Bottom line: State cannot afford to build everyone a new home

by Grassroot Institute of Hawaii, December 17, 2023

Hawaii has a housing shortage, and home prices in the state are so high that many long-time residents have been moving to the mainland because they can no longer afford to live here.

So what can Hawaii policymakers do about it? 

Jonathan Helton, policy researcher with the Grassroot Institute of Hawaii, said to H. Hawaii Media radio host Johnny Miro on Sunday that we simply “have to look at ways to make it easier for private homebuilders to build more homes.”

For Helton, those ways would consist primarily of zoning and permitting reforms, which he outlines in the Grassroot Institute’s new report, “How to facilitate more homebuilding in Hawaii.”

“All the things that we talked about here on the show, those are in there,” Helton said to Miro near the end of their conversation. “But the bottom line is this: Hawaii has a housing crisis and … the state and the cities do not have infinite money. The state can’t just say, ‘We’re going to build everyone a home.’ We just don’t have the money for that. 

“So, we have to look at ways to make it easier for private homebuilders to build more homes, and that’s what this report is designed to do.”

Miro noted that the report focuses on urban areas, and Helton said there are two reasons for that.

The first is that “there’s been a big push to …‘Keep the country country,’ and to not build a lot more housing on lands that could be used for agriculture. And so, because of that, people have tried to look at, “Well, if we’re not going to build new housing in agricultural areas, the focus is kind of shifted to ‘How can we build more houses in areas where there are already houses?’ 

“And the second reason,” he said, “really has to do with cost. Whenever you build a new subdivision out in agriculture or rural areas, you have to put in infrastructure for that. … So, if we can focus on building housing where there is already infrastructure, that will help to lower the cost.”

TRANSCRIPT

12-17-23 Jonathan Helton with host Johnny Miro on H. Hawaii Media radio network

Johnny Miro: Good Sunday morning to you. This is Johnny Miro. It’s once again time for our Sunday morning public access programming on our five Oahu radio stations, found at 101.1 FM, 101.5 FM, 107.5 FM, 96.7 FM and 97.1 FM. 

And the topic this morning will be housing. We seem to be talking about that quite often because it’s so important, and we’re trying to find a way — everybody is that is involved in it — to try to make it more affordable for everybody. We need more of it.

And the Grassroot Institute of Hawaii issued a brand new report this past week with a bunch of ideas about how to make that happen. It’s called “How to facilitate more homebuilding in Hawaii.”

And the policy brief was written by Grassroot policy researcher Jonathan Helton, whom I’ve spoken with on this program before, and who is a special guest this morning. So, welcome Jonathan. Thanks for joining us once again.

Jonathan Helton: Thank you for having me this morning, Johnny. I look forward to this conversation. 

Miro: Yep. What kind of housing shortage, Jonathan, is the state looking at currently? 

Helton: I think we all know that the state has a housing shortage, but let me try to put it into context.

So, back in 2018 the state of Hawaii did a study, and they said we need about 3,600 new housing units to be built every year for the next decade — so until 2030. And that same study said the state is only building between 1,000 and 2,000 housing units every year. So we’re already at least 1,500 units short every year. And that was in 2019. 

So, you gotta keep in mind that since then, we’ve had inflation and supply-chain shortages, and permits take forever to get processed at the county, no matter what county you live in. And the tragic fires. Maui is going to need a lot more housing than the state projected in 2019; and just to keep the people who lost their homes in the fire on the island. So, to call the housing crisis a crisis is not overstating it.  

Miro: Yeah. We have so many crises these days. Yeah, this is one that’s not overstated. 

Your new policy brief, Jonathan, “How to facilitate more housing in Hawaii,” it begins by stating that it is focused on how to build more housing in urban areas. Now, why did you choose to focus on just existing urban centers? 

Helton: There were two main reasons for that. The first is sort of political and cultural. 

There’s been a big push to quote-unquote “keep the country, country,” and to not build a lot more housing on lands that could be used for agriculture. And so, because of that, people have tried to look at, “Well, if we’re not going to build new housing in agricultural areas, the focus is kind of shifted to how can we build more houses in areas where there are already houses?” 

And the second reason really has to do with cost. Whenever you build a new subdivision out in agriculture or rural areas, you have to put in infrastructure for that. And if the person who’s building all those homes, if the homebuilder has to pay for the infrastructure, all the sewer and the water, they’re going to pass that along to the people buying the homes or renting the homes.

And if the city or the state builds the infrastructure, that’s coming from tax dollars. So, if we can focus on building housing where there is already infrastructure, that will help to lower the cost. 

Those are the two main reasons we wanted to focus, how I’m trying to ask the question of, “How can we build more housing in existing cities?”

Miro: Yeah, it does make sense. In your report, Jonathan, you list about a dozen different policy options that state and county lawmakers could adopt to facilitate more housing, starting with the concept of up-zoning.  

Now, that’s a term I haven’t heard yet. What is up-zoning? And how could it help lessen Hawaii’s housing shortage? 

Helton: I wanted to give a smorgasbord of options to the state and county lawmakers to look at ways to make it easier to build housing. Up-zoning is first because it’s kind of a buzzword that has taken off across the United States and even worldwide, when talking about housing. 

Up-zoning kind of refers to the idea of allowing additional density. 

So, a good example is states that have said, “Wherever you can build a single-family home, you are now allowed to build a duplex.” That would be an example of up-zoning, of adding additional density. And so I start there because there’s a lot of ways that the county governments can add density to existing areas.

So, the first one is very simple. It’s saying, “Wherever you can build a single family home, you are now allowed to build a duplex.” Now Honolulu already does a very good job with this; that’s already law in Honolulu. But if you’re going to build a duplex in any other county, it’s gonna be a little bit harder. And how much harder depends on the county you’re building in. 

Maui just made it easier for people to build duplexes, but it’s still not as easy as it would be in Honolulu, from a legal perspective. 

So that would be one thing to look at. Another thing could be to look at setbacks. 

Whenever you build a house, county zoning code says it must be X feet from the road or sidewalk, and it must be X feet from the lots besides the lot you’re building house on. And so all of that eats into the amount of house that you’re able to put on that lot. And so, that can contribute to driving housing prices higher as well. 

So that’s where I start to focus. I mentioned Auckland, New Zealand, and Auckland is a prime example. It’s a city that up-zoned a lot of the land. And as a result of that, housing prices decreased. So they added more supply, housing prices fell. That’s what we want to see happen in Hawaii. 

Miro: And similar, you know, the town has a nice harbor, and it’s very dense also, just like Honolulu — Auckland, New Zealand; much more population based, but I can see that, the similarities. 

Helton: Yes. 

Miro; Grassroot policy researcher, Jonathan Helton, joining us this morning once again talking about housing and how we can make things easier. 

So, in your discussion about up-zoning, you mentioned the idea of minimum lot sizes. Minimum lot sizes. What is that about and how does it factor into the housing policy?  

Helton: The minimum lot size refers to how large a piece of land must be for someone to put a house on it. So, for context, if you want to build a single-family home in Honolulu, the lot has to be at least 3,500 square feet. If you want to build a single-family home over on Big Island, it has to be at least 7,500 square feet of land. So, it can’t be smaller than that. 

And as a practical consequence, this means that when someone comes in and looks at this piece of land and says, “What kind of house should I build here?”, they’re going to try to maximize profit and build the largest house possible. However, this runs against the ideas of housing affordability, because if you mandate a certain large amount of square footage for every lot, then people are going to build larger houses. And larger houses are more expensive.  

So, what we’d like to see the state and cities consider is allowing houses to be built on smaller lots. 

So, I’ll give you an example. Houston, Texas, has experimented with this, and I think it’s worked. So, Houston, Texas, in the ‘90s and then again in 2013, they said, “We’re going to allow you to build houses on smaller lots.” I think the minimum was 1,200 or 1,400 square feet. 

And when they did that, it resulted in, unsurprisingly, smaller houses being built. And smaller houses are generally less expensive. 

So, the entire idea of lowering minimum lot sizes is asking the question, “Should we force every homeowner to buy a really nice home?”

And as much as everyone would really like a big home that has a lot of different, has a lot of bedrooms, has a lot of amenities, not everyone can afford that. So, we should at least make it easier to build smaller homes that are more affordable to more people. 

So that’s the entire idea. 

Miro: Yeah, well, well-put, well-stated. A lot of information coming your way once again from Grassroot Institute of Hawaii policy researcher Jonathan Helton. The topic once again, very important topic we seem to talk about a lot, but there’s a good reason for that, because it is important; housing, housing. 

So, to follow up on what you just stated, where would people park? As far as — you also mentioned parking minimums in that. What does parking have to do with building more homes? Because that seems to be also a big topic, a big issue. 

Miro: Yes, that’s a great question. Parking — you wouldn’t think parking is related to home building, right? It’s this: You build a home and then you put a driveway there, so that people can park their car. It seems simple, unfortunately, it’s not. 

So, each county has rules about how much parking you need in order to build a home or a business. So, to give you another example, if you are going to build a 2,000-square-foot home, In Honolulu, the county rule says you have to have at least two parking spaces for that home.

And that’s kind of the same — for a 2,000 square foot home, that’s the same across every county. But it’s not just homes, it’s businesses, it’s shopping centers. And each county kind of has a different calculation for … OK, your grocery store is 5,000 square feet. You have to have X number of parking spaces. Or your accountant office is 2,000 square feet, you have to have Y number of parking spaces. 

So, the rules can get very complicated. And the problem with these rules is that if you’re building a home and the land value is very high, if you put parking there, the room you’re putting there for parking is room that could have been used to maybe build some more housing. And that drives up costs. 

So I’ll give you some statistics. There was a 2020 study that was conducted by the Ulupono Initiative here in Hawaii. And they said that parking minimums can add between $5,000 and $77,000 to the price of each housing unit. So, obviously, it can be a very large range. That depends on a lot of things. 

One of the big things is the land value. If you’re building housing in an area where that is very desirable, the land value will be higher. And building a parking space there, therefore, really is also more expensive. So, one of the things we want to suggest is asking the question: Why should the city and county governments dictate how much parking you need? Why not let the people who are building the homes decide; the people who are buying the homes?  

If you are someone who just plans to ride the bus, maybe you don’t have a car, you don’t need a house that has a lot of parking. So, maybe you would like to find a house that is a little bit less expensive and it doesn’t have parking. So, that’s kind of the gist of discussing parking in terms of housing policy.  

Miro: Yeah, and if there’s less parking though, to follow up on that, where would people park? Where would they be able to park with that? 

Helton: And that’s, you know, that’s the million-dollar question. And so, there are a couple of options. Obviously, not all parking lots are full all of the time. A lot of them may be vacant. So, we may be able to use existing parking and just park there. 

Maybe if you reduced parking, more people would ride the bus. Or if they happen to live near a rail station, they might be able to use that. 

But people can be creative. If parking minimums were reduced, and a lot of people and a lot of new homes and a lot of new businesses stopped offering parking and stopped having free parking, some businesses might say, “Maybe we can offer free parking as a recruitment perk for our employees.”

I think the bottom line to the question of “Where would people park?” is that we should let the businesses, and the homeowners, and the homebuyers and the renters — we should let them be the ones choosing — and not kind of arbitrary, city rules. That would be the bottom line.  

Miro: Highlighting a new report issued by the Grassroot Institute of Hawaii, this was this past week, a bunch of ideas about how to make, you know, housing a little bit easier to obtain. “How to facilitate more homebuilding in Hawaii,, that’s what the piece is called. 

“How to facilitate more homebuilding in Hawaii,” [go to] grassrootinstitute.org for more. Policy researcher Jonathan Helton explaining it all to us in the easiest way possible. Another thing you talk about is accessory dwelling units, or ADDs, I guess. 

So what are ADDs, or are you saying ADD, the acronyms? How can they help resolve our housing crisis? 

Helton: ADUs became popular —

Miro: Oh, ADUs, I apologize.

Helton: Yeah. ADUs, accessory dwellings, yeah. They became popular a couple years ago.  They really took off here in Hawaii in recent years. 

Back in 2015 and 2016 in Honolulu, when the Council and the mayor worked on some legislation that did two things. They said, number one, if you have an ADU — so like maybe a backyard tiny home, for example, or maybe you live in a split-level house where the primary, the owner of the house can live on the top and renter can live on the bottom — if you have, if you’re in one of those situations, they passed a law that said you can now rent.

And so previously to 2015, 2016, you weren’t really supposed to be renting your accessory dwelling. And so now that that was legal, a lot more people said, “Hey, I’d be happy to build one of these. I think I could, you know, get some rental income.”

And the other thing that they did to make it easier for people to build accessory dwellings is, Honolulu waived, like, sewer hookup fees for ADUs. So they made it easier and less costly for someone to build one. 

And ADUs, I think, seem to help. There’s been a lot of them that have been built and permitted in Honolulu in the past several years. And they offer a really great way for someone to maybe house their relatives. Maybe you have a parent or parents who want to live closer to their kids, and so they can live in a little unit on the same lot. Or maybe it’s vice versa. Maybe the kids want to move back to Hawaii and they can live in the ADU while they’re saving money to either rent or buy somewhere. 

So ADUs are a very small scale — in terms of the size of the unit — they’re a small-scale solution, but because they’re smaller, they’re more affordable for people to purchase. And they may offer more affordable rents. 

So I think that trying to prioritize ways to make ADUs easier to build, I think that’s a good idea. And so I think, I think we’ll talk about that more. 

Miro: Yeah, and that would involve, of course, the DPP [Department of Permitting and Planning]. I think we’ll touch on that in just a bit. But when you’re talking about this, a lot of focus is on Maui after the devastating fires of Aug. 8th, there’s been conversations about how to use more of these ADUs to house displaced Lahaina residents. How could this be accomplished, Jonathan?  

Helton: I want to just note, the process of trying to find places for all of the displaced people in Maui to live, there is not one silver bullet for that. So, when we’re talking about ADUs, it’s not like, if we just did X, Y and Z, everyone could have an ADU. Unfortunately, it’s not that easy. 

But there are things that the county could do to make it easier for people to build an ADU. 

So a couple of things: Number one, right now the Maui County Council is looking at a bill that would give people who want to build ADUs, up to $100,000 to do so — with the agreement that those people who received the money, they rent those ADUs out and at an affordable level for a certain period of time. 

And this was something Maui was working on before the wildfires happened. But I think it’s something they’re really trying to look at now, is: “What is the easiest way to get up more temporary and permanent housing units?” So they’re looking at that. 

There’s a couple other things you could do. The first is to make sure the permits are processed in a timely fashion. 

When Honolulu did its ADU reforms a couple of years ago, they put in a clause that said, “If you’re trying to build an ADU, DPP has to get you your permit in a certain number of days.” And so I think that sped up the process. 

But the second thing, if Maui lawmakers might want to look at is going back to parking mandates. If you want to build an ADU in Maui right now, you have to have a certain amount of parking. You know, that adds cost. So maybe looking at revising those. 

I think that ADUs do have a place in providing housing to people who are displaced by the fires. You know, as I said, they’re not a silver bullet, but let’s look at things that would make them more affordable and more accessible for people to build.  

Miro: And just to follow up on that, you said $100,000 if people agreed to this, potentially if it’s followed up. Is this the federal disaster relief funds that they’d be utilizing? Where would they be getting the money, the funds for something like that? 

Helton: So, that’s a very good question. Maui, back in the budget, so the budget that passed this summer, they included a couple million dollars there for this, um, I think they’re calling it an “ohana assistance program.”

So they want to do this as kind of a pilot to see if people are interested, which I expect people will be interested in the, you know, up to $100,000 helping them build an ADU. 

It’s a limited amount of money right now. If they’re, if they’re really going to upscale this, I don’t know where the money would come from. It might come from the state. It might come from FEMA [Federal Emergency Management Agency]. That’s a very good question. 

Miro: All right. Another thing, Jonathan, you talk about is the self-certification to help speed up the home building permitting process here. Now, Honolulu, of course, recently passed its self-certification law to speed up the building permitting process, the building permit process. But, uh, what are the pros and cons of this program?  

Helton: So, Bill 6 is now law. And self-certification, in a nutshell, says if you are a licensed architect or a licensed engineer who works with buildings, you can self-approve your building permit. 

And, you know, that sounds like a really good deal. Obviously, there’s some safeguards, some safeguards in place. You have to have a certain amount of insurance in case there’s flaws in the building permit. 

So what this is designed to do is, it will allow architects and engineers who are working on certain projects, which are listed in the law — it’s, affordable housing department of Hawaiian Homelands and certain rental improvements. So those types of projects will now be able to kind of bypass the normal DPP process.  

So the goal is to make it easier for those permits to get through, but also to take some of the workload out of DPP so that they will be more capable of addressing the permits that they’re still assigned to deal with. 

So hopefully it will speed up the process. I don’t think that they finished putting the final tweaks on the program. So I don’t know that you can get your permit self-certified tomorrow. But we’re hoping that in the next several months, they’ll get that up and running and that it will help cut the wait time for your building permit.

Miro: All right, let’s see now. Could this self-certification process help speed up the Lahaina rebuilding process on Maui also?  

Helton: Yes, we think it might have a role to play. Maui has a similar program to Honolulu’s. It’s not exactly the same, but it does allow architects and engineers in certain instances to self-approve their building permit.

So we’re looking into that program and we’re going to try to see how can that be used to help either rebuild Lahaina whenever that discussion comes up, but to provide temporary housing or even the ADUs we mentioned quicker. That, I mean, we’re certainly going to be looking at that. Maybe we can come back on once we’ve done more research and talk about that again.

Miro: Grassroot Institute of Hawaii policy researcher, Jonathan Helton. Let them know about the paper that was just released, the piece that was just released, and also anything else you’d like to add. 

Helton: OK. The title, “How to facilitate more homebuilding in Hawaii,” all the things that we talked about here on the show, those are in there. I talk about some more, such as, like, mixed-use zoning and adaptive reuse.

But the bottom line is this: Hawaii has a housing crisis  and we just, and the state and the cities do not have infinite money. The state can’t just say, “We’re going to build everyone a home.” We just don’t have the money for that. So, we have to look at ways to make it easier for private homebuilders to build more homes, and that’s what this report is designed to do. How do we expand the housing supply so the prices go down? 

And the report’s on our website, which is grassrootsinstitute.org. Love for you to read it. If you’re interested. Happy to reach out, we can, we can talk further. 

And Johnny, of course, as always, really appreciate you having me on the show. I think this is a really great conversation, and I hope that people learn something and, you know, beyond that,  housing in Hawaii is very technical.

Miro: Hey Jonathan, thanks for joining us once again. Look forward to another discussion on a very important topic. There’s many out there. Enjoy the rest of your weekend and the holiday season that’s underway right now.