An effort to help alleviate Maui’s dire shortage of affordable housing by having a state agency acquire and convert commercial buildings to partial residential use has come up short at this year’s Legislature but still might produce results.
The plan, proposed via Senate Bill 378, recently stalled in the House and failed to meet a Thursday procedural deadline needed for passage this year.
However, the idea put forth in the bill could still lead to new affordable housing that is less costly to produce while also adding vibrancy and historical character to communities 20 months after a wildfire in Lahaina destroyed around 3,500 homes.
“Out of the tragedy has come the opportunity to be very bullish about the fact that when Lahaina is rebuilt we can take the opportunity to create housing where the jobs are going to be,” said Sen. Angus McKelvey, who introduced the bill with six other backers.
McKelvey, who lost his home in the fire, did not propose buying land zoned for commercial use in Lahaina, but believes property owners in the West Maui town could rebuild what they lost and include homes above businesses that return.
“What’s old is new again,” said McKelvey (D, West Maui-Maalaea-South Maui). “This was how our towns were built on Maui back in the plantation days.”
SB 378 advanced fairly deep into this year’s legislative session without public opposition. Despite stalling, the bill is not completely dead because it could be passed in 2026 in the second half of the 2025-2026 biennium. There is also a view among some stakeholders that creating a law from SB 378 isn’t necessary to realize the intent of the measure.
The bill proposes to form a working group to identify commercial or mixed-use properties on Maui that a state agency could buy and partly turn into affordable housing.
“By locating housing near workplaces, redevelopment supports worker retention, fosters community connections, and alleviates traffic congestion, thereby improving overall quality of life,” the bill states. “Additionally, reusing existing structures reduces environmental and financial costs associated with new construction while expediting the delivery of housing options, as many units are already built and ready for conversion.”
The working group under the bill would be led by the board chair of the Hawaii Housing Finance and Development Corp., a state agency that helps finance development of affordable housing.
HHFDC’s board chair would head the proposed seven-member panel. Other members would include the director of Maui County’s Department of Housing, the president of the Realtors Association of Maui and two Maui County residents with expertise, respectively, in redevelopment and mixed-use property financing.
Alice Lee, chair of the Maui County Council, endorsed SB 378 in written testimony.
“Following the 2023 Maui wildfires, there is an urgent need to develop housing in Maui County to ensure an adequate housing inventory for displaced residents and the broader community,” Lee wrote. “Mixed-use developments allow residents to live near where they work and access essential services, helping to create vibrant, sustainable communities while reducing traffic congestion.”
The Maui Chamber of Commerce also expressed strong support, and encouraged lawmakers to have work proceed without delay.
“The Chamber recognizes the critical need for more housing and understands that many individuals prefer to live close to their workplaces, making mixed-use developments a mutually beneficial solution,” the organization said in written testimony. “In light of the severe housing shortage in both the State and Maui County, we fully support measures that promote, rather than hinder, the development of housing for our residents.”
HHFDC Director Dean Minakami also supports the bill, and said in written testimony that the effort has the potential to expand Maui’s supply of affordable housing.
The agency has some experience acquiring commercial real estate for residential use on Maui under an effort that began before the wildfire and was altered to provide fire survivors with a place to live in 2024.
This project also was directed by the Legislature, which in May 2023 appropriated funding for HHFDC to buy a former 175-room hotel in Kihei that in recent decades had been used as a Christian missionary training center.
Initially, the intent was for HHFDC to acquire the former Maui Sun Hotel so that Maui County could convert the property to teacher housing, affordable workforce housing and prekindergarten classrooms after major renovations. Instead, HHFDC bought what was most recently known as Haggai Institute for $38 million and began housing wildfire survivors in August after completing renovations to what is now named Hale ‘o La‘ie.
SB 378 sought to have the working group submit recommendations by the end of this year ahead of being dissolved shortly thereafter.
Senators on March 4 voted 25-0 to send the bill to the House of Representatives for consideration. On March 14 the House Committee on Housing voted 7-0 vote to send the bill to the House Finance Committee for consideration, though no further action was taken, which prevents the bill from passing this year.
