Budget crisis not needed to solve housing crisis

by Kelii Akina PhD, President/CEO, Grassroot Institute of Hawaii, October 24, 2021

Housing is one of those issues we have long talked about in Hawaii, and after decades of debate, it seems there are now a few important points about housing that most of us agree on:

>> There’s not enough of it.

>> Zoning laws and regulations can stifle more of it.

>> Complex permitting procedures delay its construction and add to its costs.

>> Making more land available, even just a little bit, would help increase its supply.

Given these areas of agreement, it should be easy to reach a consensus on a few significant reforms that could help increase the supply and lower the cost of new housing. For example, we could:

>> Liberalize zoning restrictions to allow higher-density housing, including duplexes, tiny homes and mobile homes, and specialty housing on land owned by churches or schools.

>> Lessen the need for state and county approvals of projects under a certain size, such as, say, 25 acres.

>> Allow homebuilding on a small percentage of lands currently designated agricultural that likely will never be used for farming. Considering only about 5% of all land in the state is designated urban, a 1 percentage point increase of that amount would equal a 20% increase.

These are suggestions that are broadly supported and would require little if any taxpayer investment. They also are good starting points for addressing the housing crisis without committing to any major capital projects, adding to government payrolls or busting the budget.

Unfortunately, these commonsense proposals too often get pushed aside when government officials try to solve a crisis they helped create. Even attempts to reduce regulation usually end up increasing bureaucracy.

Consider, for example, Maui County’s newly released housing plan. Its goal is to add 5,000 affordable homes within five years. It acknowledges the need to streamline zoning and permitting procedures — a long-overdue recognition that the bureaucratic process creates major delays in construction. But the plan also comes with an estimated cost of about $1.2 billion, which it would raise through property tax increases, higher taxes on vacation rentals and new assessments on residential developers.

Worried about the high cost of housing, the county has decided to solve the problem through a plan that would increase property taxes — which inevitably would raise the cost of housing.

As for the streamlined approval process, the Maui plan would let housing projects skip approvals, but only if they receive final approval at the county council. Talk about a self-defeating approach. Removing approval roadblocks just to add a major one at the end — allowing the council to kill projects — misses the point entirely.

As the University of Hawai‘i Economic Research Organization noted in its critique of the plan: “The whole point of by-right development is to replace the traditional discretionary approval process with a rule-based approach.”

This same type of flawed thinking is reflected in the Biden administration’s Build Back Better plan, which looks to address the lack of affordable housing by pouring billions of dollars into upgrading public housing and funding rental assistance.

On the upside, Biden’s plan also promotes zoning reform, which I praised in Honolulu Civil Beat — especially to the extent that it might encourage relaxation of Hawaii’s burdensome land-use regulations.

But my praise was not intended to include the sky-high spending in the bill nor its eventual impact on taxpayers. It isn’t necessary to create a budget crisis in order to solve the housing crisis.

There is no shortage of good intentions here. Nearly everyone supports the idea of lowering housing costs and increasing the supply of affordable housing. However, both the Maui plan and the Biden plan get caught up in an overly complicated, government-heavy and very expensive approach to addressing the problem.

Let’s put our focus on where we can do the most good: reducing burdensome land-use and zoning regulations that hinder the growth of housing. That is the path that can lead to a real difference without the bloat of big-budget financial sweeteners.