Housing regulations add up to solid brick wall against homebuilding

by Keli‘i Akina, Grassroot Institute, January 7, 2024

There is something very telling in the fact that it’s taken almost half a year to see anything come from the governor’s emergency proclamation aimed at speeding up homebuilding in Hawaii.

The governor’s order, announced in July 2023, established a 36-member Beyond Barriers Working Group to guide the hastening of housing construction, but it wasn’t until late December that it was able to approve its first application.

This highlights the challenges faced by the governor’s attempt to remove government barriers to housing construction and the severity of the problem.

The first application to be approved by the working group was a request to waive the state-mandated school impact fee for a project in downtown Honolulu involving the conversion of an office building into 52 affordable rental apartments.

The request was submitted by the project builder about two weeks before the working group’s Dec. 20 meeting, and had the support of the state Department of Education.

But the seemingly minor request actually has called attention to a major issue.

According to Honolulu Star-Advertiser reporter Andrew Gomes: “A couple members of the working group, which had difficulty establishing a quorum for the recent meeting, expressed frustration over spending what ended up being nearly 30 minutes assessing the school fee waiver request instead of five or 10 minutes.”

Sterling Higa, executive director of Housing Hawaii’s Future and a member of the Beyond Barriers Working Group, told Gomes there is no good reason to charge downtown projects a school impact fee at all.

“The schools in this area have shrinking student populations,” he said, “so whatever impact fee would be paid by the residents of this building isn’t actually going to help them get new schools in the area.”

To make matters worse, the state Office of the Auditor has sharply criticized the DOE’s administration of impact fees, even questioning whether they violate Hawaii’s constitutional requirement that there be a “nexus” between the proposed new units and the need for more classroom capacity.

Not surprisingly, some housing advocates say the Legislature should abolish or reform school impact fees, since they have not proven to be particularly useful in addressing education needs.

They also can add up to be quite costly. The downtown area has a school impact fee of $3,864 per unit, which would have amounted to $200,928 for the 52-unit project that sought the exemption.

My hope is that the 2024 Legislature will take a hard look at school impact fees and align them with our modern realities.

More important, we must remember that the slow, expensive process of constructing homes in Hawaii isn’t caused by just one regulation or fee — it’s due to an endless web of regulations, mandates, fees, approvals and permitting delays that we have been forced to endure for many decades.

Further proving my point: Gomes reported that this downtown conversion project has been proceeding under a 2019 city law intended to create 500 affordable rental units a year through financial incentives and regulation and fee waivers. Yet, as of November 2023, only two projects have been completed under the program.

But don’t let that get you down. Resolving Hawaii’s housing crisis is possible, and there are numerous simple fixes available to lawmakers now that could make a big difference at no cost to taxpayers.

You can learn about many of those possible fixes in a new report from the Grassroot Institute Hawaii titled “How to facilitate more homebuilding in Hawaii,” which you can read or download for free at the Grassroot website.

Reforming school impact fees would remove one brick from the wall that stands between us and more affordable housing. Our goal must be to remove many more so we can resolve Hawaii’s housing crisis once and for all.
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Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.