“How to increase affordable housing in Hawaii” was the topic of a webinar sponsored by the Kokua Council on May 3, 2021. Keli’i Akina, president of the Grassroot Institute of Hawaii, was among the three presenters, along with state Sen. Stanley Chang and community activist Kim Coco Iwamoto. The forum was moderated by Kokua Council Chairwoman Lila Mower.
Akina, Chang and Coco Iwamoto each gave 15- to 20-minute presentations, in which they shared their views on what kinds of policies and perspectives are needed to increase the supply of affordable homes in Hawaii. They also were asked questions by a group of selected guests.
The entire webinar, 83 minutes worth, is featured below. A separate video featuring just Akina’s presentation is available here.
5-3-21 “How to increase affordable housing in Hawaii”
Forum sponsored by the Kokua Council
Featuring Keli‘i Akina, Sen. Stanley Chang and Kim Coco Iwamoto
Moderated by Lila Mower
Lila Mower: — your patience. I apologize for the technical difficulty. I’m Lila Mower, president of Kokua Council, and welcome you all to join this forum on housing and affordable housing.
We have, as our guests, Sen. Stanley Chang, Kim Coco Iwamato and Dr. Keli’i Akina. Each of them will have up to roughly 20 minutes to do a presentation on housing and affordable housing, and when each of them are through, at the end of all three presentations, we will then go into questions and answers.
While we are listening to their presentations, I ask everyone who’s not speaking to mute themselves and to close or cover your videos. I will be going into speaker view at this time, and I ask Sen. Chang, we’re going to call Sen. Chang, Stanley, because we’re very informal, I hope you don’t mind.
Stanley, if you could start your presentation, we’d greatly appreciate it. Thank you.
Sen. Stanley Chang: Thank you so much, Lila, and to the Kokua Council, for the opportunity to be here with you today. I will get started here with a presentation on a concept that I’ve talked about for a few years now called ALOHA Homes. I just want to start by emphasizing that even though the housing shortage in Hawaii has been a well-known issue for many decades now, the fact that we are in the worst economic crisis in generations with the worst unemployment rate in generations, the fact that vacation rental demand has crashed over the last two years, and yet housing prices have continued to break all-time records, shows just how desperate the situation is, especially with respect to building more supply.
Often at the Legislature, when we look at problems, we look to other jurisdictions like California. The only problem is, as we all know, the housing shortage in places like the Bay Area and Southern California is probably even worse than it is here. Luckily, there are jurisdictions around the world that have solved housing shortages, and a notable example is Singapore, where over 80% of the population lives in public housing. It is considered one of the best public housing programs in the world. How do they do it?
They start with a Central Provident Fund. Here in America, we’re familiar with Medicare and Social Security withholdings from your paycheck. In Singapore, not only do they do withholding for retirement and health care, but also for housing. Every working Singaporean has been saving money into a housing account. They take those funds to the Housing and Development Board, which is the public housing developer in Singapore.
HDB has been building tons of housing, over 1 million units over the course of its history. In this entire slide presentation, this is the most important slide. This is the only magic trick. HDB has been building enough supply to meet demand. Back in the ’80s, it was over 30,000 units per year. Nowadays it’s more like 20,000 units a year, and in fact, they forecast how many units of demand they will have. They actually build not just enough to meet the demand, but they build a little bit more because they don’t want supply shortages. Just one developer is building about 20,000 units a year in Singapore. Here in Hawaii, the whole state is building about 2,000 units a year.
As a result in Singapore, they have a homeownership rate of about 90%. In the U.S., it’s only about 63%, and in Hawaii, only 57%.
This is what you get in Singapore. It’s a three-bedroom, two-bath unit, 969 square feet, new construction. These are some old numbers, but in Hawaii, you could certainly expect to pay in the high six figures, if not seven figures for that product. In Singapore, they sell that product for only $180,000.
It’s attractive, it’s very advanced. They really take advantage of a lot of technology, including public transportation. On the upper right, you have a new town that is being built with no roads at the ground level and the town center. It’s only public transportation and pedestrians.
A lot of people ask, when I was visiting Singapore, “Why do you have such a housing shortage in Hawaii? Is it because you don’t have enough land?” Of course we say we don’t have enough land, but Singapore is less than half the size of Oahu. It has over five times the population. So it’s all relative.
This is another key principle. There are many obstacles to housing supply, but in my opinion, the key ones are not technical. They’re not based on engineering or even economics. The key obstacles are political. What we really need to understand is what it is that the people of Hawaii are asking for when it comes to housing. This plan that I’ve devised is called ALOHA Homes: affordable, locally, owned, homes for all. Every piece of this plan is designed to address some of the objections, the reasonable objections to new housing construction that we’re all familiar with, that we’ve all heard multiple times about different housing proposals.
Let’s talk through them one by one. The first, “A,” is affordable. A lot of times people say, “Well, this housing that’s currently being proposed is not affordable to local families.” What do I think is affordable? Well, we have to throw down a number, and my number is $300,000, which you can buy for a down payment of $9,000 under existing federal programs. According to HUD, these are old numbers [referring to a slide]. This is actually affordable to 49% of AMI, which is a family of four making about $64,000, which a lot of people don’t do. But if you imagine a family of four with two parents, each of whom is working, they only need to make $32,000 a year each to afford this. The monthly mortgage payment is about $1,500. So, $9,000 down and $1,500.
It also has to be affordable to the taxpayers. Back in 2018, there was a ballot question: “Should we raise property taxes to pay for education?” Seventy percent of the voters voted no. It doesn’t seem that there’s a big appetite for large new taxpayer subsidies. So this will not be subsidized by the taxpayer. It will be a revenue-neutral program, because profiteering off state lands is equally if not more controversial. Again, it’s a revenue-neutral program.
“L,” locally: This might be the single biggest issue that we hear about. Is this housing going to have local people in it, or is it simply going to be built for wealthy overseas investors as parking spaces for their money? My answer is, it should be for local people. That means a Hawaii resident who is an owner-occupant and who owns no other real property. That, to me, is a local person. If you own no other real property, if you’re an owner-occupant, that’s your home, and you don’t have another home that you can easily decamp to.
“O” is for ownership. What this means is a 99-year leasehold interest. A 99-year leasehold interest — the significance of that is it will take you to the end of your natural life. Every person buying a home can be assured that they will not outlive the lease. They will never have to move before they die. They will never have to deal with a rent increase before they die. Those are all the problems with housing insecurity that current renters have. If you own a place for 99 years, you have housing security, and that’s what ownership provides.
Of course, because you have a 99-year leasehold interest, you can do anything you would do with a fee simple interest, i.e: you can buy, you can sell, you can pass to your heirs. Because you can resell and mortgage these properties, well, what’s going to happen with the profits? Our proposal is, since we hear a lot of feedback that it’s unfair for people to be able to receive windfall profits from the sales of public housing, to take 75% of the upside of every secondary market transaction, not just the first, so that you will never be able to get rich off these units. You can live in them, you can make a small profit, you can cover your costs of your improvements, but these will never be appealing as investment vehicles for investors.
“H,” for homes. These are not shoeboxes in the sky. These are not tiny homes. They will have multiple bedrooms, enough to raise families, and they will have what is perhaps the ultimate real estate amenity: a five-minute walk to everything, including public transportation, schools, retail, commercial, etc. It will be a good place for future generations to grow up in.
Finally, “A,” for all. This is perhaps one of the most controversial aspects: absolutely not required. In fact, I strongly oppose a requirement of a first-time homebuyer or any type of income restrictions whatsoever. Public services are for the public. Public schools are for the public. Public parks are for the public. Public highways are for the public. There are no income restrictions on any of these public services. This will help to accomplish a number of things, one of which is income mixing. We have learned, over the years, that when you concentrate poverty, a lot of negative consequences result. These would not be concentrated poverty. Rich and poor would be able to live side by side. I believe that that is America. We live in a society where all are equal, and if the public schools are open to both a billionaire as well as to the homeless children, and if the billionaire wants to send their children to the same school, side by side with a homeless child, I think we should be celebrating that. That is a way to offer buy-in to all sectors of society.
This is just a quick illustration of how that plays out at the federal level. This is a federal budget slide. These are old numbers, but the top three parts of the federal budget are Medicare and Medicaid, Social Security, defense, and number four is interest on the debt. These constitute the large majority of the federal budget. Housing is just that small blue box in the bottom right.
What do Medicare, Social Security and defense have in common? They are all for everybody with no income restrictions. Even Donald Trump qualified for Social Security, Medicare, and of course defense protects him, like every American. That is why even Donald Trump has pledged never to cut Social Security , Medicare, and defense. Across the political spectrum, when public services are made available to the public, they are popular.
Why is this important? Every year, on average, the DOE graduates about 11,000 high school seniors. That’s not even counting the private schools. Here are some of them from a recent Hilo high school graduation. Every year, on average, the state of Hawaii produces about 2,000 units of housing. No matter how you cut it, 11,000 does not go into 2,000. All 11,000 of these graduates could be billionaires, but it does not matter. The housing simply does not exist to house them.
If we continue to under-supply the market, as we have been doing for the last decades for generations now, I encourage our political leaders to be honest with our young people at graduation and say to them, “Now that you are an adult, it’s great that you were born and raised and educated here, but you have to leave and you cannot come back because we as a state have decided not to build enough housing for you.” That’s the reality. That is the sad reality that generations of local people have grown up with. I am not OK with that reality. That’s why I’ve spent so much time now and so many years now to trying to find a way to make large amounts of new housing supply acceptable to the people of Hawaii.
Here’s just a quick slide overview of some of the features of ALOHA Homes that we’ve included to meet the reasonable objections that local people have raised for generations now to affordable housing.
Let me leave it there. Thank you again for the opportunity to present today. I look forward to talking story and Q&A more in the rest of this program.
Mower: Thank you, Sen. Chang. Yes, I noticed this year and last year, you presented a lot of innovative ideas on housing at the Legislature. I don’t know if anything passed. Everything that I looked at was either sitting in committee or referred or deferred. Nevertheless, thank you very much for your innovative ideas.
Dr. Akina, recently you had, I think it was an online discussion that I was one of the audience regarding Bill 10 on Maui addressing affordable housing. We’d like to hear your thoughts about housing and affordable housing. Dr. Keli’i Akina, may we please hear from you next? Thank you.
Keli‘i Akina: Thank you very much, Lila. I appreciate it. First of all, aloha mai to everyone. Great to see you today. I’m so delighted that Kokua Council has brought so many fine people together. I really appreciate the invitation, Lila. It’s just great to be able to be with you again. You’re a good friend. Those of you at Kokua Council are doing good things in terms of educating the public.
Sen. Stanley Chang, that was a great presentation. I had some questions for you, and I’ll reserve that for the Q&A time. I appreciate all that you’re doing to advance affordable housing.
Kim Coco Iwamoto, I’m honored to be on board with you today as well.
Those of you who don’t know me, I’m Keli’i Akina. I’m a trustee in the Office of Hawaiian Affairs. I’m also the president of the Grassroot Institute [of Hawaii], a think tank that looks at how we can come up with solutions for the problems that we have.
What I’d like to do is share a little bit about the macro view. I love the way that Sen. Chang presented an on the ground solution, and I’m sure that there are many of these that we can look at. But I also want to take a look at a 20,000-foot level at the economy, at precisely what the problems with the economy and the government are that have resulted in this critical shortage of housing. If you’ll excuse me, I’d like to set up a slideshow now. If anyone who’s watching would just wave your hand, and let me know that you actually see my slideshow. Can you see the slide right now, everybody?
Akina: All right, that’s great. What we’re really talking about today is solving Hawaii’s housing crisis. I believe that all of us around the table recognize that we must make it possible for everyone in Hawaii to have the opportunity to afford housing. That’s an absolute critical for the next several years, next future that we have .
Hawaii, unfortunately, has the least affordable housing of any state in the nation. The median price of a single-family home has now hit $920,000. That’s exorbitant. It’s led to a tremendous outflow of residents from the state of Hawaii. Since 2016, Hawaii’s population, if I take net figures, has fallen by 22,000 people. The rate of people leaving the state has become one of the highest in the nation.
At The Grassroot Institute, we have a series of videos and stories of people who’ve left Hawaii. It’s called “Why we left Hawaii.” Here are a couple of them. Tom and Ycrem Holloman said, “The cost of living in Hawaii is just too much. Our tiny Hawaiian home was valued at $25,000 more than our four-bedroom home on one full acre here,” where they’ve moved. You’ve heard that story on the mainland over and over again.
Ashlynn Sakaria said this: “I was born and raised on Oahu. In Hawaii, we could never think of owning a home, but here in Arizona, we actually have a chance to be able to buy a home. As hard as it was to leave Hawaii, we knew we had to do better for our daughter.”
How many of you have heard that story? I have four children, all of them grown, now living on the mainland, trying to earn their first mortgages. They know that in Hawaii, they’re not able to do that yet.
Last year, there was a survey done. You may have seen it. It showed that Hawaii’s high cost of living, lack of job opportunities and high housing costs were the top three reasons that people are fleeing the state.
Let’s go to that question.Why is housing so expensive in Hawaii, and what can be done about it? David Callies is a national expert on this, a former law professor at the William S. Richardson School of Law. He basically says that, “Land use in Hawaii continues to be the most regulated in all the 50 States. It’s the way our government regulates land use that creates an artificial shortage.” He said, “It can take 10 years to build housing on a raw piece of land.” Of course, the house only takes a few months to build, but getting approval to build a house can take a decade or more. That’s because housing in Hawaii is simply over-regulated.
Do you realize that we develop housing on less than 5% of the land? In fact, all of our urban and housing development takes place on only 5% of the land in Hawaii. This means that 95% of our land is set aside for agriculture or conservation, and most of the agricultural land is lying fallow right now. Unfortunately, this has led to an artificial scarcity of land in Hawaii. The land is available for housing, but we just don’t release it.
Watch the pie chart really closely now, down at the bottom. I’m going to try to move you through this and show what happens. If we simply allow development on one percentage point more, that is we move from 5% to 6%, that would increase the land available for housing by 20%. That’s whopping. What would happen is that the price point would come down, if we don’t sell it all to rich billionaires from Asia, which we can avoid doing. I’m glad Sen. Chang is in favor of that.
If we moved from 6% to 7%, increasing by just two percentage points, that would increase the land available for housing by 40%. Now, let’s do it one more time. If we moved from 7% to 8%, that would increase the land available for housing by 60%. The basic economics lesson is that the price point will go down. According to David Callies, there would be no negative effect upon the availability of land for agriculture and conservation.
We’ve got to talk a bit about the State Land Use Commission. They are the ones with the oversight over these zoning districts. Any housing project over 15 acres that needs a zoning change must first go and get approval from the State Land Use Commission. This adds tremendous delays to otherwise good projects. The LUC is a quasi-judicial body, which means that if someone intervenes in a hearing, it can throw a project into the court system where it can be delayed for years upon years. Then if a project clears the LUC, they have to go through all of the same regulatory hoops and hearings at the county level.
We’ve written a report at the Grassroot Institute called “Reform the Hawaii LUC to encourage more housing.” You can get there by going online at grassrootinstitute.org. By the way, it’s grassroot singular, no “s” at the end, grassrootinstitute.O-R-G.
Our report recommends allowing projects that are 25 acres to skip the LUC process. Some lawmakers, including Sen. Stanley Chang, have rightly tried to pass that, and we’ve supported him in that effort. Unfortunately, those measures have not passed yet. There’s still more work to be done to educate the public and lawmakers about this common-sense reform.
Our report “Build-up or build-out?”, which is a separate report, shows that Hawaii’s housing shortage could be resolved if we just allowed either building up or building out. The report shows that allowing a house to be built out would be the least expensive way to produce more housing. But it isn’t the only way to create housing. We can also build up. There are appropriate places to do so. But there are so many regulations that can get in the way of that too. Height limits, for example, prevent buildings over a certain number of stories. Many counties in the state only allow four- to five-story buildings, and this significantly limits housing.
Affordable housing requirements are another policy that can have unintended consequences over housing. These regulations require a certain percentage of the project to be sold at below market rates. For example, take the Island of Maui. They’re getting ready to enact a policy approved by their County Council to require all 201H housing projects to be 75% affordable. What that would do is give Maui County the second most restrictive housing policy in the nation. It sounds good, but let’s look at what that really means. The last time Maui County increased their affordable housing requirements, only 14 houses were built over the following 7 years.
The only places with higher affordable housing requirements are three municipalities that have 100% affordable mandates: Santa Paula in California, Oxnard in California, and Aquinnah in Massachusetts. After they enacted the mandate, the housing growth in those three municipalities declined by more than 60% over the following 10 years. I believe that Oahu lawmakers need to look at that very carefully as a lesson to avoid any attempts to increase the affordable housing requirement.
Why does a higher affordable housing percentage become a problem for developers in producing housing? It sounds like something we would want. We would want to have a project maybe filled with 75% affordable homes that can be accessed by people with lower incomes. The reality is, as they say in economics, “There ain’t no such thing as a free lunch.” This has to be paid for. If developers are paying for it, it’s a real disincentive to building.
Here’s a real-life example from Council member Yuki Lei Sugimura, who gave this to me last week when I interviewed her on one of our interview programs. She said there’s a project in West Maui whose total cost is $64.6 million for 88 units. That means it cost about $735,000 per unit. To sell the units as affordable, they need to guarantee that the house is actually sold for $350,000. That’s less than half of what it cost just to build it. Who’s going to come and do that? What developer would do it?
Under Maui’s new 75% requirement, that means the developer would have to sell three-fourths of the units they build at a substantial loss. Now, the developer then needs to find other money to make up the difference. How are they going to do it? Either by raising the price of the remaining 25 homes they can sell, and that’s going to contribute to inflation and the cost of housing, and it’s going to put these massive millionaire mansions right there in the project, or they’re going to have to seek government subsidies. What that means is that we as the taxpayers and the citizens of Maui are going to have to pay for the difference.
The bottom line is that developers simply won’t build the affordable housing. They’ll go off and do other projects. The system is well-intended, but the effect will be less housing for everyone. What this does is force developers to create ultra high-end housing to compensate for the houses sold at below market prices. This contributes, ultimately, to the income disparity in a place like Maui. Now, this approach of requiring a certain amount of affordable housing for affordable housing projects can work if the figure is below 50%. But once the requirement reaches 50% or above, it becomes less profitable to build housing communities, and more profitable to just build mansions.
In other words, it’s also a myth to say that developers would rather build mansions than affordable housing. We’ve talked to a lot of developers, and they really would prefer to build large-scale affordable housing projects, and doing so could be profitable for them. At the heart of the matter, the high price of housing is the result of our supply problem, and without enough housing, the price to buy and to rent both go up.
In order to have sufficient affordable housing, we’ve got to ensure that there are incentives to build more homes. What that means is working together to remove barriers and burdens that slow down the building of affordable housing and prevent new solutions and innovations that will address the housing crisis. For example, we have a report on our website produced by Grassroot Institute called “How to build affordable thriving neighborhoods.” This shows at least 50 ways to reform regulations to allow for more housing.
Here are some examples: waive some building code requirements for temporary homeless shelters, allow taller buildings, allow residences in commercial districts, allow office parks and malls to build housing, reduce the political approval process. If a project complies with existing zoning, it shouldn’t require more than a planning department approval and building permits to proceed. Publish preapproved plans for common projects like accessory dwelling units or single-family homes, then permit expedited review for projects using these plans, a lot smaller lot sizes.
Additionally, we find ourselves in the good company of Sen. Chang again who sponsored several zoning reform bills that we supported this legislative session. This include block-level upzoning, which means, to allow homeowners in a neighborhood to vote to increase housing density in their block, or allowing for the creation of fourplex units on lots where single-family dwelling units are permitted, allowing religious and educational institutions to build residential units on their own land regardless of current zoning restrictions, requiring counties to authorize the building of detached dwelling units that meet certain minimum standards.
While we might have different perspectives on the housing crisis and how to solve it, and while there are many potential solutions that are being debated, it’s important to remember that we all share the same goal: We want to increase the supply of housing in Hawaii, we want to make it possible for everyone to afford housing, and with those shared goals, we should be able to work together. We like to say, e hana kakou, let’s work together.
Well, I’d like to turn off for a moment to my slide presentation and just conclude with this thought. I came here today to present to you some of the research of the Grassroot Institute of Hawaii, and I’ve done that, but as you know, I also wear the hat of a trustee in the Office of Hawaiian Affairs, and my heart is not only for all people of Hawaii, but for the Hawaiian people to be able to have the housing that they need and deserve. I believe that one of the solutions to our housing problems is to ensure that Hawaiians are able to get the housing we need.
We’ve got to come up with solutions where the Office of Hawaiian affairs and the Department of Hawaiian Homelands worked together to end the 27,000-person waiting list for Hawaiian homelands. There are many innovative solutions that are being developed. I’ll be glad to respond during the Q&A time to this.
Once again, my mahalo to Kokua Council for this opportunity to talk about a very crucial issue, and I’m just so glad we’re all working together to provide housing for everyone in Hawaii. Thank you very much.
Mower: Thank you, Dr. Akina. Obviously, our program is not long enough to talk about all the solutions and all the concerns we have for this decades-long problem.
Next, we have Kim Coco Iwamoto, who will talk to us about, not just affordable housing and housing ownership, but housing in terms of rental housing. Kim Coco, you’re up, thank you.
Iwamoto: Thank you. Thank you so much, Lila, and thank you Sen. Chang and Trustee Akina. I was so glad that I got to hear both your presentations. Unfortunately, I’ve missed Sen. Chang’s presentation in the past, so it was really great, and it was so nice.
I apologize I don’t have a PowerPoint, but I do want to share how I got involved in the issue of housing. I was working as managing attorney of Volunteer Legal Services Hawaii previously, and I decided to become a foster parent, and some of my foster kids were previously homeless, previously incarcerated. … I needed to be really present for them. They were going through high school.
So I decided to invest in a small apartment building in the Ala Moana area. I put a down payment down. I got a mortgage. I started fixing it up. Wearing this new hat allowed me flexibility to attend school functions. It’s a very small apartment building. But within a year of fixing it up, repainting it, planting some palm trees, I was approached by an interested buyer, and they’re like, “We can give you 100% return on your investment.”
It was 2004, and then it was around 2006, as the housing bubble was reaching a peak. They offered me a lot of money. It was insane, and I was like, “Wait a minute.” My current tenants at the time, some of them had been there for 30 years. I was trying not to raise the rents. And I’m like, “Wait a minute. How are they going to afford their mortgage if they’re buying the building from me for so much more money, and then how will they meet their mortgage payments if everyone” — obviously, they would need to increase the rents for everyone in the building by an exorbitant amount.
I realized at that moment that I would be a part of the problem for affordable housing in the urban core, or part of the solution. Obviously, I decided to keep the building and to really be more — It kind of woke me up to what’s going on in terms of other people just buying and selling and flipping properties for investment, and it hurting the local families who are living in these dwellings.
Then I started to expand. I started getting calls. I didn’t know much about Section 8 at that time. I would get calls from people because I would — actually, in my ads, I would say, “Please be able to show that you earn three times the amount of the rent that I’m asking. Of course, it would be impossible. Then someone in Section 8 would be like, “That’s not even possible.” So I learned more about Section 8, and eventually, I started renting to individuals with Section 8.
What happened [was] that during this current recession where everyone’s losing their jobs, those individuals — and I think a lot of landlords have been experiencing this — but diversifying your rental portfolio, meaning tenants. I many of them or half of them or a significant portion of them have Section 8, it’s actually really great because it carries you through those times when people start losing their jobs and they can’t make the rent payment. Section 8 is guaranteed by the government. So as the individual’s income rises and falls, that Section 8 fills in the gap so that the landlord is protected, or at least that relationship is protected.
I want to share with you one family. I also started thinking that since I was renting to Section 8, I’m like, “Let’s go even deeper.” I said, “I want to go find one of the programs who are actually getting working families who are homeless and getting them into permanent housing.” I reached out, and I found one of the first families. It was a family of three kids and a father. They were all living in a van.
They actually had a Section 8 voucher to get a three-bedroom apartment, but there were none. When he met with me for the one-bedroom unit, that’s the only one I had available, and I said, “Your voucher, you can get a three-bedroom.” He’s like, “You know what? There are no three-bedrooms. Your one-bedroom is way bigger than our van. We’ll take this.”
What was really interesting — he was working, so Section 8 basically just gave him — I think the voucher that he was using was for $200 because he was making enough and that was just the amount that Section 8 identified that he would need to meet his rental payment.
By getting permanent housing, he was able to get four raises in that first year. During the period that he was homeless, he’d been employed by the same person. But after he had permanent housing, he was more reliable, and he got raises. Now, suddenly, he found himself not eligible for Section 8 anymore, which is fine because he was making more. It worked perfectly. I actually lowered his rent a little bit so that he wouldn’t be struggling and they could be fine. He’s been there for many years now. So that whole Section 8 system does work amazingly. I encourage private landlords to think of this as an option of diversifying their portfolio.
Also, Partners in Care — I just joined the board of that organization — but they are the Oahu-based continuum of care for any service providers working with the homeless community. They have a landlord engagement program. They actually offer a fund. If something happens in one of your units, and you’re renting it to a previously homeless family and something breaks, there’s money sitting there that they can share with the landlords to repair things if something breaks. The good news is that they’ve actually made very few payments out of this trust because families aren’t breaking things as much as people thought they might. Anyways, that’s a great opportunity to partner with community programs.
That’s one of the things. Flipping properties has a huge negative impact on affordable housing in Hawaii. I would love it if our lawmakers, or maybe this is on the city council level, maybe on the state level, but [it might be good] if we’re able to work on doing a scaled conveyance tax. One of the interesting things is that, during this pandemic, during this economic recession, we found out that home sales were still going up. The Realtors are still making money. Homes are still being purchased. Why didn’t we actually try to maybe increase the conveyance tax as soon as the pandemic started?
It’s information for the future, because what we know is that home prices, it just seems like real estate is going to constantly be making money. Is there a way to harness some of that revenue generation, that opportunity, and then [use] that revenue to fund our Section 8 programs?
So that’s one, conveyance tax. A conveyance tax that actually also works [so] that you pay a higher conveyance tax if you keep the property for a shorter amount of time. For instance, in my situation, when I was approached by the buyer soon after I purchased and fixed up my building. If I sold it, there should be a higher rate of conveyance tax to discourage me from doing that, because it’s going to cause everyone’s rental rates to go up. Doing the scaled conveyance tax to discourage and disincentivize flipping a property would be really important to keeping rates lower.
Obviously, with the Airbnbs, that’s another issue. With the proliferation of Airbnbs, you can track the skyrocketing of rental rates across Oahu. Again, I’ve been following this since 2004 as a landlord. We didn’t have Airbnb back then. Once it started happening, rental rates for local residents skyrocketed. Then, actually, during the pandemic, more of these Airbnb units started reentering the market, and it did bring the rental prices down a little bit. It did adjust. That’s a clear indication of the impact it’s having.
Also, one of the things I researched recently is I found that Hawaii has one of the highest rental rates, No. 1, but also has one of the highest vacancy rates — meaning between all of the homes that people are parking money here in Hawaii, so they’re leaving their units vacant, and also landlords not willing to bring their prices down quicker to adjust with the fluctuation.
Even during the pandemic, I met landlords who refused to bring their prices down, but they had three units in their small building, and they just didn’t want to bring the price down. They were just afraid; they just didn’t want to adjust to meet the market where it was at. They just said, “We’ll just leave it high and empty.” So we have a high vacancy rate, as well as a high rental rate, which is really disturbing.
One of the ways, or solutions, to address that would be an empty-home fine or empty-home tax.
Obviously, helping, then, landlords or homeowners calculate whether or not it’s worth it for them to leave the dwelling vacant, or is it better if they just lower the price and get it rented quicker.
An empty-home tax, there was a report actually commissioned by the City & County of Honolulu, and it’s on their website now, if you look under “housing.” It basically addresses the revenue options for taxing property owners, again, who park their money here in Hawaii and leave their dwelling empty and vacant. Even just taxing 1% on these homes that are habitable dwellings, that are vacant, could increase — you can actually raise $500 million in revenue in the first year by just charging 1% of the assessed value. One of the reasons why so many wealthy people park their money here is because our property taxes are relatively low, considering the value of the experience that they’re getting by parking their money here.
Do we want to discourage that by actually increasing the personal home exemption that, if you live in your dwelling, you’re allowed to apply for this personal home exemption, but also then raising property taxes, so the only people who are paying an increased property tax would be those who are just outside investors, … or arrange it so that if you have a local resident who pays taxes in Hawaii living in your dwelling, that also would be eligible for a residential home exemption.
That would also increase people living here, and then businesses will thrive because just looking at Kakaako proper, all of those condos that are empty, and all of the businesses on the ground level, all of those restaurants, hoping that they would have sold more meals and more services at the hair salon to people who would be living in those condos. But now, those condos are so empty that there isn’t that same economic revitalization that I think HCDA was hoping for.
And actually, Sen. Acasio, who I’m working for now and who was new to the Senate this year, she did circulate a resolution. It was never heard, but it did urge the HCDA to use its purpose and its revolving fund and its ability to find, through promulgation of the admin roles, to instigate this empty homes find. Unfortunately, maybe it brought the idea to the forefront that HCDA could be used in this way, but it didn’t get a hearing. But it’s a start.
Another issue is, and I think a lot of the other speakers are putting out some bold ideas, and so one of the bold ideas I’ve been thinking about for a while is a moratorium on luxury developments — condos, luxury residential, anything on the luxury side — just stopping the permitting there and allowing all of the resources. I think as trustee Akina said, that he’s spoken to developers and they’re not against making affordable. It’s just, I think, it really hurts them.
One of the things that happens when a developer who’s doing a luxury development [competes with another who is doing] an affordable housing development, they’re competing for land, they’re competing for labor, and they’re competing for resources, to even bid on things like cement. All of these things are being bid against, so who’s going to win? It’s always going to be the luxury developer because they can just raise the prices.
If you have a moratorium and you said, “Wait, until we build all the affordable, starting with the most need,” meaning for the people who are homeless, and then work your way up to the AMI levels, but until we get our affordable housing needs met, we’re not going to build any more luxury. If you do help to build affordable, you’ll get these little credit points so that when it’s time to build a luxury, you will be first in line.
That can bring in the architects, the electricians, all of the labor who’s involved in affordable housing. If all of [them] combine their credits, their golden stars that they’ve earned to address our problem and our need, then they collectively can be at the top of the list for a luxury program once you reopen that.” That’s, I think, a bold idea that can happen.
When I mentioned this to the Building Industry Association, some of the members there, when they were vetting candidates and stuff, they said, “Yes, that actually doesn’t seem like it would be a problem because we would all be working. Everyone would be working. As long as it’s equal and fair across the board, it could be an option.”
Another issue is rent control and rent stabilization. I know that Trustee Akina has issues with that. I think I read something in researching this. But Peter Savio, who’s also a developer of affordable housing, he mentioned a story about his aunt living in rent control in New York City and having that stabilized rent early on in her life. Then as she built her career, her rent stayed the same, her earning potential increased. By the end of her life, she was able to build a lot of equity. That model could also work, and I think something like that needs to happen here as well.
Of course, there are so many other intersecting issues around affordable housing and people actually slipping into homelessness. We need to obviously look at our bankruptcy laws.
At one point, the bankruptcy laws were much easier to access. In fact, when I was at Volunteer Legal Services Hawaii, we had a prostate bankruptcy clinic. I think it’s become more difficult now.
We need to start looking at how the lobbyists for all of these financial inches institutions have chipped away at what was once a consumer protection law, has now dulled that safeguard and safety net for people who — then what happens if people’s wages are being garnished, they can’t even get the money to pay for rent, and that’s part of the thing that’s happening. So there’s all this stuff happening on the periphery that impacts how “affordable” affordable housing is for our local people.
I think I’ve reached my 20 minutes. I also have questions for the other speakers, and I welcome their questions. Thank you so much, I appreciate your time.
Mower: Thank you very much, Kim Coco. We understand that housing is a very complex issue that we’ve been tackling, again, I said, for decades, and it’s not just Hawaii, it’s all over the world, I noticed. You’ve brought up some great ideas.
It’s now time for question and answer. If anybody would like to raise your hand using the “raise hand” icon, please start. I see a number hands up. Rick, Doug, can you monitor? Let me know who’s first.
Rick: Oops. Trying to open everything up. Let’s see. Oh, go ahead, Kathy.
Kathy: May I call you Kim, Kim? Kim Coco. I think some of your ideas are so wonderful. We could probably get a lot of people on board to build affordable housing by the tons because there’s lots of space that can be used. The deplorable permitting situation is putting a lot of people off. Is there any way you think that would ever improve — the permitting situation?
Iwamoto: This is permitting for everything. I feel like, if you’re business and you just want to get your business started, there’s all of the … I speak to business owners. They’re talking about all these roadblocks, but I’m like, “Aren’t you guys the same business owners and the same developers who believe in smaller government? Aren’t you the ones who want to pay fewer taxes so that the municipalities or the state hires fewer people to do the work?” You can’t say smaller government and then go, “Wait a minute, why is it taking so long for this work to get done?” You can’t have it both ways.
Obviously, what happened with this whole permitting scandal at the City and County of Honolulu is that, yes, there’s only a few people. They’re taking bribes to get cut to the front of the list. Would that have been a problem if they just hired more people to do the permitting? If they just said, “You know what, it’s worth it to pay more taxes, for the wealthy to pay their fair share of taxes so that we can have more government services so that the wealthy can make more money.” I feel like you can’t ask for it both ways. Maybe Trustee Akina has something to say about that.
Mower: Thank you, Kim. Doug, your question?
Rick: She asked Keli’i something.
Akina: Aloha. I’m sorry. I was trying to do my unmute there. Thank you. Kim, thank you so much for inviting my thoughts on that. I think we’ve got to strive for a society where we can allow people to have the opportunities that they want to go after, regardless of their station in life. We’ve got to have a safety net, and we have to also have the opportunity to achieve great things in one’s life as well.
We need to learn how to balance these together. One of the stories that Confucius told is that he had visited a prince, and the prince asked him what he should do next because Confucius had told him, “Make sure that you see that people have the food they need. Make sure that they have the safety they need.” The prince then asked, “Is it all right for me to be able to grow in wealth?” Confucius said to him, “It’s all right for you to grow in wealth, so long as everybody else in your kingdom grows in wealth.”
I do think there is a challenge to that, but that’s the ultimate vision that we want to achieve. Our research shows us this, that when we allow the market to operate the way it’s supposed to operate, and when we reduce government interference, those who produce at the top end housing and other things, jobs and so forth, that build the economy, actually do provide opportunities for others to rise up the ladder as well. My heart breaks when I look at the level of income disparity. I share that with you, Kim. I do hope we can find a society where all people are able to flourish together. Thanks for asking.
Mower: Thank you, Dr. Akina.
Rick: Doug, you had a question.
Doug Matsuoka: Yes, I do. Let me briefly introduce myself. I’m H. Doug Matsuoka, volunteer director at Kokua Council. I work at Hawaii Meals on Wheels, and I’m a founding member of Hawaii Guerrilla Video Hui. I’m a renter, which I think most of our council are owners. I’m a renter and not too long ago, I was homeless. I’m working now. As long as I’m working, I can afford the rent. If I wasn’t working, then I’d be out in the street.
I have a lot of questions, but there’s one big one that we asked the mayoral candidates that didn’t come up. Before I ask the question, Dr. Akina, I think that’s trickle-down. I think that’s not going to work. That sounds very Reagan-esque. Just my opinion. That’s a prologue to what I want to ask is rent control. Won’t rent control work? I’m ready for it, heck.
Akina: Well, thanks, Doug, for that question, if you were intending it for me. First of all, I don’t promote the idea of trickle-down economics. We’re not looking sentimentally at trying to allow the rich to become massively rich in the hope that they will somehow benefit the poor. I think what we have to look at is a society that balances the role of government to regulate and the role of government to allow individuals to pursue their visions. What I’ve been trying to point out is that one of the major reasons for the shortage of housing is the over-regulation of government in the market.
That’s not to say that there shouldn’t be government regulation, but we’ve shown very clearly that the supply of housing has been reduced through an artificial scarcity, and that affects the basic supply-and-demand and the price point. If we can simply solve some of the factors with the LUC and our zoning rules that cause that to happen, we will stop disincentivizing the creation of a market that allows everybody to succeed.
Now, with respect to rent control, I don’t want to get into the specifics there. We have some studies that we can refer you to with regard to that. That’s one of many, many, many measures, where the government piecemeal attempts to interfere with the free working of the market. Now, the free working of the market doesn’t mean let’s let ethics simply go aside completely and base this upon Gordon Gekko’s idea that greed is good. The free working in the market means there should be a minimal role for government to provide for the protection of contracts, to provide for the overall framework in which economy can work.
Then we are able to let economic players pursue incentives, regardless of what level of the economy they’re at. That free exchange between parties results in goods that people can benefit from. With respect to rent controls, we may be doing something of value to some individuals, but we’re also violating the rights of other individuals, the owners of that property. How do we find the right balance? The less regulation we have, the more likely it is we’ll find the right balance. Thank you.
Matsuoka: Thanks. If anyone else wants to answer it too, I’m up for it.
Chang: I guess we’ll jump in. A lot of people ask me why ALOHA Homes is ownership-based and not rental-based. Vienna actually is similar to Singapore. Over 60% of the population of Vienna lives in public housing, and they’re all renters. Rent control exists in Vienna in both the public and private sectors. It can work too, but in America, after generations of the idea that ownership is the American dream and is key to security, I think it just needs less education, that people seem to like the idea of ownership more.
Now, if you look at systems where rent control has not been successful, or widely accepted the way that it is in Vienna, look at, say, California, which has rent control, New York has rent control. The success of the Vienna model is that everybody gets it. Everybody gets it. Rich and poor alike regardless of ethnicity, regardless of any status. When you have a system like in California or New York, that’s a housing undersupplied system, where we have a housing shortage, there are the lucky few who get rent control, and then everyone else who doesn’t. That division in the society is a political problem that has caused rent control to become very unpopular in places like California and New York. In theory, rent control is not — it can work as long as there’s no scarcity of housing.
Iwamoto: Sorry for jumping in. I have friends who are in an apartment building in L.A. in West Hollywood who have rent control, and they didn’t enter this apartment as low-income people. They’re working professionals, and their rent is stabilized, and they’re able to now build equity.
What’s interesting, though, your ALOHA Homes model: When it’s leasehold, that IS a long-term rental, with the allowance that you can sell the remaining lease. That’s interesting. I was surprised by that, watching your presentation. I’m like, “Oh, leasehold.”
One thing that I didn’t hear you mention was, is there a monthly maintenance fee? Because that’s the thing that renters do not pay, and that’s what might be different, because the renters don’t pay a maintenance fee. It’s all built into their rental remittance. The leasehold, would that include a monthly maintenance, Sen. Chang?
Chang: Yes, it would. It would be like any other condominium building. They would be paying a monthly maintenance fee. As you heard me say, I would be proposing a 75% recapture of the profit for every secondary market transaction, not just the first. My hope would be — not my hope. The program would require that these funds go back into the operation and maintenance, and repairs, of these towers. As we all know, when condo towers age, spalling concrete, elevator replacements, they’re very expensive maintenance bills. By recapturing those profits, that is a potentially very large source of revenue that can help keep the maintenance fees as low as possible.
Iwamoto: Then I think about the condo building across from Sports Authority. I can’t remember the name, but it was supposed to be workforce development building, and then they were handed over management and their monthly maintenance fees skyrocketed. I’m like, “Wow, how did the leaseholders of your ALOHA Homes vision, how would they deal with those huge spikes that might happen because something happened? Would there be a cap on a monthly maintenance that a developer could hand over to these leaseholders?
Chang: Obviously, there are problems at that project, and there are problems at a number of projects. The idea would not be that we would prescribe limits. Every building, every tower would be different, but structurally, because there is this revenue source coming into the towers in the form of the 75% recapture, that would be a potentially very large and significant way to help pay for repairs and maintenance, that would not be coming out of the pockets of the existing owners.
That would have the further effect of benefiting — so if there is turnover in the building — the more turnover there is — in theory, that would actually benefit the existing people who want to stay more. If you bought in at a low price, and you don’t make a lot of money, you were one of those original people who could only afford the $9,000 down in the $1,500 a month, you would be benefiting by having your maintenance fee go down, if there are resales of the units around you. Everyone would benefit from the higher level of maintenance and repairs just in general.
In America, we think of public housing as under poor maintenance and so on, but in Singapore, everything is much more efficient and they just assume that, if there’s a broken light bulb, that it’ll be replaced within a couple of hours. I think they pay their maintenance fees, something like $25 or $50 per month. It’s a real- world — these are not pie-in-the-sky ideas. These are actual ideas that do work.
Rich: Keli’i, go ahead.
Akina: Thank you very much. I have a question for Sen. Chang. Thank you very much for that excellent presentation you gave to us today. I really believe that you are at the forefront of providing a bold and visionary look at what we really need to move into in the long run. I’m so glad that you took the time to go to Singapore and see the model that they have there.
I do have some questions in terms of feasibility as to how applicable that can be in Hawaii. There are naturally some differences between Singapore, and our state and county governments here in Hawaii. I’m sure you’ve wrestled with the question of how feasible getting ALOHA Homes off the ground and maintaining it would be. A couple of questions I have with regard to that would be first, on the financial level: The financial capacity of Singapore dwarfs that of Hawaii and our counties here. The Hawaii Executive Collaborative recently released information showing that we have at least $88 billion of unfunded liabilities here at the state that are currently due, and so our financial stability is very, very different.
Secondly, our management capacity is also very different in terms of developing large public-sector projects. Case in point, of course, is the rail project itself, which ultimately has been a real challenge both in terms of management and development, and in terms of financing. Given those thoughts, Sen. Chang, how do you address the feasibility of Hawaii with our capacity to be able to execute an ALOHA Homes program?
Chang: That’s a great question. Obviously, there are limitations in our system. We discussed some of them earlier with the problems that DPP has experienced in recent years, but we have to start somewhere. Speaking of Singapore, Singapore, first of all was invaded and tens of thousands of people were massacred during World War II by the Imperial Japanese Army. That was pretty traumatic. Then it was given independence in 1961. It merged with Malaysia in 1963 and then it was kicked out of Malaysia in 1965.
There are massive racial riots. Other countries, like the People’s Republic of China, were sponsoring large movements to replace the government during that era, and there was a huge fire in 1961 that left 16,000 people homeless. I should also say, even though we think of Singapore as this gleaming first-world financial capital today, back then it was one of the poorest major cities in Asia. It was poorer than Manila. It was poorer than Saigon. It was not considered a model of governance at that time.
It was precisely because they were in such dire straits that they embarked on this massive public-housing building program, because they had no other choice. In some ways here in Hawaii, we’re lucky. Most of the voters are homeowners, and the voters don’t necessarily feel that same urgency of, “Whoa, we had four changes of government in just one generation.” We watched our siblings and our parents and our children get massacred. The British Navy pulled out of Singapore in the 1970s, which was as big a deal as if the United States Navy were to pull out of Hawaii.
Because they have their backs against the wall and because they needed to provide people with housing, and just to replace the huge squatter encampments, the slums that were destroyed in fires, and so on, they took the plunge, and they plunged into the deep end, and it was not perfect. Those early units were not what we would consider acceptable today in Hawaii. There were 10-story units with no elevator. People were expected to walk up and down 10 stories to get to their units.
Later, when elevators were put in, they would only stop at every other floor to help save money. Again, not something that probably the people of Hawaii would accept, but over the years they made improvements, and now you have some of the beautiful housing developments that I showed earlier that are absolutely state-of-the-art. They are some of the most energy-efficient projects in the world. The authority is investing in new technologies like energy reflective paints so that — Singapore is a very hot country, it’s right on the equator — they can reduce their costs for electricity for air conditioning and so on.
I guess the short answer is we have to start somewhere. Things are not perfect today, but the existing status quo of forcing our young people and our less fortunate to leave Hawaii, to me, is a five-alarm fire that we need to fix. We need to have that sense of urgency, and I really hope that it doesn’t take a fire that leaves 16,000 people homeless for us to finally have that urgency to act on this issue.
Iwamoto: Sen. Chang, aren’t there lower hanging fruit to address the amount of young people leaving Hawaii? Like I mentioned, doing a scaled conveyance tax or doing some things to restructure our tax system to disincentivize this kind of profiteering off systems that just force rents to go up. Aren’t there things that we could do that don’t take the investment infrastructure of the ALOHA Homes that we could see within next 10 years instead of the next — I’m not sure how long —
If everything went [according to] your vision, how soon can the first Aloha Homes building erected, versus how soon can we change some of the tax systems or the incentives and disincentives around rental rates, for instance?
Chang: Those are all great points. Earlier this year, at the beginning of the legislative session, we introduced over 60 bills relating to various aspects of affordable housing. One of the bills that the Legislature did pass this year was an increase in the conveyance tax on homes priced above $4 million. That’s only one small step, but it is, I believe, a step in the right direction. We have to be taking steps in the right direction.
I don’t see it necessarily in terms of short-term versus long-term. I think we need to do both. We have to be able to walk and chew gum at the same time. Are there short-term things that we’re doing? Yes, like the state just passed an increase in the conveyance tax. When I was on the city council, the council adopted the Residential A classification for non-homeowner occupied properties worth over $1 million, and the city council increased the rate of property tax. Now I think it’s almost three times the rate of owner-occupant properties.
There are things that are happening. You mentioned earlier, Kim Coco, that in 2019 the City and County of Honolulu, the city council, adopted new regulations on vacation rentals to really crackdown on the industry. Studies showed at the time that 30% to 50% of Airbnbs immediately disappeared. Those units, in theory, went back into the rental pool, the housing stock that could be used by local families, and it did have a temporary short-term effect on bringing down rental rates, as you already observed.
In 2020, we experienced not a marginal change, but a dramatic change, in vacation rental demand. It crashed. It crashed on every single island. What also crashed was the number of sales to wealthy overseas investors because wealthy overseas investors stopped coming to Hawaii. Even today in March 2021, international arrivals are down 98% from what they were in March 2020.
Today, we have less vacation rental demand and less wealthy overseas investor’s demand than the wildest fantasies of those who were campaigning against vacation rentals even just two short years ago, and I was one of them. I was elected to the city council against vacation rentals. That’s what the community wanted. We have seen that, actually, the vacation rental market crashed. It didn’t just go down a little bit. It crashed, and that did not reduce home prices. In fact, home prices have broken all-time highs. On Oahu, $950,000 last month; Maui County, $980,000; and Kauai county, $1.02 million.
So the answer is, yes, it will take time to build large amounts of new supply. As we’ve all seen, any time a policy, a program, is shortcutting the process, that is very controversial. There was a Kawainui affordable housing development. Seventy-four units, every single one of them affordable. It was built under the 21H program, which has existed for decades now. The community said, “We don’t like that this is shortcutting the process,” even though it is 100% affordable, and even though it’s in compliance with a law that’s been on the books for decades.
I am not proposing that ALOHA Homes shortcut any process. If an environmental impact statement needs to be done, as all of them will need to be done, because they will all be on state-owned lands, let that process take place. It may take five years. It may take longer. I don’t mind waiting as long as after the 5 or 10 years that we finally have a substantial amount of new supply that can actually move the needle, and that won’t happen overnight either. Probably what would happen is an administration would propose the first project of one tower, maybe 500 units, just to see how it goes to see what the demand is like, for these 99-year leases with uncertainty in the maintenance fees, as you’ve already, correctly, pointed out, and see what the demand is.
Maybe they’ll be able to achieve a $300,000 home price, which I think is already a generous estimate. Maybe they won’t, and maybe it’ll go up to $400,000 or $500,000, and see what happens. My prediction is that a condo with a 99-year lease at $500,000 is still far, far below market, as we’ve already seen. That was before the recent bull market in housing prices. My prediction is those units will sell out immediately, that people will be camping out for those units and that a lot of those units will be going to people that we don’t necessarily think of as deserving to get first crack at affordable housing units.
They may be existing homeowners. They may be people with a lot of net worth. They may be people buying them for their children who are currently residing on the mainland. Because all of these inequities are real, and because all of these inequities are inevitable when you’re introducing a program with much smaller supply than there’s demand for, I think there will be an outcry from the population. Hey, we can’t just build one tower of this. The demand was enormous. We need to be able to sell these units to people who aren’t just prepared to stand in line for two weeks and who already have the qualified mortgage or can pay cash for these units.
We need to be able to make this program available to everybody at all levels of income, even if it’s really hard for them to scrape together the mortgage and the down payment, and so on. I think that will provide some of the impetus to gradually roll out this program. There will be an outpouring from the community. At least that’s my optimistic viewpoint. It will take time, but we have to start somewhere. That’s the bottom line for me.
Akina: I very much appreciate what Sen. Chang and Kim Coco are saying. We need to have both a long-range picture and get started as soon as possible, and we need to take actions in the short run as quickly as we can. There are things we can do now and things we have to do in the future. As Sen. Chang pointed out, Singapore has come from such a low position and has achieved so much in the last century, that we can look to that as perhaps not a model for Hawaii, but a vision for where we can go in terms of Hawaii.
There is one thing that I think Singapore has done particularly well that has led to their ability to provide housing for their people, and it has to do with the operations of the free market. On one hand, in terms of political freedoms, Singapore is not necessarily the leader in the world, but in terms of allowing market freedoms and the operations of a marketplace that attracts capital, and actually gives incentives for marketplace solutions to all needs in society, Singapore is definitely ranked as one of the most innovative places in the world.
That’s really where I think we need to learn a lesson. We need to recognize that over-regulation by government and interference with the marketplace prevent the development of capital, prevent the incentives that will cause housing to be built naturally, and we’ve got to really loosen up on that in order to make Hawaii a true economic engine. That economic engine is what’s going to drive the supply of housing. That’s what’s gonna make housing available to everyone at every level of the economic ladder. The more we can do that, the better off everyone will be. That’s something that I would like us to promote as we continue to work together on various solutions.
Iwamoto: But Trustee Akina — correct me if I’m wrong, Sen. Chang — wasn’t the Singapore plan and what currently exists in Singapore — it’s a socialized housing situation. Just like you mentioned the military, Medicaid, all of those things, the people themselves are putting money to subsidize the housing. It’s not like, I’m sorry, Trustee Akina, what you’re proposing, which is free market. If you’re giving praise to the Singapore model, you’re giving praise to a subsidized Socialist housing approach.
Akina: Kim Coco, thanks for raising that question. Oftentimes categories can easily be confused. On one hand, there are political structures, such as whether a society is more Democratic or more Socialist. On the other hand, there are actual economic structures, and these are not the same thing. For example, take Communist China. Politically, it’s Communist and yet it has economic zones in which the free market operates, such as in parts of Hong Kong and throughout other economic zones — Shenzhen and so forth.
What I’m talking about is not the political structure nor the social structure. I’m talking about whatever that happens to be, there are things where government can actually help the operation of markets or interfere with the operation of markets. We need to come together and agree on getting the government out of interfering with the development or the operation of markets.
Iwamoto: Thank you.
Rick: Lila,you’re muted.
Mower: All right. Thank you very much for reminding me that I was muted. I would like to thank our three guest panelists. It was a very interesting, educational panel today. I Learned a lot. Different points of view, very meaningful valid points of views for us to think about and discuss among ourselves. Kokua Council is an advocacy organization, and one of the ways we advocate is to educate. I think we certainly got an education today. Thank you very much Sen. Chang, Dr. Akina, Kim Coco. Really appreciate your participation. So sorry that we have to end at 1 o’clock. I would like to give each of you an opportunity to do a short wrap up. If we may start with Sen. Chang.
Chang: I just wanted to say thank you again for the opportunity to be here today, and to my co-panelists, Trustee Akina and Kim Coco Iwamoto. I really appreciate the chance to engage in a robust policy discussion on various aspects of not just our plan but the current state of the housing situation today. Speaking of that robust discussion, I just wanted to point out that despite our differences politically and ideologically of the three of us, I think we’ve a very extremely, politically diverse panel, to say the least here. I think there’s a surprising amount of overlap.
I think what we’re all saying here is that we do need to build housing that is affordable to local people, that should not be used as vehicles for investment by wealthy overseas investors,. That local people should have the opportunity to live here. That we should be acting more aggressively with governmental policies to address this shortage, because it is severe, and we should be looking outside of the box at jurisdictions both nationwide and globally.
I’m pleased that over the last years we’ve been able to introduce a number of these concepts. Very few of them have made it to the finish line legislatively. I really think that it’s dialogues like this where there are stakeholders from across the spectrum that will help bridge those gaps, and I continue to look forward to working with Kokua Council, with our co-panelists on consensus, views on bills that I think we can all agree on, and also on measures that need a little bit more time, a little bit more study, a little bit more discussion before they come to fruition. I don’t think this is going to be solved overnight. As they say, the best time to plant a tree is 20 years ago, the second-best time is today, and we have to start somewhere, and I think it’s discussions like this that do make me hopeful that we are starting. Thank you.
Mower: Thank you, Sen. Chang. Dr. Akina.
Akina: I want to congratulate the members of Kokua Council for putting on this program and for your educational endeavors. They’re very important. Lila, thank you for moderating today. I was just very honored to be on the same panel as Sen. Chang and Kim Coco Iwamoto. Such wonderful people, I respect both of them, especially their commitment to helping Hawaii become a better place. I think that’s what unites us together. I believe we have to have more conversations like this, where it becomes evident that we share at our heart more than we differ in.
In particular, I believe that we are all passionate about the vision of seeing that everyone in Hawaii is able to afford housing. Hawaii must be a place where the people can pursue their dreams and goals, and achieve them without having to leave Hawaii or without their children having to leave unless they really want to do that. I believe that as we e hana kakou and we work together, we’ll find such solutions. I think that’s very important.
At the Grassroot Institute of Hawaii, we are looking for solutions that are research-based, scouring the nation and the world for best practices and bringing them to our government. As we work together on improving the quality and capacity of our government, we hope that will protect and build a society that will be able to thrive. Really honored to be here today. Thank you to my fellow panelists and to the Kokua Council. Much aloha. Malama pono, everyone.
Mower: Thank you, Dr. Akina. Kim Coco.
Iwamoto: Thank you. I share the previous panelists’ expressions of gratitude to you, Lila, and to the Kokua Council. I learned a lot, so thank you so much to Sen. Chang and Trustee Akina. Thank you so much for preparing the slide presentations. Like Sen. Chang said, just starting the discussion wherever we are today, that’s the most important thing. I really do love the free flow of an exchange of ideas, and this collaborative process as identifying what the challenges are and the possible solutions, as varied as they are. Thank you so much.
One thing for Trustee Akina. The one particular slide of the pie chart with ag and conservation and a small portion of urban, or housing. I would have loved to see the military piece there, and then if you expanded the urban and you took away from something that we’re envisioning, as Singapore has had that experience, of what it would look like with less military presence and more room for housing. Thank you for that, and maybe you’ll modify your slide.
Mower: All right. Thank you very much to our panelists. It really was an enlightening, interesting discussion. I’m glad you had the opportunities to discuss, and we had opportunities to hear the exchange of ideas. I enjoyed the collaborativeness of this all. Thank you very much to our audience for joining us today. We hope that you stay well. Malama pono. We’ll see you again in the future. Thank you, panelists. Aloha.