Rein in this red-tape rascal

From Grassroot Institute, October 2, 2020

When your state lacks sufficient housing, the last thing you should do is make building a difficult, risky and lengthy process. But that’s exactly what Hawaii has done by creating levels of bureaucracy that strangle development.

On this week’s episode of “Hawaii Together” on ThinkTech Hawaii, I interviewed Jackson Makanikeoe Grubbe, a research associate with the Grassroot Institute. Jackson is the author of our new report on the state Land Use Commission, “Reform the Hawaii LUC to encourage more housing.”

While housing and development are hot topics in Hawaii, few people understand what the Land Use Commission (LUC) does. But it has a significant impact on what land is available for housing and how quickly homebuilding can occur.

The LUC’s primary role is to decide whether land-use designations can be changed for parcels larger than 15 acres. In other words, if you wanted to reclassify a 20-acre parcel of agricultural land to urban so you can build houses on it, you would have to petition the LUC. The LUC would then hold hearings and decide if your proposal conforms to the Hawaii State Plan. That typically takes at least two years. 

But you wouldn’t be done yet. Assuming your proposed development made it through the LUC, you then would need to move through the county zoning process. That could add an additional year. Or three. 

Then you would have to consider the different permits and permissions you might need, like environmental permits and subdivision approvals.

And let’s hope that your project hasn’t been tied up in lawsuits while all these other things are going on.

All said, it would take about 10 years to clear the red tape that ties up the larger housing projects in Hawaii. And that might be optimistic. We have found examples where it took 20 years or more.

But whether it’s 10 years or 20, the longer it takes, the more expensive and more risky it becomes. Your company might not even have the resources to wait a decade or two before a project can go forward. Such costs and delays, in fact, are why many developers try to sidestep the LUC altogether, by avoiding projects that go over the 15-acre threshold. 

Eventually, the problem trickles down to the ordinary Hawaii resident who just wants to buy a house. By making it harder to build homes, the state artificially reduces supply, which increases demand and drives up prices.

As Jackson explained in our interview, a big part of the problem is that the LUC has been acting like a zoning commission, duplicating the demands and work that should be handled at the county or city level. The LUC has been known to require developers to fund schools or other infrastructure. There have been instances when its regulatory requirements were extremely particular, as in a 1990 case where it approved a housing development but regulated the golf prices and required the development to provide one “non-tourism job” per unit.

As Jackson explained, when the LUC steps beyond the boundaries of its mission and acts as a county zoning board, it causes delays and uncertainty. What’s more, the LUC’s forays into zoning are redundant. The counties are far better equipped to handle that element of the process and know what is really needed to protect public safety and promote local interests.

So what can we do to make the agency less of a barrier to new housing?

In our new report, Jackson notes an effort in 2015 by then-Senate President Donna Mercado Kim to abolish the LUC. Her proposal failed. But there are still measures we could take to reduce the delays and inefficiency created by the agency. Mainly, we could reduce its scope of responsibility.

As I mentioned in our interview, we certainly want to protect and care for our land and other natural resources. But that mission gets muddled when the LUC is overly concerned with zoning and other goals outside its original kuleana. Thus, the commission should return to its core mission of ruling on proposed land-use changes and how they accord with the Hawaii State Plan. 

Another option could be to speedup the agency’s quasi-judicial approval process. Yet another could be to increase the acreage threshold on parcels that counties are allowed to handle without LUC involvement. A 2019 legislative bill proposed 25 acres, but it could be more.

There might be other worthy options our lawmakers could consider. The point is to make housing more plentiful and affordable for Hawaii residents. 

In the wake of the coronavirus emergency, everyone is feeling the economic pinch. If we are serious about reducing the cost of housing in Hawaii, we need to take action soon. Reforming the LUC to eliminate some of the delays and risks for homebuilders would be just a small step in making our state more affordable, but it's one that would benefit everyone.

E hana kakou! (Let's work together!)

Keli'i Akina, Ph.D.
President/CEO