Affordable housing

Affordable home ownership and ensuring that all residents have access to housing that meets the needs of Hawai‘i’s working people is a challenge our state will continually face into the future.

It’s a classic example of supply and demand. The supply, partly as a result of living on an island, is finite, while the demand is infinite.

One result of living in a place of great beauty and having tourism as our number one industry is that each year millions of people visit our home, flying in daily from all corners of the globe. A large percentage of our visitors are relatively wealthy and have the ability to purchase property to live anywhere they choose. Many do not hesitate to make that choice, and decide to invest and to live as our neighbors. This constant flow of wealth and visitors to Hawai‘i creates and sustains high-end demand especially on the Neighbor Islands.

Hawai‘i’s seemingly perpetual shortage of new affordable inventory is exacerbated by complex land-use laws and the lack of adequate infrastructure.

In an effort to manage growth and protect our environment, Hawai‘i has strict zoning guidelines and land-use laws governing new development. The process for taking land from an agricultural designation to an urban or residential designation is long, complex and expensive. In addition, the public’s desire to preserve open space and protect existing agricultural lands further inhibits the rapid urbanization of new lands and thus slows the development of new housing inventory.

Because of the constant pressure on supply by the steady flow of investor/owners from outside the islands, developers will always “build to market” and sell at the top price that the market will bear.

Thus, to increase the amount of “affordable housing inventory,” government must require developers (in return for zoning or other incentives) to build and sell a percentage of their homes “below market” at affordable prices to local residents. The developer then will offset this cost of doing business by selling the remaining inventory at higher prices and/or reduce their profit margin.

Zoning concessions, density bonuses, tax credits and other tools are available to leverage the number of affordable housing units that will be built. However, the lack of adequate infrastructure is perhaps the biggest obstacle to new housing development.

The financing and construction of new or expanded infrastructure in existing urban and residential areas is probably the single most important thing government can do to accelerate the development of housing for local residents. And it will create new jobs. Without question the single largest expense of any housing developer is the construction of new roads, water and sewer improvements.

“In-fill” development and the redevelopment of existing urban areas makes great sense from a community planning and transportation perspective. For the most part, these lands are already zoned for development. However, the cost of putting in the necessary infrastructure causes these lands to sit idle and under-utilized. Developing new communities in these areas, with perhaps higher density than has been customary in the islands, makes for more livable and more affordable “walk-able” communities with access to public transportation, shopping, government services and areas of employment.

Government has the long-term capacity to borrow the funds needed to build the infrastructure and will be repaid over time via payments in sewer, water and property tax fees.

In these times of high unemployment and a dragging economy, the state and county governments should move forward and aggressively invest in and build the critical infrastructure needed in areas where landowners and developers are willing to develop new affordable housing for local residents.

•Gary Hooser is the Democratic majority leader in the state Senate, representing Kaua‘i and Ni‘ihau. His regular column, written exclusively for The Garden Island, tackles the critical issues facing Hawai‘i.