Maui County has always allowed condominium units in Kaanapali Royal to operate short term rentals in the Kaanapali Resort Area.
54. For nearly forty-five (45) years, condominiums in Apartment Districts in Maui have been allowed to engage in short-term rentals.
55. As an example, Kaanapali Royal is a 105-unit condominium project located in the Kaanapali Resort Area at 2560 Kekaa Drive, Lahaina, Hawaii, and has always operated as a mixed used property which includes owner occupied units, and long-term and short-term rental units.
56. Since the approval of Kaanapali Royal’s project documents and permits, property owners have relied on the County of Maui’s (“Maui County”) 45 years of assurance that Kaanapali Royal mixed-use condominium units are legally allowed to operate and continue as short-term rentals in the Kaanapali Resort Area.
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62. Reflecting on Kaanapali Resort Area’s overall character, Kaanapali Royal was zoned in an Apartment District, which up until the passage of Bill 9, CD1, FD1 (2025), allowed for both long-term and transient vacation rentals.
63. Kaanapali Royal’s founding project instruments and documents tie its operations and management to the Kaanapali Resort Area. Kaanapali Royal’s original Declaration of Horizontal Property Regime of Kaanapali Royal (“Original Declaration”), recorded on April 12, 1979 in Land Court as Document No. 932343, specifically says that the purpose of the building is so that “Apartments shall be occupied and used only as permanent or temporary residences or lodging.”
64. In Kaanapali Royal’s Restatement of Declaration of Horizontal Property Regime of Kaanapali Royal (“Restated Declaration”), recorded on January 12, 1999, in Land Court as Document No. 2513169, restates the original purpose of the building to provide “temporary residences of lodgings.”
65. Both Original and Restated Declarations are project documents recognized by the County of Maui that allowed Kaanapali Royal to operate transient short-term vacation rentals. 17
66. Plaintiffs’ deeds also include covenants for all owners of Kaanapali Royal to be mandatory members of the Kaanapali Operation Association (“KOA”) which manages the resort area utilities and aesthetic standards.
67. Plaintiffs have relied on permits issued to Kaanapali Royal by Maui County, uses allowed by the governing and project documents, the original layout of the condominium, and Maui County’s assurances by partly codifying the Minatoya List, in their decision to acquire ownership of units in Kaanapali Royal.
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Maui Island’s Reliance on Short-Term Rentals to host a Tourist Economy Is Protected by Law.
74. In 1980, the Hawaii State Legislature passed Act 186 (1980)1, relating to time sharing, by limiting the location of time-sharing units, time sharing plans, and other transient vacation rentals within certain areas.
75. In response to the state’s action, Maui County passed Ordinance 1134 (1981)2, and for the first time, defined “transient vacation rentals,” mirroring the language of Act 186 (1980), to mean:
76. rentals in a multi-unit building for visitors over the course of one or more years, with the duration of occupancy less than thirty days for the transient occupant. Ordinance 1134 (1981) established Section 19.37.010 of the Maui County Code (“MCC”) which listed transient vacation rentals an allowable use in the Apartment District under three (3) separate conditions:
(1) Any existing transient vacation rentals;
(2) Transient vacation rentals in hotel and apartment districts if authorized by the project instrument; and
(3) If the project is not a hotel and wants to create a transient vacation rental, the use may be created if the use is authorized in the project instrument, or the project instrument are amended by unanimous vote to authorize transient vacation rentals.
77. Under this new law, properties with transient vacation rentals, like Kaanapali Royal, were explicitly allowed in the Apartment District. This use was protected by the law for eight (8) years.
78. Exactly eight (8) years later on April 20, 1989, Maui County passed Ordinance 1797 (1989) which amended the Maui County Code to require the Apartment District to be occupied on long-term residential basis, adding the language, “[B]uildings and structures within the apartment district shall be occupied on a long-term residential basis.”
79. Section 11 of Ordinance 1797 (1989) added an exception for existing uses and lawfully valid permits issued before the effective date saying this ordinance shall take effect upon its approval; provided that this ordinance shall not apply to building permits, special management area use permits, or planned development approval which were lawfully issued and valid on the effective date of this ordinance.
80. Later that year, Maui’s Deputy Counsel Haunani Lemn opined in Corporation Counsel Opinion 89-7, that Ordinance 1797 (1989) did not effectively delete transient vacation rentals as permitted uses in the Apartment District as established in MCC Section 19.37.010 (1981).
81. Two (2) years later in 1991, Maui County passed Ordinance 1989 (1991)5 which amended Maui County’s code to ban all time shares and transient vacation rentals in the Apartment District, and provided the language: except as provided by this section, time share plans, and transient vacation rentals are prohibited.
82. Ordinance 1989 (1991) amended MCC Section 19.37.010 which continued to allow pre-existing transient vacation rentals to operate in the Apartment District:
83. On July 27, 2001, Maui County’s then mayor, James H. Apana, Jr., requested a legal opinion from Corporation Counsel on the lawful application of Ordinances 1797 (1989) to clarify which apartment units are excluded from the prohibition on transient rental in the Apartment District.
84. On July 30, 2001, Deputy Corporation Counsel, Richard K. Minatoya, provided former Mayor Apana with a Corporation Counsel Opinion. This opinion would colloquially come to be known at the “Minatoya Opinion.”
85. The Minatoya Opinion reiterated Corporation Counsel’s original 89-7 opinion and said:
“we continue to stand by Corporation Counsel Opinion 89-7, in which former Deputy Corporation Counsel Haunani Lemn opined that Ordinance 1797 (1989) did not effectively delete transient vacation rentals as permitted uses in the Apartment District.”
86. But the Minatoya Opinion emphasized that Section 11 of Ordinance 1797 (1989) specifically preserved:
“…building permits, special management areas use permits, or planned development approval which were lawfully issued and valid on the effective date of this ordinance.”
This allowed transient vacation rentals to operate if it had a permit or approval lawfully issued and valid on April 20, 1989, regardless of whether the Ordinance was effective to impose a transient vacation rental ban. This is the Minatoya Opinion’s “building permit exception.”