(Released on 03/25/07)
This year a lot of hot air at the square building on Beretania Street has focused on solutions for the homeless and the building of affordable housing. The issue isn’t new, in fact, if one were to trace the issue of affordable housing it would find its beginnings during the Great Depression when the territorial legislature established the forerunner of today’s Hawaii Public Housing Authority.
Like every other problem lawmakers try to tackle, they believe the solution lies in spending more money. The problem with that is, as we have learned, that when the state had the money, they did nothing with it to the point that during the 1990’s when the state general fund was hurting for resources, lawmakers scooped more than $200 million out of the various state special and revolving funds that had set aside money to build affordable housing. Now lawmakers have turned to raising taxes so that they can have enough money to solve the affordable housing problem.
But then again, they shoot themselves in the foot when one sees how they raised the conveyance tax to raise those monies. Two years ago, lawmakers thought that anyone who could afford to pay more than $600,000 or $1 million for a property could afford a higher conveyance tax and so they raised the conveyance tax on properties that exceeded those thresholds. And perhaps they were so focused on residential property that they forgot that the conveyance tax also applies to nonresidential properties as well. So not only did they spank wealthy homeowners, but they punished us all as consumers of goods and services sold from nonresidential properties like stores at the local mall and the auto body and fender shop down the street.
Ah, but they felt they needed to spank speculators in residential property even harder, so they designed a second schedule of conveyance tax rates which were even higher for those residential properties sold which would not qualify for the county homeowners’ exemption. And who did they think were going to live in these residences? Lawmakers could only see residential properties being manipulated in the hands of nasty “speculators,” forgetting all the while that these units that are not owner-occupied will probably house some “renter.” It really makes one imagine that lawmakers believe rental units will somehow fall out of the skies.
And if not falling out of the skies, by golly, then government will build it with your tax dollar. At this pace all future rental housing will be in someway financed or subsidized by state government. So in the future, government will become the biggest landlord in the state and more and more tax dollars will have to be generated to build that rental housing. So much for private investors and developers building rental housing. And those that will want to build rental housing will be standing in line for a hand out from state government. Somehow that isn’t what the picture of a free market economy looks like.
But when it comes to barriers to affordable housing, the two-ton gorilla happens to be government itself. As a Housing and Urban Development official from the national office proclaimed, she was “shocked” to learn of all the barriers state and county governments put in the way of building affordable housing in Hawaii. From zoning and permitting to inspections, the bureaucratic labyrinth is never ending. It took a small, self-help housing development on Kauai more than five years to get all the permits it needed.
And politicians can’t help but put their noses where they don’t belong as long as they can see some political gain for themselves. Such was the case of the Date-Laau development in the mid 1980’s where a developer wanted to redevelop a city block of three and four story walk-ups into high-rise condominiums. The residents rose up in arms with the thought that they would be evicted and some savvy politician seized the opportunity as a way to ride into office by defending the poor residents. But looking back after nearly a quarter of a century and it looks more like an opportunity lost, for in place of a few dozen apartments, there could have been hundreds of units for ownership and for rent. The inventory of housing would have been that much greater possibly staving off steep rises in not only housing prices but rents as well.
The same could be said of the current situation with Kukui Gardens which is a series of two and three story walk-ups in downtown Honolulu where there are 800 units occupying acres of precious land in the heart of downtown. By going vertical hundreds more units could be built. While lawmakers see nothing but luxury apartments replacing that housing, it does not have to be so. A mix of market/below market units could be mandated providing replacement housing for those families who are already there. But no, the legislature is once more sticking its nose in the process and insuring that the inventory of affordable housing will remain constricted.