Kent, Tumpap look ahead after impressive housing event on Maui

by Grassroot Institute of Hawaii, July 28, 2022

“Wow.”

That was Pamela Tumpap’s reaction to Tobias Peter’s July 13 presentation in Kahului on the “Tokyo model” of housing.

Tumpap, president of the Maui Chamber of Commerce, said this past Tuesday on her KAOI radio show, “Business Matters,” that it was “really the whole presentation. … There was so much to share and [Peter] did an awesome job just trying to get through as much of it as he could in the time that we had.”

Tumpap was speaking not only to her radio listeners, but also to Joe Kent, executive vice president of the Grassroot Institute of Hawaii, which sponsored the presentation both on Maui and Hawaii island.

“He is a phenomenal speaker … [and] had phenomenal slides,” Tumpap said of Peter, assistant director of the AEI Housing Center, based in Washington, D.C. “And how do we work with the state and counties to move in this direction [the Tokyo model]? Because it is a model that, from those I was sitting with, which included many community organizations that work in housing, as well as developers, we all just went, ‘Wow.’”

Kent responded: “Of course, we brought Tobias out here not to look at how do we make Maui the next Tokyo. We just wanted to see what has worked and what ideas can we pull from, like the slightly higher building heights, and parking, and little things like that.

“And we’ve talked to a lot of our legislators and Council members who are very much with us when it comes to Yes In My Backyard,” he continued, “Many Democrat and progressive circles, by the way, have risen to the Yes In My Backyard movement. And that is actually starting to take a [foothold] here in Hawaii with a lot of prominent lawmakers.

“Just … this year,” Kent said, “there was a Yes In My Backyard bill passed [in the Legislature] to at least look at the issue and to try to figure out what could we do to restructure the zoning or housing system to make it work.

“So, little by little, [we’re] chipping away, and it takes education. That’s what we’re all about is just trying to get ideas out there, and let’s talk and let’s work together. That’s what our CEO and president, Keli’i Akina, says all the time: “E hana kākou.” Let’s work together. And that’s our motto.”

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TRANSCRIPT

7-26-22 Joe Kent with Pamela Tumpap on KAOI radio, Maui

Pamela Tumpap: We’re back. Our next guest is Joe Kent, the executive vice president of the Grassroot Institute, which is an economic research organization and a nonprofit taxpayer watchdog that promotes values of individual liberty, economic freedom and accountable government. 

Joe grew up on the Big Island and attended the University of Hawaii at Hilo and Minnesota State University, where he obtained his degree in education. Joe was a public school teacher for eight years here at King Kamehameha III School in Lahaina and Sleepy Eye Public School in Minnesota. 

Now that’s kind of interesting. Sleepy Eye. I’m going to have to have you tell us a little bit about that, Joe. 

He is also a former student fellow at the Foundation for Economic Education. 

Good morning, Joe, and welcome to the show.

Joe Kent: Good morning, Pam. Thanks so much for having me on the show. You just reminded me about Chief Sleepy Eye, [whom] the school was named after in Minnesota. [laughs]

Tumpap: That’s an interesting name for a school. [laughs]

Kent: It really is.

Tumpap: Well, I’m so glad to have you on this morning. I had the pleasure of attending one of the forums that you’ve been bringing to Maui, and you brought Tobias Peter, an assistant director of the American Enterprise Institute Housing Center. And he is a phenomenal speaker. And the topic was really geared around Hawaii looking at a “Tokyo model” that he presented for housing.

Kent: That’s right.

Tumpap: Joe, tell us a little bit about how you brought Peter here, and some of the big takeaways that you felt that he shared during the models that he presented to us on zoning.

Kent: Yeah, absolutely. Well, he talked about the Tokyo model for housing. And we’ve heard a lot about different housing models recently: the Singapore model, the Vienna model, and those models tend to focus more on public housing and the state as your landlord. And we wanted to look around the world to see what other models there were, and it turns out in Tokyo, an amazing thing has happened: Housing prices have stayed flat. Despite housing prices skyrocketing in all major cities around the world, especially in Hawaii and Maui, home prices stayed flat in Tokyo. And there’s one person who knows why — and it was Tobias Peter — so he presented on that.

Tumpap: Yeah. You know, it was, again, as you talked about, and we’ve done projections from a housing forum and said, at a very, very low interest rate, very low, 4% — and we don’t project forward usually, except for when you’re looking at reverse mortgages — and that number I was given, was told it’s extremely low. I said, well, we want a number nobody will question. 

Continuing to project out, we’ve already exceeded the 2024 projection, which would be over a million-dollar median home price. And we projected that we would hit over $2 million median home price at that 4% annual increase in 2042. This is everybody. And  to hear that Tokyo has a model where it’s staying flat. [laughs]

Kent: Well, just imagine, in Tokyo, you can buy a two-bedroom apartment for $1,000 a month. And that just almost seems unbelievable right now, and it’s been that way for the past two decades. 

So what has happened, where they have actually provided enough housing for everyone, and the answer is, they’ve allowed people to build. Their system is really based on a market and property-rights system with little possibilities for local interference. 

And so, in Hawaii, we often see public input at every step in the housing process and that often delays or kills housing projects, because often the neighbors don’t want the projects next to them, and they’re the loudest voices at those hearings. 

But in Tokyo, almost all the housing is done “by right.” And that means if they have the right to build in their zone, then they don’t need to go through the public hearings, they can just build. And that’s partly because they’ve zoned to allow for more housing.

Tumpap: Right. And let’s talk about how they’ve been doing that with inclusionary zoning.

Kent: That’s right, that’s right. In the U.S., inclusionary zoning means affordable housing requirements. But in Tokyo, inclusionary zoning means the lower zones are included in the higher zones. 

So for example, in the lowest-density zone — the single-family zone in Tokyo — it allows for three-story buildings and so on, but not many businesses can build there. But in the higher zones, in the more urbanized areas in Tokyo, you can still build a single-family home.

I mean, in the most urban district in Tokyo, you could have a very high-story building right next to a single-family home. That almost seems unbelievable, but of course, on Maui and in Hawaii, we don’t allow the building of housing in the business districts. In fact, on Maui, I think, there was recently a bill rejected at the Council that would’ve allowed vacant spaces in industrial areas. But that got voted down.

Tumpap: Yeah. We opposed that bill and the reason we opposed it was it also had apartments, that you could have apartments in these areas. And that one of the things that I thought they did right in the bill, was say, “Look, because it’s in a commercial area, we do want to have an environmental assessment, to make sure, for example, if you were going to be within a certain radius of, say, a prior gas station or something, we want to make sure that it’s in an area where we’re not worried about, for example, some sort of toxic leak.” 

But then there was also inclusion of looking at ways to landscape and to provide buffer areas in the development, which would’ve been helpful as well. But we got really hung up on things like, well, there might be late-night noises. Which, by the way, in ag properties, we have that as well, right?

Kent: It’s true.

Tumpap: You can farm later at night and you can have loud noises. We got hung up on things like lighting and certain things. 

But the point is that, first of all, in developing a development in those areas, the developer is not going to develop something that they won’t be able to either sell or lease out, right? They’re not going to put a huge investment in doing that. 

And people will have a choice, and it was for apartments. So again, people would have a choice. Right now we have so many people saying our choice is to have a roof over our head. Our choice is to have an affordable place to live.

Kent: Right.

Tumpap: So it was really, in my mind, shocking that we didn’t recognize that. And also, it was also apartments, so people could rent there and it would be a great demonstration model, in my mind, to look at other alternatives because people weren’t making the life choice of, say, owning there, gave us a lot of flexibility. 

And I think that what we saw, and you had a great picture of an area where somebody had a large estate home surrounded by buildings in Tokyo, and that they could keep their large estate home in that area while Tokyo allowed other uses. And, it was …

Kent: Yes, that’s right. In Tokyo, if you have a mansion, for example, you could tear it down and build affordable housing, if you want. If you had a group of houses, for example, that [you]wanted to demolish and instead build apartments, they could do that too. But in Hawaii and Maui, that’s a lot more difficult. You would have to ask permission from the government and that might be a political process.

But notice that, in doing that, if you replace a mansion, for example, with a low-rise apartment complex, you could actually increase the value of the property, since you could get more money per unit. 

That’s a weird thing. You think, oh, it’s always the most profitable to build a mansion, but that’s not true. Sometimes it’s actually more profitable to build apartments, or even affordable apartments, than it is to build a mansion, because, if you think about it, a mansion, you can only get a few million dollars, but an apartment complex could be worth tens of millions of dollars because of all the tenants living there.

But on Maui, we make it difficult to build apartments — even low-rise apartments —  that the developers often just, well, they throw up their hands, and say, “OK, I’ll just build a mansion instead.” And that means that you have one person living there, or one family, rather than a lot, and that’s basically broken our housing system.

Tumpap: Absolutely. And this Tokyo model really showed that. I mean, it was just very clear. I wish we had had more legislators in the audience because that whole point about how to use the land and how to best utilize it, and that way that we can model after Tokyo to have more density in an area. 

And that we, in Maui, we have such limited density. We’ve got big parcels of land with very few homes on them. And yet the conversion in Tokyo to go from that, if you so choose — as you point out — to increasing your property value by upscaling them and having more density and use on the land, and the tremendous amount of housing it creates. There were some other … 

Kent: And also …

Tumpap: Go ahead.

Kent: I was going to say that, in so doing, then you refresh the housing. A lot of housing on Maui is many, many decades old, and it’s crumbling. And you see on social media these posts of a picture of a million-dollar home on Maui, and it looks like it was built in the ’60s. 

And that’s because it’s so difficult to build here that nobody tries, and there’s really no incentive to tear down old buildings and build a new one there, or a new group of buildings there either.

Tumpap: Yeah. By the zoning change, this eases that, and then you see brighter, fresher, more up-to-date-with-code communities, as we’re rebuilding. Because they don’t have to go through these long processes to try and get things through, which is really phenomenal. One of the things … 

Kent: Yes. 

Tumpap: Oh, go ahead.

Kent: I was going to say that also, some people might wonder about infrastructure, by the way, because if you’re building so much more, then how do you create the infrastructure needed for all these new homes? 

But Tobias explained that infrastructure is really, it’s actually benefited by a policy that’s more favorable toward development, because more housing equals more tax revenue, which can pay for the infrastructure, like roads, bridges, electricity and so on.

Tumpap: Yeah. That was a great point. And the other point that I found fascinating, but also Tokyo has a different system, was parking. And they can either address parking in the development or not address parking in the development. But Tokyo, because of the narrow roads, there isn’t room for on-street parking. So 1) that doesn’t happen in those areas, and 2) and I found this when traveling there, that you cannot even buy a car until you can prove you have a space to park it.

So a lot of people were the developers, and I was asking well, talk to us about parking. But what they found though, is, of course, there are more walkable, bikeable communities as well in Tokyo, which is really exciting. And then some developments have parking and some developments don’t, but again, that’s a consumer choice on where you want to buy in.

Kent: Yes, exactly, and that’s something on the mainland that they’re doing in Minnesota and Oregon and California. They’re starting to relax these stringent parking requirements because not everyone needs or wants a parking space. 

And that requirement adds to the price of the house, which is what we’re trying to address. The houses are so expensive. But also, in Tokyo, they allow for higher buildings. You can have a three-story building. 

In Maui, you can have maybe a little less than a three-story building. But with three stories, you can put the parking underneath the housing on the first floor, for example, and that solves the parking problem.

Tumpap: Yeah, and Tobias was saying, “Look, given where we’re at, we’re just talking about going up a few feet. Because we’re just under that three-story limit that allows Tokyo to do it. But if we just went up a few extra feet, that would make a huge difference. And, again, allow for more density in different areas.” 

It’s really the whole presentation, and I know that there was so much to share, and he did an awesome job just trying to get through as much of it as he could in the time that we had.

So now, and I know he has phenomenal slides, and I know that you’ve been doing this across the state What is the Grassroot Institute’s next step? 

How do we work with the state and counties to move in this direction? Because it is a model that, from those I was sitting with, which included many community organizations that work in housing, as well as developers, we all just went, “Wow.” 

Minor changes, but some of them bigger in terms of understanding the density things, that’s sort of a bigger change. But things like, if we just go up a few extra feet, we’re still protecting views, [and] we could address parking and other things a different way. 

Where is Grassroot going next on this?

Kent: Of course, we brought Tobias out here not to look at how do we make Maui the next Tokyo. [chuckles]

Tumpap: Right. No, no, that’s not our goal.

Kent: That’s right. We just wanted to see what has worked and what ideas can we pull from, like the slightly higher building heights, and parking, and little things like that. What can we bring to the state? 

And we’ve talked to a lot of our legislators and Council members who are very much with us when it comes to Yes In My Backyard. We hear a lot of people say, “Not in my backyard. No new development. Don’t try new things.” 

But we want to try to find those people who are into the Yes In My Backyard movement, which has taken a [foothold] on the mainland in California and Minnesota. And many Democrat and progressive circles, by the way, have risen to the Yes In My Backyard movement.

And that is actually starting to take a [foothold] here in Hawaii with a lot of prominent lawmakers. Just last year, or excuse me, this year, there was a Yes In My Backyard bill passed to at least look at the issue and to try to figure out what could we do to restructure the zoning or housing system to make it work. 

So, little by little, [we’re] chipping away, and it takes education. That’s what we’re all about is just trying to get ideas out there, and let’s talk and let’s work together. That’s what our CEO and president, Keli’i Akina, says all the time: “E hana kakou.” Let’s work together. And that’s our motto.

Tumpap: And you folks are doing a great job. You’re a phenomenal think tank organization bringing in experts like this. It really was a great presentation. And how can people who maybe weren’t able to attend but are interested, where can they find it?

Kent: Thank you. Yes. We just put it up on our website, and we have the whole video and we have a transcript.

 If you go to grassrootinstitute.org, then you can find the video and read the transcript. And actually, the presentation was really funny in a lot of places too, so hopefully, your listeners will catch that.

Tumpap: It was, and again, I appreciate the work you’re doing. I know you’ve also been giving testimony on housing issues. This is such a critical need for our state. It’s an even more critical need in Maui County, and it’s something that we all need to partner with and work together. And I loved seeing this phenomenal presentation on this. And you’ve been doing others.

Kent: Oh, yes. We did another presentation on the Big Island that was well received, and we’ll continue to do more of these types of presentations. 

We have another presentation scheduled in August, on Aug. 18th at the Maui Arts & Cultural Center, and that has to do with fixing the state budget and the county budget. But if you’d like to learn about that, you can also go to our website at grassrootinstitute.org.

Tumpap: Yeah. Well, we are excited with the programming that’s coming through. Thank you so much, Joe, for doing this presentation, bringing Tobias, looking at models nationwide, and examining different areas that both Maui and the state of Hawaii can look at our housing differently. It is a statewide issue and it is something that we desperately need to solve. 

And again, you started with one of the things that I thought was really important, because again, as we are watching our median home prices rise, we’re seeing a lot of others coming in, finding that we’re, quote, “very inexpensive” and buying things up, and we’re pricing people out of the market. The flat models that this presents are some really great models. But again, it’s about getting more built. 

So we truly appreciate that, and you’re doing an awesome job, so thank you for all that you do all the time. And this is just one of your many topics, as you point out. We talk a lot about responsibility, fiscal responsibility in government, and this is also a very important election year. It’s really important that we get the right leaders who are willing to explore new concepts and move us forward. And thank you for all that you do in that arena. I’d love to have you on the show again soon.

Kent: Great. Thank you so much. We just cheerlead the work that you folks are doing at the Maui Chamber. It’s just so awesome to have your voice there, and thanks for having me on the show. We’d love to come back.

Tumpap: Thank you, Joe. It’s my pleasure and I hope you have a great day.

Kent: Thanks, you too. Aloha.

Tumpap: Thank you, Aloha. All right. Well, there’s so much going on in housing and many people always think of the Chamber in sort of a different arena …