Maui is in trouble. The Lahaina fires were among the most devastating in U.S. history, with 97 confirmed dead, over 7,500 displaced (of a population of 165,000), and 2,200 buildings—$6 billion worth of real estate—destroyed. And this is only the start of Maui’s woes. 

The island faces economic collapse. Seventy percent of its economy is linked to tourism, and property taxes from tourism-linked enterprises make up 60 percent of the County of Maui’s revenues. Now tourism has been brought down to pandemic-era levels. If emergency funding dries up, the county will need to consider cuts to basic social services amid surging unemployment and one of the country’s worst housing crises. Island residents have filed over 10,000 unemployment claims since the fire. And to top it off, Chinese operatives have exploited the island’s suffering to stoke anti-U.S. sentiment.

Maui needs to bring back tourists and rebuild lost housing. But these are Herculean tasks. The government confronts the insularity of a rural county, the economic vulnerability of an island, and the historical grievances of an ex-colony. All this, even before the fire, produced a regulatory environment that has made (legal) homebuilding prohibitive to all but luxury developers catering to tourists and transplants, spurring anti-development resentments among outsider-wary locals. Rebuilding cannot succeed unless the county and state loosen these anti-development policies.

Hawaii has been upbeat about the disaster response lately. Displaced residents have all been relocated into hotel rooms and short-term rentals, and debris removal has proceeded apace. West Maui has begun to reopen to the public. None of the island’s major resorts suffered any damage in the fires, as the burn zone was only 3.4 square miles.

But within those 3.4 miles was the commercial, residential, and cultural center of West Maui. Clean-up efforts may take a full year before the area is even safe to build on. This raises several questions. Is there enough money to house the displaced for that long? How will residents finance the rebuild? Many of the destroyed properties were underinsured. Most property-owners couldn’t afford to rebuild their properties even if the clean-up ended tomorrow, with high labor costs driven by the island’s overwhelmed supply of contractors. Insurance providers, meantime, are pulling coverage.

Maui’s precarity stems from three geographical facts. Most pertinent to the fire: besides some small wells, the island’s only source of usable water is rainwater from the mountains. The island is home to two extinct shield volcanoes connected by a central valley. Two firms —the West Maui Land Company and the East Maui Irrigation Company (one for each volcano)—own a network of aqueducts that capture rainwater and channel it into the valley. The system is a relic of the island’s history as a sugar plantation owned by Alexander & Baldwin. 

Redirecting water from natural floodplains has made certain areas of the island unusually dry and brush-covered. Even formerly irrigated areas are now overgrown with brush, as farmers, facing declining profits, have stopped maintaining the land.

A second source of peril, and a major reason why so many died in the fire, is the island’s mountainous terrain, which makes transportation difficult. Though the island is only 48 miles wide, it takes two-and-a-half hours to drive across at top speed. Only one road along the side of Mauna Kahalawai, the western shield volcano, connects West Maui to Central Maui. Half of the island’s hotel rooms are along this road. Likewise, all of South Maui, a major residential corridor and home to the other half of Maui’s hotel rooms, is built along what is essentially a single-entrance road.

Maui is therefore particularly disaster-prone. The island’s most vulnerable areas can evacuate only along one road, that, once cut off, leaves residents trapped. It was a minor miracle that the fires did not spread to Kaanapali or anywhere in South Maui, which is similarly dry and brush-covered.

The third source of hardship stems from the island’s remote position in the Pacific Ocean, 2,500 miles from the continental U.S. and 4,000 miles from Japan. For decades, the island’s residents have relied on shipping to obtain essential goods, such as food, energy, and construction materials. Skilled laborers, from doctors and lawyers to construction workers, are regularly flown in from Oahu, as Maui does not have enough homegrown expertise to sustain the island independently. Disaster-relief personnel, supplies, and equipment needed to be shipped or airlifted in after the fire, while the debris, much of it toxic, must now be carefully transported for processing on the mainland.

Transportation costs promise to make recovery operations in Maui much more expensive than in most of the continental U.S. The island’s small size, coupled with the scale of the disaster, means an enormous amount of off-island expertise will have to be brought to Maui in the coming year. 

Worst of all, Maui must rebuild amid one of America’s most severe housing crises. The island’s higher water, energy, and consumer-goods costs can be chalked up to geographical factors. But its housing scarcity is entirely the result of bad policy. Stringent homebuilding regulations have jacked up housing prices to near-San Francisco levels, meaning most island residents must work multiple jobs to get by. The median home price is $1.2 million.

Why are prices so high? The island has no shortage of land, and its typical home is modestly sized (around 1,500 square feet). But developers face a byzantine regulatory regime unparalleled in its complexity. To build a house, a developer must file paperwork with two independent planning authorities—the State Land Use Commission and the Maui Planning Commission, which has not substantially updated its plans since 1960—and comply as well with “regional” and “community” planning regulations. 

Beyond navigating all four levels of planning (which sometimes conflict), a builder must also survive a review process and litigation from anti-development groups under the Hawaii Environmental Policy Act (HEPA) and other laws that regulate the preservation of Native Hawaiian graves, called iwi kupuna, and other cultural sites. These hurdles can make building a single house a years-long process. Estimates suggest these regulations can add between $250,000 to $400,000 to a new home’s cost.

Rebuilding Lahaina might seem like a simple matter of restoring already-permitted properties, but many of the properties were built before the current regulatory regime. Now they will all need to survive extensive governmental review and hostile litigation before they can be rebuilt. The county today mandates a minimum 6,000-square-foot lot size for a single-family home (irrespective of the house size) and a 7,500-square-foot lot for a home with an accessory dwelling unit. These mandates have created an artificial scarcity of land. Many displaced residents of Lahaina had lived in dwellings (many illegally built and uninsured) that cannot be restored under these constraints. 

The County of Maui and the State of Hawaii will have to take drastic measures to ensure this regulatory regime does not stop reconstruction wholesale. But deep distrust from Maui residents means that state and local policymakers face tremendous headwinds should they push for reform.

When the Lahaina fires first broke out, some West Maui residents wondered whether the state governor, in collusion with the U.S. military, had fired a laser weapon to raze the city. While such a thing might sound insane at first, paranoia-laden politics are commonplace in Maui. Residents’ conspiratorial beliefs stem, in part, from the fact that overregulation has turned developers’ attention away from building affordable homes for locals and instead to building more profitable luxury homes and tourism-related properties for wealthy outsiders. This, along with some high-profile bribery scandals, has made Maui residents distrustful of both the homebuilding industry and the state and local officials who let housing prices quadruple in the past 20 years. 

Local demagogues and those wishing ill to the United States, such as the Chinese Communist Party, have taken advantage of these dynamics to sow fear and resentment. Two weeks before the fire, Governor Josh Green, who had been elected on a commitment to make housing affordable, suddenly declared a state of emergency to expedite projects through executive action. While the two events were unrelated, conspiracy theorists (amplified by Chinese social-media bots) suggested that Green had orchestrated the fires to clear Lahaina for his alleged corporate masters.

These opportunists took advantage of a long history of grievance stemming from Hawaii’s annexation in 1898. Hawaii was a modern and independent state before 1893, when Anglo-American plantation owners overthrew the Hawaiian monarchy and imposed white-minority rule. Since the late 1960s, the Hawaiian Sovereignty Movement, which broadly aims at Hawaii’s secession from the U.S., has emerged as a major political force.

For the sovereignty movement, the fires were the perfect opportunity to expose state- and local-government dysfunction. Its supporters have promoted the idea that the fire would never have happened under the monarchy’s land-use system and that housing developers are the modern-day instantiation of the white business interests that overthrew the monarchy. These arguments carry emotional weight; Lahaina was a former capital of the kingdom, and the fires destroyed intergenerational homes that residents have lived in for a century or more.

An added challenge for rebuilding efforts is that anti-development interests often weaponize cultural politics to kill projects. Consider the stalled Hale Mahaolu Ke Kahua project, proposed in 2021, to build 120 affordable-housing units. The County of Maui declined to grant approval, ostensibly on zoning grounds, as a group of Native Hawaiian activists claimed ancestral title to the land and that construction there would disturb graves. Since Native Hawaiians have been living all over Maui for hundreds of years, anti-development groups can make similar claims almost anywhere on the island with similar plausibility.

These resentments, coupled with the island’s regulatory regime, will pose a major obstacle to Lahaina’s reconstruction. The councilwoman representing the destroyed district of West Maui, Tamara Paltin, is a staunch anti-development advocate who has, in at least one county hearing, proposed Maui’s secession from the U.S. as the real solution to the housing crisis. This bodes poorly for the reconstruction of West Maui and reflects both the radical tenor of her district’s politics and its residents’ distrust of outsiders. 

It’s anyone’s guess how the situation will evolve now that West Maui has reopened.

 As federal and state eyes remain on the island, Maui has a rare chance to address the deeper roots of the crisis. Despite its internal challenges, it is within the County of Maui and State of Hawaii’s power to take drastic actions to rebuild the island and ensure its prosperity in the coming years. Doing so, however, will require federal and state efforts beyond the routine post-disaster response.

First, governments must continue to fund displaced residents’ housing as necessary until rebuilding concludes. If residents become homeless, we can expect mass unrest and even more political dysfunction.

Second, governments must help keep afloat small businesses that have been affected by the general loss of tourism—even those that the fire did not physically damage. The whole island suffers from the loss of tourism, and many small businesses are still struggling to recover from pandemic-era losses. The federal government should consider broad forgiveness for non-delinquent Covid-era borrowers and allow the Small Business Administration to issue disaster loans to businesses outside the burn zone.

Third, FEMA, which alone has the necessary resources and expertise, must finish the clean-up expediently to make way for rebuilding. But FEMA has been dogged by its own scandals and is facing scrutiny from the House Oversight and Accountability Committee, which expressed special concern at reports of FEMA employees staying in $1,000-a-night hotel rooms. That seemed absurd, but then again, finding housing in Maui is absurd; the quoted price is actually below the market rate for a typical hotel room.

This reflects a broader challenge in the reconstruction process: namely, how to house the surge of skilled labor necessary for rebuilding amid a housing crisis. Maui’s hotels are built to service the ultra-luxury traveler. Having FEMA employees stay in $1,000 rooms is certainly one way to provide economic stimulus, but it does not inspire public confidence.

Hawaii, in partnership with the federal government, should consider chartering a cruise ship or building temporary barracks under emergency authorization to house both the present clean-up workers and the construction workers to come.

Fourth, and perhaps most importantly, since the success of rebuilding efforts depends entirely on whether the County of Maui and the State of Hawaii implement zoning reforms, Congress should consider mandating such reforms as a precondition for financing reconstruction. Washington has many grant programs for disaster recovery. Ideally, Congress should authorize special funding for Maui to upgrade water, power, and road infrastructure for disaster resilience. But there is no sense in pumping money into rebuilding if nothing can be rebuilt.

Any attempt to impose zoning reform will not sit well with the atmosphere of paranoia on the ground. But grief and resentment will only multiply if residents don’t get their homes back. Federal intervention may be the only path to breaking through the island’s political deadlock.

Whether Maui successfully rebuilds now depends on whether federal, state, and local policymakers can work together to craft interventions that address the island’s peculiar geographical and historical circumstances. If they fail, the consequences will be severe, not only for Maui and Hawaii, but also for the U.S. and the Indo-Pacific region at large.

Photo by Robert Gauthier/Los Angeles Times via Getty Images


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