• Affordable housing Affordable housing By Walter Lewis The article by Sandy Helmer appearing in the April 24 Forum accurately notes the shortage of affordable housing on Kaua‘i. While the shortfall number varies depending on how the term “affordable housing”
• Affordable housing
Affordable housing
By Walter Lewis
The article by Sandy Helmer appearing in the April 24 Forum accurately notes the shortage of affordable housing on Kaua‘i. While the shortfall number varies depending on how the term “affordable housing” is defined, the shortage is at least several thousand units. A front page TGI article on the same day discusses the 40-unit Kalepa project nearing completion, a small step being taken to alleviate the need. The $7 million in construction costs for this project is insignificant in relation to the number of dollars that would be required to make a meaningful dent in the housing deficiency.
The Helmer article suggests property tax increases as the principal “solutions” to the problem. Property taxes were not the cause of the shortage of affordable housing, and should not be considered as the answer although they could be of some value. Real property values have soared in recent years largely because of the impact of purchases of scenic residential properties. The great preponderance of these acquisitions is now made by non-residents. The resultant prices have rendered most accommodations on our island unaffordable by persons having working level incomes.
At present the County obtains about $47.5 million annually from property taxes. The Mayorís budget for the coming year is seeking $56.3 million from property taxes, an increase of 18.5%. Owners are unhappy now about the current tax burden they are bearing and there would be serious political and economic concerns about further substantial escalations in property taxes.
The Helmer article says that one reason for the affordable housing crisis is that many owners offer vacation rentals and she suggests that tax exemptions should be given to owners who rent on a long term basis. This concept sounds appealing but it does not directly benefit the resident renter’s costs. It is inferred that the tax incentive would induce owners to switch from seeking vacation rentals to having resident tenants. The success of such an effort is dubious. The County does not have any reliable estimate as to the number of dwelling units that are presently in vacation rentals and it would be difficult to predict results. Owners place properties into vacation rentals because the revenues are significantly higher than the amounts from longer term leases. The tax reduction potential would have to be substantial to bridge the difference and that is not a reasonable expectation. Most of the vacation rentals are by visitors who are able to afford pricier accommodations. These properties are not in the affordable housing category. The suggestion raises a vexing tax policy issue. Tax legislation normally occurs to raise revenue for the taxing authority. Measures that reduce taxes for specific taxpayers must have valid public policy justifications. The owners who change from vacation rentals for their property to longer term rentals will be doing so for economic reasons they consider beneficial, but in most cases they will not be easing the affordable housing problems. The case for imposing the cost of these tax reductions on other taxpayers is not compelling.
The recommended solution as to time shares has merit. The mushrooming quantity of time share units on our island is awesome. There are over 1500 units here — more than any other Hawaiian island – and many more are being planned. They should be adequately taxed to help meet the needs of Kaua‘i, but the time share lobby is formidable.
The housing needs for Kauaians are intense and the views in Helmer article are valuable in promoting the dialogue. Our elected officials actively and frequently voice their concerns about those needs. Unfortunately, their inaction is louder than their words. Targeted property tax measures may modestly ease our problem of insufficient reasonably priced housing, but much more is required. One promising concept would be to mandate a fund to be created from fees applicable to all new developments with contributions to be scaled based on the size of the development and the proceeds being applied to affordable housing.
Our best chance for a solution lies in a broad based government and private initiative that will bring together all the resources that will be required. We wish that our government would have the foresight and fortitude for such an endeavor, but are concerned that these attributes are not readily observable.
Walter Lewis is a resident of Princeville
