tax revenue. The report warns that visitor spending is expected to drop significantly.

Bissen said the study is helpful but does not capture the struggles of residents who live in crowded homes, have long commutes, or leave Maui due to the high cost of housing. He also pointed out the cultural loss when locals are forced to move away.

The Maui County Council may review a bill based on the mayor's plan in about 60 days. Council Chair Alice Lee expressed concern about potential legal issues and associated costs. She also noted that many vacation rental owners might keep their properties rather than sell or rent them out as long-term housing.

About one-third of Maui's tourists stay in vacation rentals, which are cheaper than hotels and convenient for families and remote workers. However, these rentals have been controversial, especially following the deadly Lahaina fire, which destroyed many homes.

The report highlights that the mayor's proposal is more significant in scale than similar policies in other cities. It would convert 6,127 vacation rentals into long-term housing, increasing the available housing stock by 13 percent—equivalent to a decade of new construction. Condo prices could drop 20-40 percent. The majority of affected rental owners are from outside Hawaii, primarily California, Washington, and Canada.

Switching these units to long-term housing would also save water, a limited resource on Maui. However, at the same time, it could reduce visitor accommodations by 25 percent, decrease tourism spending by 15 percent, and eliminate approximately 1,900 jobs. Property taxes could decline by up to $60 million per year.

The study suggests alternative ways to boost housing with less economic impact, such as raising taxes on vacation rentals, taxing empty homes, and changing zoning laws. Another option is to limit vacation rental licenses and auction them off, similar to how taxi permits or fishing rights are managed.

The University of Hawaii conducted the study at the request of the Hawaii Community Foundation, a nonprofit organization.