Do the right thing for Maui housing, not just ‘something’

by Keli'i Akina, Ph.D., President/CEO, Grassroot Institute, October 15, 2022

“Do something,” goes the popular political call to action. But perhaps it would be better if politicians added a line from the medical field: “First, do no harm.”

In the case of housing, the urge to “do something” too often means expanding the role of government, which research shows is exactly the wrong medicine needed to remedy one of our most pressing issues.

According to a recent study by UHERO, the University of Hawaii Economic Research Organization, Hawaii already has the highest level of housing regulations in the country, which many other studies confirm is significant cause of our acute lack of housing and higher housing prices.

This isn’t a secret. Housing activists from all parts of the political spectrum have been telling Hawaii policymakers for years that the best way to increase homebuilding and bring down home prices is to reduce government barriers.

Nevertheless, calls to increase government involvement in housing persist. A perfect example of this flawed approach is Bill 107, approved Sept. 27 by the Maui County Council, which seeks to implement “affordable housing sales price guidelines.”

Bear in mind, of course, that in the context of housing regulations, “affordable housing” doesn’t refer to reasonable housing prices for everyone. It refers to a subset of homes that must be sold at below-market rates to residents who meet certain income requirements.

Under existing Maui law, a percentage of homes in any development over a certain size must be sold at these below-market rates. But by changing the “guidelines” of how those below-market prices are determined, Bill 107 would require homebuilders to lower the prices of their “affordable” units even further — by about 20%, or an average of about $120,000.

In testimony submitted to the Maui Council on Sept. 20, Joe Kent, executive vice president of the Grassroot Institute of Hawaii, warned that such a reduced price would disincentivize the construction of new homes — exactly the opposite of what the Council would like to achieve.

This was backed up by testimony from a representative of the Waikapū Country Town project, who said the bill would negatively affect a building project that has been in the making for more than a decade.

Despite the many reasoned arguments opposing Bill 107, the Maui County Council passed the bill by a 5-4 vote. As if the proposed “sales price guidelines” weren’t problematic enough, the bill also includes a vague subsidy program for prospective buyers that has the potential to become a budgetary albatross for decades to come.

The measure now is before Maui Mayor Mike Victorino, who has until Monday to decide whether to veto it, sign it or let it become law without his signature.

He has plenty of reasons not to let the bill become law, including that it likely will discourage new homebuilding, be a drain on the county budget and contribute to higher average home prices on Maui.

There also is the likelihood that the Council membership might change after the upcoming election, and this bill may not represent the wishes of Maui voters.

Will the mayor listen to the warnings that Bill 107 could end up doing more harm than good? No doubt it is a well-intended effort to “do something” about housing in Hawaii, but this is not the “something” that needs to be done.
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This commentary was Keli’i Akina’s weekly “President’s Corner” column for Oct. 15, 2022. If you would like to have his columns emailed to you on a regular basis, please call 808-864-1776 or email info@grassrootinstitute.org.