If Housing Costs in Honolulu Are Bad Now…

by Tom Yamachika, President, Tax Foundation Hawaii

The cost of having four walls and a roof over your head in Honolulu has been staggeringly expensive relative to the rest of the nation for a while now. The median price of a single-family home on Oahu in July reached $835,000, while the median price of a condominium rose to $460,000, according to a report from Honolulu real estate firm Locations Hawaii. “This means that everyone is acknowledging that this is a very serious [housing] crisis that we are now in,” Councilmember Kymberly Pine is quoted as saying on September 21 in Hawaii News Now.

Yet, the Honolulu City Council is considering Bill 25, which would add numerous energy conservation requirements for any residential dwelling that is new or remodeled. Among the new mandates being considered:

Water Heating from Renewable Energy Only. This provision would effectively mandate solar water heating and outlaw gas heating. Some testifiers on the measure stated that this mandate alone would add $7,000-10,000 to the cost of a home. That could be the difference between qualifying for a mortgage or not, especially for residents making the area median income of $85,000.

Other testifiers pointed out that all solar water heating systems have an electric heating element as a backup. This is because sometimes hot water is needed at night or in the early morning, or when the sun is behind cloud cover. So, this requirement might result in higher electricity demand, which might not be an intended consequence.

Ceiling Fans and Air Conditioning. Ceiling fans or whole-house fans would be mandatory for every bedroom and the largest room, presumably the living room. A/C would be allowed in no more than half of the house.

The bill does not explicitly say that the requirements apply only to new houses. Therefore, if you have an existing house and you need to apply for a building permit for some reason, you may have to retrofit to conform to these requirements, although the City’s Office of Climate Change says that no retrofitting is required.

Electric Vehicle Charging: The current bill draft says that new residential multi-unit buildings with 8 or more parking stalls, and new commercial buildings that have 12 or more parking stalls, must be electric vehicle charger ready for at least 25% of the parking stalls. Residential buildings must be AC Level 1 charger ready, and commercial buildings must be AC Level 2 charger ready. (Level 1 is basically house current, and Level 2 must be fed by a 240-volt line.)

Some of the testifiers state that the requirement isn’t good enough, and that the ordinance should require 100% of the parking stalls to be Level 2 charger ready. They point out that a Level 1 charger would need multiple days to charge a vehicle, and that there would be practical problems figuring out which stalls would get the chargers.

Others argue that such a capability would cost $11,300 per EV-ready stall. They say that it’s a lot to ask given that 99% of us don’t drive electric vehicles.

So, what is the takeaway from all of this? I’m reminded of one phrase drummed into my head when I was growing up: “If you aren’t going to use it, don’t buy it.” There seem to be some provisions in Bill 25 that will require potential home buyers to pay for things they might not use. If we as a people don’t care about that and want to force changes in social behavior to support The Environment and industries supporting The Environment, then this bill should pass. If we care about protecting consumer choice and the efficiency of the marketplace, or if we are concerned about the housing crisis and the availability of affordable lodging, then this bill should be shelved. Let’s see how the discussions on this bill play out.