How To Redefine The Housing Crisis In Hawaii

By Jonathan Likeke Scheuer –

Myths, truths and steps that can take us forward.

I am now in my seventh year of serving as one of nine members of the state’s Land Use Commission. The LUC is responsible for moving land from Hawaii’s conservation and agricultural districts into the urban district — for housing and other purposes.

Over those seven years I have wised up to a pattern that is as reliable as the return of the kolea. Each fall, in the lead up to the opening of the next legislative session, developers and their lobbyists and allies start to squawk about our “housing crisis!”

They then, under the guise of creating affordable housing, propose projects that will fatten them. In January their legislative allies give opening day speeches and introduce housing bills. If any of those bills survive and pass, they may smooth the way for development but they are half-measures at best when it comes to affordable housing.

Right around the time the kolea fly north, the lobbyists disappear. The “housing crisis” persists, despite decades of promises. For developers, it is the gift that keeps on giving.

I am not blind to Hawaii’s widespread homelessness, overcrowding in small living spaces, absurd commutes, the disproportionate challenges faced by Native Hawaiians and the struggles of the middle class to pay astronomical prices for decades-old fixer-uppers. I consider myself very fortunate to fall into the fifth category.

But we cannot hope to solve our housing problem until we recognize the myths in most definitions of the housing crisis. Here are the three myths I hear most often at the LUC.

No Lack of Housing Stock
Myth: We don’t have enough, or build enough, housing.

Truth: As the pandemic took hold and tourism shut down, it became clear that the over 80,000 newly vacant visitor units in the state were far more than what was needed to house our homeless population, which was estimated to be around 6,500 statewide in 2020.

Even in non-COVID times, the vacancy rate at the high end of the residential market is significant. Think of all the dark windows in luxury buildings across Hawaii. A 2019 survey of Hawaii property owners with out-of-state addresses indicated that 52% of them left their units vacant or loaned them to family or friends.

I am not suggesting we commandeer those units, but they disprove the claim we don’t have or build enough homes. We actually do OK at building housing – take a look at the Kakaako skyline – just not housing that most residents can afford.

Local Families Are Being Outbid
Myth: We need to build 10,000 (or 25,000, or 50,000) new housing units so we can house our local families.

Truth: Because there is no shortage of people who want to move to Hawaii, we cannot build our way out of this situation.

From 2006 through 2018, an average of just over 55,000 people moved into the islands every year. In years when in-migration exceeds outmigration, this of course directly increases demand.

But even in more recent years, when the number of people moving out of Hawaii has exceeded the number of people moving here, the influx has exacerbated the problem of affordability. So many people who want to live here come from areas with better wages and lower housing costs, and thus they are able to outbid current residents in nearly all housing categories.

This holds true for short-term rentals, long-term rentals and for-sale units. We see it in single family units and condos and in prices ranging from affordable to ultra-luxury. We see it during periods of economic expansion as well as recession.

This is not a new observation. The 2019 State Housing Planning Study cited 2018 data when noting that “15% of Honolulu sales were made to non-residents and 37.5% of Maui County’s housing unit sales were made to persons living outside the State. Hawaii and Kauai Counties also saw approximately 40% of their home sales go to outside buyers.”

The study noted a large “price differential” in the average prices paid by local versus out-of-state buyers – the latter paid nearly 50% more.

Globally, Hawaii is perceived as one of the best places on the planet to live. Unless we significantly restrict flows of people and capital to the islands — which, as a U.S. state, we cannot do — our housing will always be affected by outside pressures.

Mass building will transform our islands and communities. But without significant regulation of who can live in it and how it is priced, creating housing feels like tossing candy off a Christmas float and hoping the kids who are hungry will catch it.

Regulation Is Not The Culprit
Myth: We need to reduce or eliminate zoning, cultural protection and environmental laws.

Truth: The recent Grassroot Institute missive “Reform the LUC to encourage more housing” is the latest in the steady calls for deregulation. These calls seek to reduce or eliminate the LUC and affordable housing quotas and to “streamline” reviews that protect cultural practices and natural resources.

The report looks at legal challenges that have succeeded against developments. But rather than acknowledge the bad business choices of corporations, it blames those who held developers accountable.

In fact, in recognition of the need, regulation around housing has been eased. In 2006 the state instituted an expansive “201H process” to accelerate the creation of actual affordable housing.

The measure allows for housing projects that are exempt from certain statutes, ordinances, charter provisions and rules of any governmental agency relating to planning, zoning, construction standards for subdivisions, development and improvement.

When those projects need LUC approval, the LUC is required to act within 45 days of the filing of a petition. (Our standard timeline allows for 365 days.)

Despite that dramatically accelerated schedule, the LUC has approved every affordable housing project brought to it under the accelerated 201H affordable housing timelines.

There is ample evidence that the LUC is not the barrier to creating affordable housing. One key fact: The LUC has already moved hundreds of acres of land — which were supposed to provide space for many thousands of homes — into the urban district on Oahu. Most recently, landowners of significant urban acreages at Waiawa and Kunia have instead asked permission from the LUC to delay deadlines to build homes by decades to allow them to install solar farms instead.

So what’s a better definition of the problem?

Hawaii has a large shortage of safe, quality housing that is 1) affordable given current wages in the state; 2) restricted to those who already call Hawaii home, especially Native Hawaiians; and 3) in locations near job centers. We lack the political will to either regulate and manage the market to provide this housing or to sufficiently subsidize occupants to enable them to afford housing.

With that definition, here are some policies that could address the problem.

Solutions To Consider
1. Hold developers to promises they’ve already made. Too often, promised housing isn’t built for decades or isn’t built at all. For example, Oahu’s Makaiwa Hills project on former Campbell Estate lands, which first won LUC approval in 1993, has no announced plans to break ground.

Some projects will never be built, like the failed Hale Mua project near Wailuku, Maui, where the developer was foreclosed on and no credible proposal was put forward as an alternative.

Yet attempts to give the LUC enforcement power – to hold developers to the promises they have made on affordable housing – are not given a hearing at the Legislature.

The state and counties should consistently require affordable units from for-profit actors and fearlessly and consistently enforce and hold developers to their promises.

2. Funding for the Department of Hawaiian Home Lands should always be the first part of any push for housing by the Legislature; the fulfillment of the Hawaiian Homes Commission Act was a condition of statehood.

DHHL is also the one program that has strong and enforceable requirements about who can own the housing built. Yet DHHL is chronically underfunded and then blamed for its failure to fulfill its mandate. DHHL can do better, of course, but to pretend funding is not an issue is disingenuous.

3. We need to revise our rules about buying or renting in affordable projects. As it stands, the only requirement to qualify for newly developed affordable housing is “residency” – which requires only the payment of Hawaii taxes and establishment of domicile, not any length of time living in Hawaii. Because of this lack, there is no guarantee even the small amount of affordable stock will go to the folks who already live here.

We need multiple requirements — that do not violate equal protection or fair housing laws and principles — to allow people access to affordable housing in Hawaii. These can, for example, include requirements that tie housing to employment in public education, police or fire departments and other critical trades, as is already done in a limited way by the University of Hawaii.

4. The nonprofit affordable housing sector — which is required by law to work for a mission rather than money — should be our partner of choice when it comes to creating affordable housing. But rather than call on and cultivate relationships with these organizations (such as the Mutual Housing Association of Hawaii or the Hawaiian Community Development Board), our leaders more reliably turn to the for-profit private sector.

Other jurisdictions focus their efforts on fostering housing land trusts, land banking and providing incentives for nonprofit private housing developers.

5. State- and county-owned housing should be well designed and adequately funded. It needs to be protected from the short-term political whims of elected officials who think on two- and four-year cycles and secured for the long term needs of local families.

Government housing can be one of the best guarantors of long-term affordability, but it is subject to design problems (concentration of poverty), management problems (poor or poorly funded) as well as continual pressure to sell it off.

We should not forget the successful examples of government-backed projects on Oahu, like Queen Emma Gardens. As it stands now, the scale of our efforts here is minuscule compared to the need.

6. We should be increasing density in existing communities, not building farther and farther away from them. This will require the revision of existing laws and codes to prevent neighborhoods from being able to block development.

The way we define a problem determines the way we define its solution. The self-serving cries about an ill-defined “housing crisis” have led us largely to “solutions” that only exacerbate our problems.

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