True housing reform seems a strong possibility

by Keli'i Akina, Ph.D., Grassroot Institute, February 17, 2024

It’s really wonderful to finally see so many Hawaii policymakers trying to do something about Hawaii’s soul-crushing housing shortage.

We are awash with both state and county proposals intended to help solve the problem, and 2024 could be one of the best years yet in terms of enacting new laws aimed at facilitating more homebuilding in Hawaii.

In fact, I’m told that popular reading at the Legislature right now is the policy brief “How to facilitate more homebuilding in Hawaii” by my Grassroot Institute of Hawaii colleague Jonathan Helton, which recommends many small tweaks to Hawaii’s zoning and permitting rules that together could make a big dent in Hawaii’s housing crisis.

The point is that streamlining Hawaii’s excessive housing-related regulations would make it easier for homebuilders to do what they do best — build more houses.

But not all the housing proposals we’ve been hearing about are on the right track. They include banning “outside buyers”; taxing so-called empty homes; imposing rent controls; launching “social housing” projects; and banning or at least heavily taxing short-term rentals.

The intentions behind these ideas might be good, but good intentions are not sufficient. Any remedies we pursue need to be workable and legal, with proven results.

Perhaps getting the most publicity lately has been the idea that we should ban out-of-state residents from buying homes in Hawaii — or at least punish them through higher taxes.

First of all, neither approach is constitutional and both would be unlikely to withstand legal challenge. Yet, surprisingly, some of their proponents don’t seem to care about that, claiming it’s just the right thing to do.

But that’s not entirely true. Let’s not lose sight of the fact that lawmakers have a responsibility to the public, and wasting time and money on unconstitutional or impossible proposals violates that public trust.

Second, rigorous research shows that out-of-state residents do not have a statistically significant impact on Hawaii’s home prices anyway, so keeping them out of the Hawaii housing market would do little if anything to increase the supply of homes for even existing Hawaii residents.

As for the rest of the flawed proposals, briefly, taxing so-called empty homes wouldn’t add much inventory; rent controls likely would backfire; massive social housing projects would drain our state coffers; and going after short-term rentals — as some lawmakers already are doing — risks destroying income and employment opportunities for Hawaii residents while also lowering visitor arrivals and cutting off a significant source of tax revenues.

I could speak further about these issues, but we are all better served by putting our energy toward discussing measures that will actually address the root cause of Hawaii’s housing crisis — excessive regulations.

Evidence from municipalities around the nation shows that cutting back red tape leads to more homebuilding and lower housing prices. Indeed, just today, NPR reported that “changing zoning rules to allow more housing” is “the hottest trend in U.S cities.”

Reporter Laurel Wamsley said cities in the lead include Minneapolis, Houston and Tysons, Va., all of which “have built a lot of housing in the last few years and, accordingly, have seen rents stabilize while wages continue to rise, in contrast with much of the country.”

Meanwhile, Wamsley said, Milwaukee, New York City and Columbus, Ohio, are all undertaking reform of their codes, and “smaller cities are winning accolades for their zoning changes too, including Walla Walla, Wash., and South Bend, Indiana.”

Wamsley even quoted Nolan Gray, research director at California YIMBY and author of the book “Arbitrary Lines: How Zoning Broke the American City and How to Fix It,” whom the Grassroot Institute brought out to Hawaii early last year to talk about zoning reform.

In our own backyard, some of the bills at the Legislature that would accomplish such reform include:

>> HB1630 and SB3202, both of which would facilitate the creation of smaller, more affordable “starter” or “missing middle” homes.

>> HB2090 and SB2948, both of which would make it easier to convert office buildings into homes and generally allow more residences in commercial zones.

These proposals would respect the constitutional right of owners to modify and build on their properties without undue government interference — and most important, they feature tried-and-true methods of creating more housing without burdening taxpayers.

They also are nonpartisan, so you can support them whether you are a Republican, a Democrat, a Green or a Libertarian.

The right thing to do is promote policies that will actually result in more housing — and make Hawaii a better place where we all can thrive and prosper.
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This commentary was Keli‘i Akina’s weekly “President’s Corner” column for Feb. 17, 2024. 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.