The tiny island of Lānaʻi is poised to reap major affordable housing gains with the passage this week of Maui County’s $1.56 billion spending plan, which includes $47 million to bankroll countywide residential development projects and badly needed infrastructure to support them.
The fiscal year 2026 budget signed into law Tuesday addresses a series of foundational problems, including the plight many families across three islands face to secure a place to live in an astronomical housing market.
For residents of Lānaʻi, an arid island almost entirely owned by billionaire tech tycoon Larry Ellison, a $7.2 million construction loan coupled with $10 million for critical infrastructure for Kaiaulu O Lānaʻi accelerates a long-stalled project that offers a rare opportunity to own a home.
It’s been nearly 35 years since the island of some 3,300 people that sits west of Maui had a new affordable housing project with a chance for homeownership.
Plans to expand housing options and public assistance programs come at a critical time. On the heels of record inflation and a housing shortage worsened by the deadly 2023 wildfires, more residents have had to rely on social services. Meanwhile, federal funding cuts threaten the fragile social safety net, rendering the county’s most vulnerable families even more at risk.
Focusing On Housing Woes
The median price for a single-family home on the Valley Isle was $1.3 million in May.
“Last budget we focused on West Maui and wildfire recovery and the budget three years ago was all about Covid and trying not to spend money, but this budget was for everyone,” Maui County Council member Yuki Lei Sugimura, who leads the budgeting process, said. “It has a lot of bigger strokes-projects that we couldn’t get to those previous years.”
The idea for the Kaiaulu O Lānaʻi project on Lānaʻi goes back to 2008, when it was abandoned amid the economic crash that year. The precise number and size of homes that will be built is still being worked out, but early plans envisioned 372 affordable units, including 199 lots for purchase. Lānaʻi currently has 163 affordable units, primarily rentals.
The county has solidified a partnership with Ikaika ʻOhana, a nonprofit developer with a track record of completing affordable housing projects statewide. The development aims to create hundreds of houses for low-income residents earning less than 80% of the area’s median income, including some with a rent-to-buy option.
“Lānaʻi is owned 98% by a billionaire and inside the town a third of the housing is owned by his company,” said Councilman Gabe Johnson, who lives on Lanai and chairs the county’s affordable housing committee. “So to have a piece of the island that you own, it gives people a little autonomy.”
The budget also advances hundreds of planned workforce and affordable housing units in central and south Maui.
That includes a $25 million lifeline for Līpoa Apartments, a 175-unit workforce housing project in Kīhei. The development aims to expand housing options for teachers, police officers, firefighters, government workers, bankers and other people who earn too much to qualify for affordable housing but not enough to compete with Maui’s runaway housing market.
Construction is already underway. The rental project caters to families earning between 81% and 120% of the area median income. The median household income is $79,808.
The $86 million Waiale Road extension project included in the budget would provide access to more than 1,000 homes, including hundreds of affordable units, as part of the planned Waikapū Country Town development. Without the addition of a 1.6 mile road over fallow former sugar cane fields, urban growth in the region would remain stagnant.
A longstanding government manpower shortage could stand to hinder some of the planned housing projects. The council has raised concerns that a high number of county job vacancies — roughly 700 unfilled positions across various departments — might undermine the county’s ability to execute its planned programs and initiatives, especially capital improvement projects.
“Everything that’s in the budget requires certain expertise and right now we’re short on that,” Sugimura said.
Other Problems Loom
Some advocates warn that county-incentivized housing development doesn’t properly address the problem of taxpayer-funded affordable units being resold years later at market rates.
Albert Perez, executive director of the nonprofit foundation Maui Tomorrow, said the county should adopt and enforce strict deed restrictions to make sure the housing developments stay affordable.
“We’ve got to stop the leakage right now because we have a workforce housing program that’s developing temporary workforce housing and it feels like we’re falling behind,” Perez said.
Perez also urged the county to stop relying on private developers to create enough inventory of homes that low-income and working families can afford.
“It’s not what they do, they’d rather build luxury homes,” he said. “There are some, yes, who specialize in it, but when a developer is providing only 20% affordable housing in their overall project, it’s not enough. At the rate we’re going, it will be many years and many, many people will have to leave before we have enough.”
Another $12 million in the budget will help low-income families pay for rent, gas, health care, groceries and other basics through Maui United Way’s ALICE Initiative. The funding also props up a safe parking program for residents living in their vehicles and continued support for community nonprofits working to address health, human services, education, youth programs, senior support, food security, safety, culture and arts.
The council recently began deliberating the mayor’s bid to convert short-term rentals into long-term housing in a bid to ease the affordable housing crisis. As proposed, Bill 9 would end the exemptions that allow many apartment-zoned units to operate as vacation rentals in West Maui and South Maui.
The recently passed budget for the upcoming fiscal year does not account for a significant reduction in tax revenue that would result from converting the thousands of properties in question — known as the Minatoya list — into long-term rentals.
“The 6,127 units that would be eliminated and they’re right now in the budget and they pay real property taxes so that’s a huge source of income for the county, and how do you make up for that?” Sugimura said. “It’s going to have major tax implications and this budget doesn’t address that.”
Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.
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