• Want for affordable housing grows on Neighbor Islands
Want for affordable housing grows on Neighbor Islands
By Lowell L. Kalapa
In going holoholo around the islands, it is increasingly apparent that much of the development and construction has been focused on high end resort development and/or second home development.
What is also increasingly apparent is that those people who work in these resorts or upscale housing developments have to travel a far distance in order to reach their places of employment. On the Big Island, many travel from the East side of the island to work in the Kona and Kohala areas.
On Maui, we learned that there are workers who come from upcountry all the way to the Westside to work because what affordable housing there is on the West side is limited, if not expensive.
While workers may not have to travel as far on Kaua‘i, the cost of housing is rising rapidly as mainland investors snap up choice properties to build second homes.
This is almost the same dilemma that faced Honolulu folk more than a decade ago when the Japanese bubble was rising and foreign investors snapped up what urban land was available and paid premium prices for these properties. While this burst of investment in real estate is not quite the same as the earlier bubble, it is generating the same kind of pressures pressure on the housing market, in particular the affordable housing market,
In Honolulu, the demand for affordable housing appears to have been met with a flurry of activity in the early part of the 1990s. In fact, the tax incentive for affordable housing promoted by a previous governor came at exactly the wrong time, creating huge inventories just as the market started to slide. This should be a painful reminder that government doesn’t always know what it is doing.
One thing we should have learned from that painful experience is that the demand for housing is driven by the market and not dictated by government. Tax credits or tax exemptions merely help to make an unfeasible project acceptable. If there is no demand for a certain product, then tax incentives do nothing more than discount a product that the consumer really doesn’t need.
On the other hand, there are things that state and local government can do to help encourage the construction of affordable housing. Almost to a tee, developers will argue that the cost of zoning and permitting adds substantially to the cost of construction. While anyone in a private, for profit business will agree, time is money, The longer it takes to do anything will end up costing someone money.
Now the debate is heating up over whether or not the state land use commission should continue to dictate where and when lands should be reclassified. Calls are being made to assess the need to preserve the state’s prime agricultural lands, a call that came more than 25 years ago at the state’s last constitutional convention. It seems that if policy makers and administration officials have not finished that task by now, then someone needs to take the bold step and make those decisions once and for all.
Continued delay in doing so will only exacerbate the cost of housing in Hawai‘i and Hawai‘i will again go through another affordable housing crisis a crisis that could seriously injure the economic future of the state. So if government officials want to encourage the development of affordable housing and give certainty to the economic future of the state, they need to minimize the costs of development by reducing or eliminating permitting and processing hurdles.
That is not to say development should be allowed to go about willy nilly. On the other hand, the county and state governments need to decide where affordable housing is needed and be willing to work with landowners to develop those areas of the islands. Recent incidents both on the Big Island and on O‘ahu have demonstrated the lack of coordination and decision making on where development should take place.
Those incidents also are indicative of how government cannot envision the needs of their constituents and design a game plan of how to achieve those visions or goals.
Rezoning land in areas where there is a demand for affordable housing, streamlining the permitting process and supporting developments with the necessary infrastructure are but a few ways state and county officials can assist with the provision of affordable housing. Subsidies in the form of tax incentives are not appropriate ways of spending taxpayer dollars nor are placing hurdles in the face of developing affordable housing beneficial for the people of Hawai‘i.
Lowell L. Kalapa is president of the Tax Foundation of Hawai‘i.