Presenters at event concur new ideas needed to encourage homebuilding
from Grassroot Institute
Easing or even eliminating Hawaii’s housing shortage will require multiple new policy changes, and those must come from divergent groups working together.
That was the theme of “Building common ground: Expanding housing in Hawaii,” a collaborative event put on last week by the Grassroot Institute of Hawaii and the Hawai’i Appleseed Center for Law and Economic Justice at the Japanese Cultural Center of Hawai‘i in Moiliili.
The attendees heard presentations from U.S. Sen. Brian Schatz, who sent a video message from Washington; state Rep. Luke Evslin, who is chair of the House Housing Committee; Arjuna Heim, Hawai‘i Appleseed research and housing policy director; and Ted Kefalas, Grassroot director of strategic campaigns.
Speaking to an audience of more than 70, including state and county lawmakers and department executives, the four presenters touched on myriad possible reforms, including those related to land-use laws, inclusionary zoning, density regulations, parking and amenities requirements, and farm-worker housing.
Will White, Hawai‘i Appleseed executive director and moderator of the event along with Grassroot President Keli‘i Akina, said innovation is the key to making inroads on the housing crisis “because we cannot continue to pursue the policies of the past, especially if they haven’t delivered on their intended outcomes.
“I know that sometimes change, or new things, can kind of be uncomfortable for a lot of people,” he said, “But I really want to challenge us all to really lean into that discomfort, because if we are going to be able to tackle an issue as complex as the housing crisis in Hawaii, we’re going to need to innovate. We’re going to need to try new things. And we’re going to need to embrace new ideas.”
TRANSCRIPT
10-15-25 Grassroot Institute and Hawaii Appleseed housing event
Keliʻi Akina: Aloha mai kākou. Aloha.
Audience: Aloha.
Akina: I want to welcome you, everyone, today to “Building Common Ground: Expanding Housing in Hawaii.” So glad you’re here.
My name is Keliʻi Akina. I’m the president [and] CEO of the Grassroot Institute of Hawaii. We’re a public policy think tank, but what I’m really excited about is our partners today, our co-sponsors, the Hawai‘i Appleseed Center for Law and Economic Justice. Give them a big hand.
[Applause]
The Grassroot Institute of Hawaii is devoted to educating people about individual liberty, economic freedom and limited, accountable government.
Grassroot President and event co-moderator Keli‘i Akina delivers opening remarks.hen we come together like this, we want to practice something called “E hana kākou,” which is not just words, but it’s the way we live. “Let’s work together.” E hana — “Let’s work” — kākou.
And we’ve been doing that with Appleseed for some time now. It’s really been a delight.
The key thing to keep in mind is that we get more done when we’re working together to solve Hawaii’s problems than when we’re working apart.
And regardless of viewpoint, regardless of politics, regardless of religion, or anything else that differentiates us, when we look for the common ground and find solutions that will truly help people to thrive, and even survive, we can really get a lot done.
And don’t you agree that that would be a great philosophy for our Legislature, our county councils, our federal government.
[Applause]
No, I don’t want to go there.
But lack of housing is one of the key indicators that things are not right. It’s the No. 1 reason that people are leaving Hawaii.
But thankfully, there’s a broad spectrum of voices coming together on this issue such as Hawaiʻi Appleseed Center for Law & Economic Justice, and [state] Rep. Luke Evslin, who you’ll meet later on today, and [U.S.] Sen. Brian Schatz.
If there’s only one thing we learn today, I hope it’s that it’s possible to work together, and that when we do, we get things done.
As I mentioned earlier, we’re very honored to have Appleseed here with us today. You’ll meet Will White, the executive director of Hawaiʻi Appleseed Center, and later on you’ll hear from Rep. Luke Evslin.
And we’re going to have a video message from Brian Schatz. Unfortunately, the senator sends his apologies. He was planning to be here live, but events going on in D.C. are detaining him right now.
And we have Ted Kefalas, our director of strategic campaigns at the Grassroot Institute.
First, let me introduce to you Will White, executive director of Appleseed. He’s a graduate of Kamehameha Schools, as am I. So as I joked with him earlier, I’ll do the oli today and he can do the hula.
[Laughter]
And together, we’ll take back public policy from those guys at Punahou.
[Laughter]
He grew up in Kalihi Valley. He holds a master’s in urban policy analysis and management from The New School in New York City. And before he was with Appleseed, he served in the governor’s office and worked at the state Department of Budget and Finance.
The Appleseed Center, technically Hawaiʻi Appleseed Center for Law and Economic Justice, is a nonprofit committed to a more socially and economically just Hawaii, where everyone has genuine opportunities to achieve economic security and fulfill their potential.
Will, come take the podium.
[Applause]
Will White: Thank you. Thank you. I am just very pleased to be here today, speaking at this event in partnership with the Grassroot Institute. It’s an extremely important conversation about housing for Hawaii’s families.
But before we get started, I just wanted to take a minute to recognize how special today’s event is.
You know, the fact that our two groups that don’t often see eye-to-eye on many issues, the fact that we can come together in the name of civil discourse, in the name of finding common ground, is really a testament to how special of a place Hawaii is.
Because there are communities across this country where an event like this might not ever take place. Really.
You know, stakeholders have a tendency to retreat into their respective corners, refuse to make eye contact, refuse to talk to one another, and wind up talking past each other, and not actually finding that common ground and building that change that we need to see.
But, you know, that’s what makes Hawaii so different from most places. We know that we can’t afford to retreat into our respective corners because there’s nowhere for us to retreat to.
We’re all in this together, right?
And we also recognize that to tackle some of the most pressing issues that are challenging our communities, that we need to all work together, even if it means working with people that we don’t always agree with. And when we can find that agreement, it’s absolutely imperative for us to work together collaboratively to achieve our common goals together.
And really, I can’t think of an issue more pressing than the issue of housing in Hawaii. Like Keli‘i said, it is driving families out of the islands and fundamentally changing the framework of our communities day in and day out.
So, I am just so excited that we can come together today and discuss some innovative solutions for addressing this problem.
And really, innovation here is key because we cannot continue to pursue the policies of the past, especially if they haven’t delivered on their intended outcomes.
We need to look to the research, we need to look to the data, and we need to use those to develop new, innovative strategies that can actually deliver better results for Hawaii’s families.
[Applause]
And I know that sometimes change, or new things, can kind of be uncomfortable for a lot of people. But I really want to challenge us all to really lean into that discomfort.
Because if we are going to be able to tackle an issue as complex as the housing crisis in Hawaii, we’re going to need to innovate. We’re going to need to try new things. And we’re going to need to embrace new ideas.
So I am really looking forward to today’s discussion. Hopefully, we can uncover some of those innovative ideas. And who knows, maybe we’ll even find a way to work together to achieve our common goals. Thank you.
[Applause]
So with that, I want to pass it to our prerecorded message from Sen. Schatz, and take it away.
U.S. Sen. Brian Schatz: Aloha, everybody. I want to thank the Grassroot Institute of Hawaii and Hawaiʻi Appleseed Center for convening this important discussion and for having me.
I really was looking forward to being there in person because of the diversity of opinions that are behind housing reform.
We’re still in Washington, fighting to protect people’s healthcare and reopen the government. But all of you know that housing is the challenge of our time in the state of Hawaii.
And too many people have had to move away from the only community that they’ve ever called home or leave our state altogether because housing is just too expensive.
And that is a tragedy of the government’s own making. For so long, we’ve made it virtually impossible to build the thing that we all say we want. We all say we want housing. But we make it almost impossible to build by enacting thickets of regulations and requirements and reviews.
Anyone who has tried to build a shed or a patio or a backyard cottage knows just how difficult it is to build anything at all. So over time, housing has become harder and harder to come by, and therefore, way, way harder to afford.
We have a shortage of housing because it’s impossible to build housing.
Now, here’s the good news: If the government got us into the mess in the first place, it can get us out of it, too. We just need to get out of our own way and let people build.
And what’s been really encouraging about the past few years in Hawaii is people from across the political spectrum — I belong to the left, and I know Grassroot Institute has a more conservative perspective — but all of us understand that housing is the economic issue of our time, and we’ve got to do something about it together.
Everyone, from Luke Evslin to Keliʻi Akina to Will White and many of you, coming together and saying, “We need to do something about this.”
There’s nothing progressive or humane about preventing a teacher or a firefighter or a nurse or a senior or a student from living in their own community. And bit by bit, bill by bill, the state Legislature is taking steps to remedy this crisis that has been building for generations.
The work is not nearly over yet. We’re just at the beginning, but we need to keep up the momentum.
And so I want to thank all of you for your continued work on this issue. It’s imperative that we get this right for the sake of our loved ones, for our neighbors, and future generations.
Mahalo and aloha.
[Applause]
Akina: Well, we express our appreciation and thanks to Sen. Schatz. Unfortunately, as he’s told us, he was not able to be with us today, and that was a last-minute decision. But I hope his words resonate with you.
At this time, I’d like to introduce to you one of our members of the House of Representatives in Hawaii, Rep. Luke Evslin.
Luke was born and raised in [Wailua], Kauai. He earned a B.A. in history at UH-Manoa and a master’s in public administration from the University of Southern California. He served for four years on the Kauai County Council, and he co-founded [Kamanu Composites, the] Kailua-based outrigger canoe manufacturing company.
Luke has been a leading voice in housing reform as chair of the Housing Committee at the state House of Representatives. And we at Grassroot have enjoyed working with him in collaboration on policy, along with Appleseed.
Rep. Evslin is going to talk with us about how to solve Hawaii’s affordability housing crisis. Please welcome Rep. Luke Evslin.
[Applause]
Hawaii Rep. Luke Evslin: Aloha, everybody. Thank you all for being here. Thank you to Grassroot and Appleseed for inviting me, last minute, to be here.
Unfortunately, I’m not Sen. Schatz. I told my wife on Friday that Sen. Schatz was supposed to give this keynote, and he couldn’t make it because of the shutdown, and so that I was taking his place — and she literally spit out her coffee, laughing.
[Laughter]
And she said how sorry she was for all of you that you got stuck with me instead. So from the Evslin family, our condolences to you folks. But I will try my best to step into his big shoes here.
I’ve got 22 slides here. It’s like 45 seconds a slide. So I’m going to be running through this pretty quick. I already talk fast by nature and I’m going to be talking even faster. So kind of bear with me here as we run through this presentation.
As you guys all know, the cost of housing is way too high. This is the Federal Reserve Housing Index, which just shows appreciating value of existing homes based on repeat home sales.
Two quick takeaways from this is that the cost of housing has gone up about tenfold since 1980. And if you bought a home for $400,000 in 2012, that home has more than doubled in value, meaning that you are making more than minimum wage every single hour just on the appreciating value of your aging home.
And that in a lot of ways is like a monumental transfer of wealth from my generation to the older generation, right? My generation, who is buying homes, are buying these homes that are inflated values. And it’s totally devastating.
Only one in five residents in Hawaii can afford the median-cost home in Hawaii. And I really subscribe to this, like, housing theory of everything that puts housing at the center of, like, every crisis we face, which isn’t really an exaggeration, right?
It’s certainly the driver of the fact that we have the highest rates of homelessness in the country, as homelessness correlates with high housing prices.
People often say, like, “Oh, young people nowadays, they just, they don’t want to work.” That’s not true. Young people don’t live in Hawaii anymore. They’re being forced to move away. So the reason we have a worker shortage in Hawaii is because we just don’t have young people anymore.
Everybody I know is working two or three jobs just to afford their home. And when you’re working two or three jobs, right, that takes an incredible stress and toll on families and leads to, you know, social issues.
You can’t be a teacher and afford a home in Hawaii. You can’t start a business if you can’t afford your rent, etc., etc., etc.. So this is devastating, which we all know.
Why are homes increasing in value? Because we’re building less of them. This data is really clear.
This graph is actually a little bit deceptive. This shows the age of our current housing stock in Hawaii. But a home that was built in 1960 or 1970, and then rebuilt in 2010, it’s not going to be in the 1960 or 1970 column, it’s going to go into the 2010 column.
So if anything, this, like, understates the extent to which we built a lot of homes in the ’60s and ’70s and are not building a lot of homes nowadays. So we’re building about one-third the amount of homes in the 2010s as we were in the ’60s or ’70s.
This is from the Hawaii Housing Planning Study. It shows how many homes we need by 2027 to meet our shortage. And what it really says is we need 78,000 homes by 2027.
It’s anticipating that we’re going to build 13,000 homes in that time period. So it’s saying the gap is going to be [65,000], but that baseline number is 78,000 homes by 2027. And so by not building enough homes, older homes cannot filter into the affordable market.
I’m going to spend a little bit of time on the next two slides because this is really important. But the primary creator of affordable housing in the United States is not created through a complicated series of tax credits or government subsidies that enable us to sell new homes for less than the cost of construction.
The primary creator of low-income housing is actually old homes that filter into the affordable housing market. Right? In the exact same way, that, like, if you are buying a car and you want to buy a cheap car, you know, we don’t have this complicated series of tax credits to subsidize new cars.
Old cars depreciate in value. I’ve never owned a new car in my entire life. The only time that that wouldn’t happen is if we stopped importing new cars into Hawaii, right? Which happened during COVID. We stopped bringing in new cars, the price of old cars went through the roof in ways that we all recognized was devastating, right?
High school graduates couldn’t get a car. If your car broke down, you couldn’t get a car. It was really bad, and this is what happens every single day in our housing market.
The new cars aren’t themselves affordable. The new cars enable the old cars to essentially depreciate over time.
And how this works, UHERO [the University of Hawai‘i Economic Research Organization] showed, using real-world data, a condo development in Kakaako. A condo sells for $1.4 million. They could track who moves into that condo and where they moved out of. You can look four sales down the road, and that condo opened up an $850,000 home in Ewa Beach, right?
So that’s the process of filtering, and it shows us two things, right, this research.
One, that filtering is occurring in Hawaii, but it’s not occurring to the extent that we would want it to, right? You would want to see that home entering into an affordable range, which we could see if we had more housing supply.
And the evidence on this is, like, overwhelming, and everywhere. [In] an earlier version of this presentation, Ted was giving me grief because there was like 80 slides. Like, 15 of them are showing, just, like, research paper after research paper, just showing the effect of new housing on housing prices.
But I ended up narrowing it down to this one, which essentially says there is no longer any debate on this front. The preponderance of the evidence shows that restricting supply increases housing prices, and that adding supply would help to make housing more affordable.
So why aren’t we building enough homes?
You know, just to back up one second, if you look at most major cities in the country over an extended period of time, 50 years, they all essentially average about 3% annual growth in housing prices over those extended periods of time.
If you zoom in, you are going to see wild fluctuations, right? You’re going to see periods where, you know, construction decreases or demand increases, prices going to go up.
But then construction will end up rising to sort of meet that demand, and then you’ll see prices drop again. And you see, over the long run, this sort of 3% appreciation.
In Hawaii, over the last 10 years, right, we’ve had 8% to 10% appreciation. We have not had a corresponding increase in construction.
And so, right, as an economist would say, like, there is a market failure occurring, something is blocking that construction from happening, and it’s important to figure out what it is.
As UHERO says, one of the factors is that government regulation has limited the ability of the housing market to create the units necessary to meet demand.
UHERO was able to show that Hawaii has essentially the most regulated housing market by far in the country.
This graph is probably hard for you to see, but Hawaii’s on the top there. This is just a measure of regulatory burden, and Hawaii is by far the highest.
So why is land use in Hawaii so regulated? I would actually argue that it’s regulated for good reason. In 1961, the very first Hawaii State Legislature passed our groundbreaking dual state and local zoning code.
And they did this to try and solve for a problem that they were facing in the ’60s, which was the rampant development of agricultural land in disconnected subdivisions.
And when you’re developing land in this manner, we’re consuming ag land. We’re making it harder for farmers to farm because you’re increasing the price of ag land when you’re, you know, houses are competing with crops.
But it’s also a massive infrastructure burden and a massive infrastructure cost to the next generation when you’re building, you know, disconnected roadways and water systems and wastewater, etc.
You’re also locking people into very lengthy commutes to and from work. And they didn’t know this in the ’60s, but, obviously, climate change, right, the greatest challenge of our time. And our No. 1 source of emissions in Hawaii right now, is transportation.
So all of these problems were occurring. The Legislature tried to solve for them with our dual state and local zoning code.
And what the intention was, was to make it easy to develop housing within the urban state land-use district and preserve and protect agriculture and conservation zone lands, right?
That’s the twin tenets of our state land-use law and what our entire state land-use regime is based off of.
And how they did this, right? We created the Land Use Commission, which created four land-use districts in Hawaii.
>> The conservation district: 48% of land in Hawaii. Development is very heavily restricted within the conservation district, regulated entirely by the state.
>> The agricultural district. Development is regulated to an extent by the state, right? It has to be accessory to a farm use, very loosely defined.
>> And then there’s the urban state land-use district. The urban district was essentially just, you know, they drew a circle around every existing town in Hawaii, called it the urban district, and then gave all zoning authority to the counties.
That’s when every county developed its own CZO [county zoning ordinance] or land-use ordinance, which regulated really strictly, you know, use and setbacks and heights and densities and floor-area ratios, etc., within the urban state land-use district.
1961 was the heyday of single-family zoning in America. And what the counties did, essentially, was adopt single-family zoning, like, everywhere in Hawaii. Large-lot subdivisions, only single-family uses.
As UHERO has shown, only 0.3% of the land in all of Hawaii as of 2023 was zoned for multifamily use. So when you have 4% of the land, very little that’s zoned for multifamily. It filled up with single-family homes and there was, like, nowhere else to go, and we stopped building homes, basically.
And this is the 2016 Kauai General Plan. I’m from Kauai. It’s also an award-winning general plan. But it states the problem, I think, really, really well in that it says, essentially, most of our housing development on Kauai is happening on agricultural land or very low-density residential land, and very little development is happening within our town cores.
And that if we continue on this trajectory, we’re going to consume all of our ag land and not solve the housing crisis, right? And so the general plan calls for kind of a radical change in direction. Make it easier to build housing in the urban area to protect agricultural land.
So I’d argue that we’re failing to achieve, like, the twin tenets of our state land-use law. We have not made it easy to build housing in the urban state land-use district. And so we’ve pushed development into the agricultural districts.
So the problem that I think we are facing, right, is how do we add 78,000 homes without consuming agricultural land and without, you know, adding this massive debt bomb to future generations through infrastructure costs?
That’s the part, like, I hope, like, the policies are not always that easy, and they require, like, a vibrant community dialogue about how to get there.
But the first step is just recognizing we need 78,000 homes, and every decision that we make should be framed around how do we get to these 78,000 homes. Whereas, I don’t even think we’re really at step one, you know, as far as most of Hawaii goes.
So my answer or, you know, the answer that’s, like, enshrined in state law, and in most general plans across the state, is make it easy to build housing within the urban state land-use district, and continue to try and preserve and protect agricultural and conservation zone land.
So there’s a whole list of policies, which I’ll get through, and what we’ve done over the last few years in the Legislature.
I just want to highlight the last one here. Reduce the number of TVRs [transient vacation rentals]. This is controversial in some circles, right? Often we have sort of two camps. One that says we need to build a ton of housing, the other says get rid of all the TVRs and we’re going to solve the crisis.
Like, in a lot of ways, we got to do both. You know, maybe not get rid of all the TVRs, but we certainly have to reduce the number of TVRs.
Because that 78,000 home number, you can get there if you take a vacation rental and convert that to resident occupied. That’s a unit. So whether you build the unit or you get a resident in that unit, it’s still a unit. So, like, reducing the number of TVRs is some component of the solution.
On Kauai, one in eight homes is a TVR. The same as on Maui, right? So it’s sort of an all-of-the-above approach.
In 2024, I became Housing Committee chair. It was actually my first full year in the Legislature. I’m still very naive, but I was even more naive in 2024. And we introduced this whole slate of essentially zoning-reform bills.
And I thought two things. One, I thought none of them were going to pass, because nothing passes on its first time in the Legislature. And two, I thought none of it was going to be all that controversial.
[I’m] from Kauai. ADUs [accessory dwelling units] are very popular in Kauai. I had [run], you know, two, three consecutive Council campaigns, really just trying to make it easier to build ADUs. And everybody loves it.
On Oahu, ADUs are pretty restricted. I thought everybody’s going to, like, love this. I was super wrong on both fronts.
The bills passed for reasons I’ll get to in a second. And they were also incredibly controversial.
Certain segments of the community, especially on Oahu, got really concerned about this. Certain members of the Honolulu City Council lost their … shit. Sorry.
[Laughter]
The Honolulu City Council had a resolution opposing the ADU bill, saying that it would lead to disease vectors and slums. That was the actual language in the resolution.
Like, this is, like, the worst language of the 1920s, when zoning codes were literally meant to keep brown and black people out of neighborhoods.
They, to their credit, amended the resolution and removed that language. But still, there was pushback from certain segments against all of this. And the bills ended up passing in the Legislature by, like, a two-vote margin. Probably the slimmest margin of any bill in living memory.
But they ended up passing, you know, as you can see there. They got watered down but we passed a lot of it, for reasons which I’m going to get to on my last slide.
2025, you know, I wanted to make sure that I still had friends in the Legislature and wasn’t continuing to just drop bombs every single year. So I focused less on county preemption, which was really the issue that we’re facing, and much more on trying to remove state regulatory barriers.
So, instead of pushing the counties to allow ADUs, etc., etc., I focused on what are some of the state barriers and how can we remove those? So we did, right? Eliminating school impact fees, SHPD [State Historic Preservation Division] reform, more units on a single septic, lots of funding for mixed-income housing.
Traditionally, state funding goes for very low income, but there’s no funding for, like, you know, 80% to 140%.
Trying to push the counties to increase floor-area ratio and allow ministerial permitting in TOD [transit-oriented development] areas, etc., etc.
The last two on there were my counterpart in the Senate’s, you know, bills which were county-apreemption bills which passed, prohibits the councils from increasing costs on 201H projects and a 60-day shot clock.
Next steps, right? There’s still so much that we need to do, so we continue to try and push on ways to reform the 201H process to make this, you know — 201H-38, we allow for bypassing of all state and county rules essentially, as long as you are producing some public benefit through the project.
I think we need to continue to make that easier and easier. Inclusionary-zoning reform, which I think Arjuna’s going to talk about today. Infrastructure funding, minimal lot size reform. We have very, very large minimal lot sizes in Hawaii. We need to allow people to build on smaller lots.
Parking reform, I honestly don’t think we should be, you know, requiring anybody to add parking if they [don’t] want to. Let the developer figure it out. Using state funds to reward counties for higher housing production.
Building code reform. I’m borrowing this phrase but, like, in a lot of ways, like, zoning reform is, like, a gateway drug to building code reform.
Once you realize, like, you know, the barriers that are in zoning and you realize that building codes are full of even more barriers. And so, and then, pushing for higher zone densities within TODs.
Lastly, I want to say, like, all of this will be controversial and none of it is going to be easy to pass. And the reason that we are able to pass, surprisingly, all of this stuff in 2024 was that we had this diverse coalition of stakeholders, including, you know, those that are sitting on either side of me, who are, you know, from different sides of ideological spectrum, who really coalesced around housing.
A number of other organizations, like Hawaiʻi YIMBY and Housing Hawaii’s Future and Holomua Collaborative; Sen. Schatz has been a huge champion of housing reform. You know, his staff, we have Mike Dahilig, who’s been working really closely with us.
We have this growing network of voices who have been able to really, you know, get a lot of positive testimony out there. And they’re working the halls and the Legislature.
But we need to sort of grow those voices. And you guys are all, you know, advocates and stakeholders in this room.
And the goal is to make sure that, like, any time we have a pro-housing bill, you know, get heard in the committee, that that thing should be overwhelming supportive testimony, which is the opposite of what we’ve all experienced traditionally.
Generally, you have the housing bill and it’s flooded by people in opposition. Right?
We need to sort of flip the script on that and vice versa. When there’s councils out there who are trying to block housing, you know, then there needs to be clear voices in opposition to that.
So, you know, we’re going to continue to try and push and champion this stuff. Hoping to continue to work with all of you folks. If anybody wants to get more engaged, I’m happy to meet with you offline and talk about more ways to get more engaged in the process. Thank you all.
[Applause]
Akina: Thank you very much, Rep. Evslin. Before we go on, I do want to acknowledge some public servants who are here in the room with us today. There’s Rep. Chris Muraoka, House District 45. Sen. Tim Richards, I saw you, Tim, earlier, all the way from Hilo, Hamakua.
[Applause]
Rep. Tina Grandinetti. Tina, from House District 20.
[Applause]
And in the back, I ran into Rep. Julie Reyes from District 40, Ewa Beach.
[Applause]
The kind of thinking that Rep. Evslin presented you with goes forward because of organizations like Appleseed and the Grassroot Institute, which devote time and effort to research.
One of the team players at Appleseed is going to share with us now. Arjuna, I’m looking for her bio here. She’s on the Appleseed team leading housing research and policy.
And you’re going to enjoy what she has to share with us. In fact, the Grassroot Institute team tells me they enjoy working with her. So representing Appleseed, sharing perspectives on housing, please welcome Arjuna.
[Applause]
And, Arjuna, forgive me for losing my notes. But would you share your last name as well?
Arjuna Heim: My name is Arjuna Heim. So Arjuna Heim, director of housing policy and research at Hawaiʻi Appleseed. I’m going to unpack a little bit about inclusionary zoning in Hawaii. What’s happening here?
Here’s my remote. Cool.
So, just short agenda: a little background about inclusionary zoning, historically in the U.S. as well as Hawaii, the landscape of tools in Hawaii, limitations and trade-offs, as well as policy recommendations.
So very basic. What is inclusionary zoning? It basically requires new development to put aside a certain amount percentage of below-market-rate units.
So this policy, formalized in the ’70s as a local response on the mainland to exclusionary zoning that had priced low-income families of color out of entire communities, it became more widespread in the ’80s and ’90s as federal housing programs were being cut.
But inclusionary zoning — or I’m going to switch between IZ and inclusionary zoning a lot — was never meant to be a cure-all.
It was a workaround using local zoning power to create mixed-income neighborhoods when federal dollars disappeared without direct costs to county and state coffers.
In Hawaii, we had ad hoc affordability requirements on a case-by-case basis before the ’70s, and was later formalized throughout the ’80s and early 2000s on both the state and county level.
Nationally, inclusionary zoning programs typically require an 11% to 15% set-aside or below. And this is from, I think, a more recent comprehensive national survey of inclusionary zoning programs across the country.
In Hawaii, our lowest set-aside is 15%, with the majority of mandatory council-based programs between 20% to 30%. And to offset these requirements, most jurisdictions offer density bonuses, fee waivers, faster permitting.
When the market is healthy and the rules are clear, inclusionary zoning can work relatively well. However, when costs are high and regulations are unpredictable, such as in Hawaii, IZ behaves as a deterrent on development and a system that skews the overall market.
So, what are some market factors for success?
>> One, strong and growing housing demand. We have that in part due to very limited supply constraints.
>> High land and rental values — see 4% urban land use.
>> A competitive development environment. I would argue that we have a competitive below-market-rate affordable housing, LIHTC — low-income housing tax credit — environment, but we don’t facilitate an environment where development [of] for-sale or market rentals can kind of pop up.
>> Predictable and transparent permitting, I won’t get too much into this. I think we’re all aware about permitting and regulatory opacity across the state.
>> Due to infrastructure and amenities on the outer islands, especially, in Honolulu to a slightly lesser extent, infrastructure is limited. But even on Oahu, transit access, neighborhood quality and public or pedestrian safety vary widely.
>> And policies tailored to local conditions. On the county level, a lot of these policies were put in place before a solid review by a third party or expertise. I think Honolulu implemented an inclusionary zoning policy after expertise, but in a little bit, we’ll talk about what the pitfalls of that were.
So this is an overview of all of the inclusionary zoning rules across the state. Honolulu has unilateral agreements, the affordable housing rules, IPD-T, which is Interim Planned Development-Transit. So that’s around the TOD areas. I’ve added Bill 7, which is a voluntary program.
Maui has their workforce housing. Hawai‘i County, Chapter 11. Kaua‘i County has two, a traditional inclusionary zoning requirement and a requirement on resorts.
Really important, especially to the point of my argument, I guess, today is, Kaua‘i County has recently reformed their inclusionary zoning rules to eliminate, if you build to maximum density in identified town-core areas, you are not hit with this inclusionary zoning requirement.
And so that the logic there is, you build super dense on a plot of land, and those are more naturally affordable. And I believe there’s been really positive outcomes recently.
And then, of course, we have HCDA [Hawaii Community Development Authority] and state 201H, and the counties can adopt their own 201H rules, but HCDA and 201H, you know, going back through the archives, and the beginning of these programs, they were both implemented by the state to get around restrictive council zoning.
So, for today, my argument is very much focused on the counties.
I also wanted to add a little bit on the subjectivity of affordability, because this comes up a lot. When we use the term affordable housing, that doesn’t mean a specific number, it means housing that costs 30% or less of household income.
This number comes from federal HUD [Housing and Urban Development] guidelines, and has become the default definition across counties and programs.
But the calculation is deeply limited. It ignores the other major costs of living, [such as] healthcare, transportation, food, childcare, education, etc.
So, when we talk about affordable housing under inclusionary zoning, we’re really just talking about a simplified ratio set by government agencies. And that’s not correlated to the lived experience of people, and is not correlated to [the] economic reality of building housing, and what it costs to deliver these below-market rates.
I like to use this chart to kind of illustrate, kind of, a skew in what our inclusionary zoning system costs.
Most units being produced — so on the right, is the estimated housing demand from the 2019 Hawaii Housing Planning Study. On the left is the units in the pipeline. This is from the governor’s housing team, their affordable housing pipeline. Really cool tool.
But this red bar is housing for 60% AMI [area median income]. And so on the right, you see, you know, the demand is pretty widespread from 30% to 140% AMI. We have need across the spectrum.
What we’re delivering is a huge disproportional amount of 60% AMI. And a lot of that is due to the fact that LIHTC, low-income housing tax credit, projects are the most viable to get across city councils, and it’s created a skew in our market.
So, while we have a huge amount of 60% AMI, of course, the next greatest need is for 100% to 140% AMI as well. That could be rental or for-sale housing.
But when you limit it and you make price restrictions, where income restrictions don’t allow you to go above 60% AMI, everyone else is left out in the open market. And you know, kind of SOL, shit out of luck.
And you know, I will note the second greatest need for affordable housing in the state is 30% AMI. We will not get there with LIHTC and inclusionary zoning alone. That requires direct government subsidies to the developer and to the individual.
Yeah. So, this is all to say, we’re not building to meet demand, we’re building to meet what councils are willing to approve. And this is not a good affordable housing strategy, it’s simply a political one.
So, let’s talk a little bit about trade-offs and limitations. So, this is [an] excerpt from an article in 2022 at Hawaii Business Magazine written by [Noelle] Fujii-Oride. I think it does a great job at pointing out trade-offs and limitations of inclusionary zoning.
So, between 2006 and 2014, Maui’s policy produced just three affordable units, and actually froze most of their housing construction. Most affordable units they found were produced through 201H, a state incentive program, and LIHTC, low-income housing tax credits.
Developers have argued, and I’ve traced this back to our articles published in the ’70s and ’80s, when inclusionary zoning was a hot policy topic in Honolulu, that IZ shifts the cost burden onto market-rate buyers and renters, which drives up prices overall, and academic evidence has come out backing this.
So, as well, incentive-based approaches and voluntary programs like 201H offer exemptions and waivers, have been far more productive than council inclusionary zoning.
The three main limitations and trade-offs for our county inclusionary zoning programs are:
>> It penalizes density by targeting multifamily projects, while largely leaving single-family housing untouched.
>> It’s complex and discretionary, forcing a case-by-case negotiation per project.
>> And the added costs push up market prices, worsening affordability to majority of residents who are not selected for the limited subsidized housing in this state.
So, yeah, we’re going to look at a little deep dive into Honolulu. So, very much thank you to UHERO, and its partnership with Honolulu.
So, we have a good idea of the current subsidized housing in Honolulu, particularly, and in the way that they define subsidized housing. It simply means housing that is [in] some way price restricted.
It does not include planned housing or units under construction or housing that is older and therefore naturally occurring affordable housing; nor temporary occupancy — that’s Kauhale shelters, etc. — or housing that is occupied with help from individual assistance.
So, subsidized housing in Honolulu. So, this is the count by government level of support. So, we have a little over 35,000 units of affordable housing.
About half of that comes from federal programs — HUD, USDA [U.S. Department of Agriculture], LIHTC — and 42.6% comes from the state 201H rental housing revolving fund, Hula Mae.
7.6% of our subsidized housing stock in Hawaii comes from city programs.
So, a more in depth look at our 7.6% of the city. In total, only 2% of the entire 35,000 subsidized units come from Honolulu City and County inclusionary zoning requirements. And zero come from the affordable housing rules that were set in 2018.
The majority come from unilateral agreements, which is a holdover program that was formalized, [a] holdover from the ’70s and ’80s, and was later formalized.
The second most comes from IPD-T projects, and we have this PDAs — Planned Development-Apartment — and that’s one rental unit in Waikiki.
So, we have a system that the County of Honolulu is primarily reliant on inclusionary zoning to provide affordable housing to its people. And I would say from these numbers, it is not doing a good job.
So, what are the trade-offs and limitations?
>> As I discussed, it increases market-rate prices. A multi-decade California study found that cities with inclusionary zonings saw housing prices rise 2% to 3% faster than comparable cities.
The Mercatus Center notes that mandatory IZ is associated with price increases, and reduced housing unit sizes, while the Urban Institute emphasizes that unpredictable and inconsistent inclusionary zoning policies increase land valuation uncertainty, and delay land transactions. So, you’re less likely to get new dense housing.
>> Second, it penalizes density. Inclusionary zoning obligations concentrate on the very housing types that we want to encourage, and inadvertently discourage denser multifamily construction, which is the form most needed for affordability, and long-term affordability.
>> Third, it’s complex and discretionary.
So, according to all national academic research, unclear, inconsistent inclusionary zoning policies create uncertainty in the development process and can prevent projects from coming to fruition.
Discretion in inclusionary zoning processes correlate with longer approval times, which we have. Suppression of housing production, which we have.
And research on discretionary review by Taylor and Francis in 2023 found uncertainty and entitlement decisions delay development and reduces affordability.
The majority of housing in the governor’s affordable housing pipeline is currently stuck in the entitlement process, which is a huge discretionary process. So, all these estimated units that are coming online, we’re not sure if they will actually come online.
So, we really have to ask: With these trade-offs that make market-rate housing more expensive, where the majority of us have to live, purchase and rent, and inadvertently penalizing density, and adhering to a complex system, which is defended fiercely by politically entrenched council members, [is it] worth maintaining given the minimum affordable housing units it produces?
I would argue, no. And we should look to a better housing policy future.
So, here would be my main recommendations around inclusionary zoning.
>> No. 1, remove county inclusionary zoning requirements from the State Urban Land Use Districts. This is very much in fashion to what Kauai has done recently.
>> Two, apply inclusionary zoning to resort and hotel developments. Kaua‘i County is the only county that has a specific inclusionary zoning requirement on hotels and resorts. The rest of the counties do not, but we all have hotels.
>> Three, if we’re going to insist on inclusionary zoning, then we need to pay for the below-market units directly with either public financing or exemptions and fee waivers equal to the cost for selling or renting below the price to construct, instead of taxing the multifamily dense housing that we’re trying to create.
>> Four, invest directly in residents through vouchers, down payment assistance and rent supports.
>> Five would be streamline regulation within the urban land-use district, particularly within TOD areas, so affordable and market-rate housing projects move faster.
My No. 1 dream for TOD would be, create high-density minimums, as opposed to low-density maximums, and eliminate requirements for amenities, which add to the cost of housing.
So, in this world, if you’re building in a transit-oriented development district, you would have a high minimum FAR [floor area requirements] requirement that you would have to meet. You would not have to provide amenities. And if you wanted to go below that, then I would suggest a slight tax. And if you go above that, you’re roped into the state 201H program.
And you know, this is, for all the flak that 801 South got for limited affordability period, you can purchase a unit today for $450,000 in the heart of Honolulu. You can’t say that about a lot of our new, reserved, affordable housing that’s coming online.
>> And six, I think we absolutely need to recognize inclusionary zoning as a zoning tool. It cannot be our driving housing policy for the counties.
And with that, thank you very much, and I’ll hand it to Ted.
[Applause]
Akina: Thank you. That was Arjuna [Heim] of Appleseed. And I didn’t mention earlier, she has a master’s degree in urban planning from the University of Hawaii.
Government officials from all aspects, parts of government are looking into housing solutions. I just noticed we have with us today from the governor’s office, the chairman of [the] Department of Agriculture, Sharon Hurd. Sharon, thank you for joining us.
[Applause]
Ted Kefalas is the director of strategic campaigns at the Grassroot Institute of Hawaii. He majored in political science and media studies at the University of Virginia. But probably enjoyed, most of all, the fact that he was on the football team. He was a Virginia Cavalier.
Ted does most of our lobbying now down at the state Legislature, where he educates lawmakers about reforms that are needed.
Ted has been the embodiment of “E hana kākou” [“Let’s work together”], working across the aisle with anyone down there who’s interested in solutions. And he’s always trying to find the silver lining in agreement between policymakers. Ted, why don’t you share your perspectives?
[Applause]
Ted Kefalas: Well, I appreciate the kind introduction, and I want to thank you guys for taking the time to listen to us spout a bunch of housing statistics.
I mean, it goes to show how important this issue really is to have a relatively full room. I think we have 80 to 90 people here today that are just willing to listen to us nerd out about this subject.
But I want to just especially mahalo Arjuna for her collaboration over the past few years. It’s truly the embodiment of “E hana kākou;” And this event, I think, just goes to further underline that.
And also want to thank Rep. Evslin for being here last-minute, and stepping in for Sen. Schatz.
[Applause]
So, Luke mentioned, you know, about ag land, and we don’t want to necessarily pave over all of our farms and turn them all into housing. But the rules have gotten to a point where we have made it so difficult to even build farm-worker housing, and housing for the people that are providing for our lands.
And so that’s kind of what I’m going to be talking about. I’m really excited to get into this. I think it’s a really big issue as we look to expand some of our farm-worker housing rules.
We often hear about the desire for us to stop importing food, but there’s a lot holding that back. It’s really difficult to be a farmer here in Hawaii. And one of those key issues is exactly this, farm-worker housing.
Without this, the farms can’t grow. Our local food security suffers. So, I want to dig into the problem first.
And really, building housing on land that’s zoned agricultural is extremely difficult given the current laws. Farmers face high construction costs, complex land-use rules and long permitting times.
And for a lot of folks, the process is so burdensome that they’ve just turned to creating unpermitted units, just to meet their worker needs, and that exposes them to different fines and legal risks.
So, we’ve created a system where doing the right thing is too hard and it actually results in these farmers doing nothing, or bending the rules, just because that’s the path of least resistance.
But why does that really matter?
I think the biggest thing is, our farms can’t grow without people. And people need housing in order to live, you know, and work.
So, there was a survey back in 2020 that looked at farms, and they said that 41% are facing labor shortages. A huge portion of that is because of housing costs, and they can’t find a place to live.
The on-site housing doesn’t just make this easier, it really helps with retention, it helps reduce commute times and it strengthens the connection that these workers have on the land that they are actually working and farming.
So, looking at the current state law, farm dwellings are allowed in certain instances, but there’s a lack of clear standards.
We define what farm houses are, farm dwellings are, but we don’t define employee housing, and that small distinction creates big uncertainty for these folks.
Counties also have a pretty wide discretion. So, we end up with a patchwork of rules across the islands where each county is different, and they interpret and enforce their laws differently. So, what’s legal on Maui may not be legal on Oahu and vice versa.
I want to look, we talked a little bit about discretionary approvals, but one of the big things is what you can build by right, where you don’t have to go through the long process.
And just quickly, looking at the different requirements, on Big Island, you get one per site, essentially. Honolulu, you get two farm dwellings total. Kauai, you get five farm dwellings, but you also get a guest house per unit.
So, that’s kind of a weird one, where, let’s say, you have a farm, you have three farm dwellings, you’re only allowed three guest homes. If you have five farm dwellings, you can build up to five guest homes, but that’s where the limit kicks in.
And then on Maui, you get two farm dwellings, and then an additional farm-workers, farm-labor dwelling per every five acres.
If you want more than that, if you’re a farmer and you want to go further, you have to go through a discretionary approval process at any county that you’re at.
So, on the Big Island, there’s no real limit. As long as you have a farm plan that you submit, and the director looks at it, approves it, you can get more farm-worker housing approved there. And we’ve actually seen, in the past 10 years, 187 approvals.
So, that is, it’s an example right there of having some sort of clear standards, and not having a bunch of hoops to jump through.
In Honolulu, we actually passed a new farm-worker housing ordinance this past year. It requires a conditional-use permit. There’s a bunch of requirements included in that. I’ll go into that in a second, but we’ve actually seen zero permits that have been approved so far. I mean, it’s relatively new. Again, we’ll talk about that more in a little bit.
On Kauai, they have some relatively strict rules when it comes to discretionary approvals. It requires a special-use permit, and then additional requirements like proof of sales, a long-term agricultural tax dedication.
But, when you look at what is allowed by right, the guest houses, over the past year there’s been 45 applications for guest houses by right. So, the outcome, that “4” number that you see right there, that is just for folks that are looking to go further and pass something that’s discretionary.
But it also goes to show that these by-right projects that people, there’s an appetite for them. Once you get to this discretionary point, though, that appetite goes away because people don’t want to wait the months, or years, necessary to get through that process. And it’s very similar on Maui.
If I can, I mentioned Honolulu, just looking at the ag districts. Honolulu has two agricultural zoning districts: AG-1 and AG-2.
On AG-1, you’re allowed one farm dwelling for every five acres. AG-2, you get one for every two acres. But no matter the size of your farm, let’s say you have a hundred-acre farm, you are allowed two dwellings total. That’s it.
You can go to the Council and get a special-use permit, but you have to follow all of these rules. So, each dwelling unit can’t be more than 800 square feet. You can have no more than eight dwellings in a multi-unit building.
And, you know, if the farm stops operating, everybody, to use an Arjuna term, everybody’s SOL, and you’ve got to move out. And that makes it really difficult. Just not having that certainty makes it really difficult for somebody to take on a project like that.
Also, I mentioned there’s no applications since as of September when I last looked. So, that kind of tells me that this process is really burdensome for folks. Just the fact that not a single person has even put in an application.
But, you know, what can we do about it?
Here are just some policy recommendations. We’re really looking to expand farm-worker housing in a practical, responsible way that, you know, helps support people that are really farming these lands and making it possible.
>> So, one thing is to look at a statewide framework for farm-worker housing.
Right now, like I mentioned, each county has their own rules, and that inconsistency creates some confusion and delays. Having a framework would help provide a kind of clear, consistent standards that farmers can know what’s allowed. Farmers shouldn’t need to hire a lawyer or a lobbyist just to get housing built on their land.
>> We also want to allow more things like ADUs, tiny homes, modular homes for workers.
So, you know, farmers need, sort of, flexibility. Not every single type of house is going to work for them. But these things, like ADUs, these tiny homes, this could be huge for seasonal, temporary-type workers.
And by allowing these on farms, we can quickly expand our housing options without necessarily changing the character of our agricultural land.
>> Another option would be to legalize unpermitted units. I talked about it earlier, but there are a lot of unpermitted units out there, and we don’t know how many there are because they’re unpermitted.
So, you know, trying to recognize, and get these units back into, you know, I guess the database, and realize what we have would be really helpful. Not to mention it would help bring these homes into compliance without starting from scratch.
So, you know, it helps improve safety, reduces a lot of that legal risk and immediately would increase our known supply of housing.
>> And then, finally, is streamlining county permitting.
I think everybody understands the issues of county permitting. I mean, I think, Luke, you touched on it. Arjuna, you touched on it. Now, I’m going to touch on it again. And that just goes to show that, that’s a huge common denominator here.
On Kauai, I mentioned that there were 45 applications for guest houses, which are by right. Only three have been approved this year. And so that is a huge weight for folks that just want to do the right thing.
And so if we can try to continue to move towards these by-right approvals, we think that that should help expedite the process.
>> And then just to finish up, I’d be remiss if I didn’t just mention the Land Use Commission.
Currently, the LUC looks at every parcel that’s larger than 15 acres. If you want to turn that parcel from agricultural to residential land, oftentimes you have to go through the LUC. The counties, meanwhile, handle the district boundary amendments, is what it’s called. They handle anything under 15 acres.
So, what we’ve actually seen is a lot of projects are getting built at 14.9999 acres, and that’s to get around this whole process. Because the LUC has become a situation where, if you’re a developer or a homebuilder, you don’t want to go through that. It just adds more uncertainty for you.
So, we need to look at raising that threshold, and empowering the counties to do more on their own without having this duplicative review process through the LUC.
And I’ll just finish it up by saying that, taken together, all of these reforms could really transform the way that we look at our agricultural housing in Hawaii.
More importantly, they’re gonna help strengthen our agricultural industry, support local food production, and make it possible for people who work the land to actually live on it.
Luke mentioned earlier that we need your help. And we actually at Grassroot have a testimony tool that just makes it as easy as possible for people to submit testimony to the state Legislature.
If you are a member of our newsletter, we will send around, you know, alerts occasionally, especially during the legislative session. So, I encourage you, if you’re not a member on that mailing list, please get on it, and we will send out, you know, an alert whenever one of these housing bills — whether it’s inclusionary zoning, whether it is parking reform, whether it’s agricultural land and agricultural housing — we’ll send out alerts, so that you know when to testify.
And we’ve made it as simple as possible. It takes you 60 to 90 seconds to submit a testimony. And it’s just really critically important to give people like Luke here the backup that he needs when he takes these ideas to his colleagues and tries to get them passed. So, I appreciate your time and look forward to any questions.
[Applause]
Will White: Thanks, Ted. Can we have another round of applause for all of our panelists today?
[Applause]
Great. So I’ve been informed that we’re running a little short on time, but we do want to give our panelists a chance to go a little bit deeper on their presentation. So, we’re going to switch things up and do kind of a quick lightning round here.
And the first question is for Rep. Evslin:
“So, the Hawaii Legislature has passed some pretty significant housing reforms. You talked about a few of them in your presentation. I’m curious to know, in your estimation, what you think the appetite for further reforms could be in the coming session. Several of which I believe you also mentioned in your presentation.”
Evslin: I think what we’ve done over the last two sessions shows that there is a real appetite for continued reforms, right? 2024, we really had two big zoning-reform bills, both ended up passing. Last year, the floodgates were open, and then we had like 12 pretty big bills. Most of them essentially ended up passing.
Everybody knows the housing crisis isn’t over yet, so I think we can continue going until we end the crisis.
White: Great. All right. So, feeling positivity from the Rep. there. All right. Good positive outlook.
Arjuna, question for you:
“You know, what do you think, in your mind, what might be really the main roadblock for some of your policy recommendations in either reducing or removing some of these inclusionary requirements?”
Heim: Unfortunately, the major roadblock is likely the makeup of nine council members across the counties. It’s a lot more concentrated power in fewer people’s hands.
And also, inclusionary zoning has been incredibly politically expedient for all politicians, you know, across the country, in our state as well, to be like, “Oh, we’re doing something about affordable housing,” without actually having to think critically about how the policy is working, invest in the housing that they want to see, or invest in the residents.
White: OK. Great. Thank you. Ted, I’m curious to know how you would respond to this:
“You know, one critique to your proposal might be that it could allow all sorts of housing on agricultural land, right? And perhaps people would maybe stop farming because of that. What would you say to those who might bring up that as a concern for some of your recommendations?”
Kefalas: Well, I think there are valid concerns there.
I think first, though, we have what’s called important agricultural land, where you have to farm and dedicate the land. A lot of the county requirements also require you to have a certain amount of sales. You have to have tax dedications. So there are safeguards in place there.
But then there’s also areas where we have fallow lands that aren’t producing any sort of crops or anything right now. And so I would argue that those may be better served to produce housing.
You know, Luke, I think, showed that we have 4% of our land that’s zoned, like, urban, and that is far too little when we’re talking about housing and housing our people, because we see so many people leaving.
So, not to completely flip that, so that we have 48% urban, but there is opportunity to potentially expand that number.
White: Great. Great. So, we can have both at the same time, is what you’re saying?
Kefalas: Yeah, exactly.
White: OK. Great. Do you want to say? …
Akina: I’d like to say mahalo to Appleseed and to Will White. Give them a big hand, the entire team.
[Applause]
And to all of our participants, give them another hand.
[Applause]
To close this now, back to Will.
White: Thank you all for coming.