How to make housing affordable in Hawaii (Maui presentation)

Photos by Sean Mitsui

Making housing more affordable on Maui could be accomplished through two changes to the island’s status quo on development: comprehensive rezoning and greater density. 

But making those changes will be easier said than done. Why? The answer may be that Maui is “schizophrenic.”

“Sure, everybody says they want housing,” said Lawrence Carnicelli, president of Maui-based Alaula Builders, at a June 16 presentation hosted by Grassroot Institute of Hawaii. “The No. 1 thing we want is housing. [But] the No. 1 thing [is also that] we’re against building and development. We’re schizophrenic as a society.” 

Carnicelli was among two featured speakers at the event, “How to make housing affordable in Hawaii.” The other was Jason Economou, director of government affairs at the Realtors Association of Maui. Keli‘i Akina, president of the institute, was host and moderator.

Akina cited a new report ranking Hawaii as No. 1 in the nation for regulations that prevent housing development and asked why that is so.

“There’s no straight answer to that,” Economou said. “We, as a community, can’t seem to agree on what we want: where we want the housing, what kind of housing we want, where it could be built, who can live there, what kind of taxes we’re going to put on it, all the different uses.” 

Asked to pick one thing that could be done to make housing more affordable on Maui, Carnicelli said comprehensive rezoning, which would help take the politics out of homebuilding.

“What we have here on Maui — for those of you that aren’t wonks — is you have state land-use designation, countywide policy plan, island plan, community plan, zoning and you may have like historical overlays, whatever. If all those don’t line up, guess what? … Now it becomes a political issue, and affordable housing is political will.”

Economou said policymakers need to allow greater housing density. 

“We need to get more comfortable with density, and that includes just allowing people to build up on their properties,” he said.

Both agreed that civil discourse is vital. 

“It’s important … that we start talking all together, that we … listen to each other,” Economou said. “Right now we have people in office who won’t even talk to folks like Lawrence because they’re attached to a development company. … [D]uring a housing crisis, that’s absolutely insane.”

Carnicelli said, “We keep talking about all the things that we don’t have in common … The reality is, whatever side we’re on, we have way more in common than we don’t.”

To see the entire presentation, click on the video below. A full transcript is provided.  

6-16-22 Jason Economou and Lawrence Carnicelli at Grassroot Institute of Hawaii presentation on “How to make housing affordable in Hawaii”

Keli’i Akina: Thank you, Kevin, for that introduction, and aloha.

Audience: Aloha.

Akina: It is so good to be back on Maui, Maui nō ka ʻoi. I Zoomed myself out over the last two years — how about you?

But thank you to all you faithful friends at the Grassroot Institute who have come together on our Zoom conferences. And it’s now great to kick off again a lifetime of coming together with one another here on Maui, Maui nō ka ʻoi. Don’t you agree with that?

But one of the biggest problems we face is the cost of housing. Whether you’re at the lower end of the economic stratum or whether you are at the higher end, Maui does not make it easy for people to live, in terms of houses for those who want affordable homes, for those who want luxury homes, for those who want short-term homes. It’s just not happening here the way a free market economy could make it happen.

So we’ve gathered together to look at the causes of the housing shortage problem on Maui and throughout the state of Hawaii. And today, we’re not going to bring you necessarily our scholars and our researchers with whom we work across the country to analyze the situation. We want to present to you people who know this market intimately, who understand what’s going on on Maui and in the state of Hawaii. 

So I’m so very happy to have two friends joining us today. We’re very grateful to have Larry Carnicelli. Give him a big hand over there — I’ll introduce him in a minute.

[applause]

Akina: And also, Jason Economou, give him a hand.

[applause]

Akina: We’re going to talk about how to make housing more affordable on Maui. Let me ask you a real quick question. How many of you are in the industry of housing, development, real estate or anything at all related to that for your livelihood? 

Look around, everybody. This is an enlightened audience. And how many of you — and you can raise your hand again — are in the industry of housing as a consumer?

OK, we need to invite some more homeless people here to join us to balance out the audience. But housing affects every one of us. We have a project at the Grassroot Institute called “Why [we] left Hawaii.” Maybe some of you have seen some of those videos and some of those stories. Hundreds of people who have packed up and are gone.

The No. 1 reason they give is the cost of living, and when we’ve parsed that a bit, the No. 1 factor in the cost of living is you know what: housing. 

So it’s something that affects our livelihood, it affects the aloha spirit, it affects the future of Hawaii, and it’s becoming a very contentious issue. 

What we believe at the Grassroot Institute is we have to find a way to bring the different parties together and work on common ground to increase the supply of housing. Don’t you agree with that? That’s so important.

This must not be one of those issues that is pro-rail, anti-rail, pro-development, anti-development. It’s got to be something where everyone in Hawaii practices what we believe at the Grassroot institute call E hana kākou — Let’s work together. Let’s work together for the good of everyone. 

And that’s why I’m so glad to have Jason with us today. Jason Economou is the director of government affairs at the Realtors Association of Maui. He received his juris doctor at the Charleston School of Law in South Carolina, and he was previously an associate for Merchant Horovitz. Jason, you want to say hello to everybody?

Jason Economou: Hello, everybody. Thank you for having me. I want to throw in, I’m also a graduate of the Citadel. I’m very proud of that. And I think I left that off.

Akina: Very good. Next to Jason, we’ve got Larry Carnicelli. Lawrence is vice president of development at Alaula Builders. He was the chairman of the Maui Planning Commission for quite a while; well outspoken, and knowledgeable about the issues there. He served previously as the director of government affairs at the Realtors Association of Maui. He’s a board member of Stand Up Maui, a nonprofit that advocates for affordable housing, and he’s been a real estate broker on Maui since 1999. 

Give our two guests a big hand, please.

[applause]

Lawrence Carnicelli: Thank you, Dr. Akina, I just want to say that it’s an honor to actually be in the room with you guys, and that you guys would actually come out and hear what we have to say, especially because I see a lot of friends and people that I know, and they’re in the room right now and I think there’s a lot of people that are a lot smarter than I am that maybe you guys should have a mic too. Anyway, I’m just honored to be here. Thank you.

Akina: Yes, and dovetailing on what Larry says, I want you all to prepare to ask questions. We’d love to hear what you want to ask our guests. 

So what I’m going to do today is pose a few questions of my own, questions we at the Grassroot Institute had been mulling over for quite a while, ask these gentlemen to respond, and then we’ll make the microphone available to any of you. 

I want to say in advance, you’ll need to come up to the microphone because this is being broadcast and we want the audience beyond this room to be able to understand what’s going on.

Larry, people drive around the island of Maui, and they see beautiful open space, which causes many to wonder why is housing so scarce? Because it doesn’t really make sense to the average person when we tell them it’s because there’s no land to build on.

When we look across the island, there are places, of course, where we wouldn’t want to build —God’s beautiful nature. But there are plenty of other places which could sustain building without in any way damaging the aquifer or damaging the beauty of Maui.

So let me ask you this question. Why is it so hard, in your opinion, with your professional background and experience, why is it so hard to get the housing built on Maui that Maui needs?

Carnicelli: I think the direct answer to that question is because we don’t want it. We don’t want housing. Everybody says they want housing. Everybody wants to talk about housing. Every candidate’s going to tell you that affordable housing’s their No. 1 priority. And we don’t build housing. 

Maui is schizophrenic. The No. 1 thing we want is housing. The No. 1 thing we’re against is building and development. We’re schizophrenic as a society. 

Until we say we want housing, we’re not going to have housing. Until we elect people that are going to actually make a change and not talk about change, we’re not going to have housing. The only way we’re going to get housing is to actually do something and not talk about it anymore.

Akina: Well, Larry, that’s a great kickoff to answering the question. And you address the issue of attitude. You address the issue of cultural mindset. You address the issue of political thinking. But I’m going to turn to Jason now and ask you guys to be a little bit more technical.

The Grassroot Institute has recently been studying a research report that just came out that ranks Hawaii as No. 1 in the nation for regulations that prevent housing development. So give ourselves a hand. We’re No. 1!

[audience laughter]

What do you think about that, Jason? Is that correct? Does it resonate with what you understand? And what would be some of those regulations that prevent us from moving forward with housing?

Economou: After I answer this question, I’ll turn water into wine, because you’re asking me for a miracle. There’s no straight answer to that. 

Part of what Lawrence is talking about I agree with, and I think the answer’s a little more nuanced, because when we talk about the “we,” it’s that communal we, and he’s absolutely right. We, as a community, can’t seem to agree on what we want — where we want the housing, what kind of housing we want, where it could be built, who can live there, what kind of taxes we’re going to put on it, all the different uses.

We are striving to have these discussions and make these decisions as a community, but, quite frankly, most of the people in the community aren’t really aware of the complexity of the issues. This is an issue that took us decades to get into. 

You know, if you ask anybody — we can poll each one of you as you’re walking out the door — you know, what’s the solution? I’m sure at least half of you will be tempted to say, “Well, why don’t they just do X?”

And it’s never that simple. As people who have been looking at different legislative attempts to get housing, I can guarantee you there’s always unintended consequences. And we, as a community, failed to agree with what consequences we can live with and what consequences we can’t. 

But to be more technical, I will get into it so that you hear a report that Dr. Akina was referencing was a godsend for people like Lawrence and I, who have been saying this same thing for years now, and in Lawrence’s case, a long time. We had Dave DeLeon here, decades ago, he’s been saying the same thing.

And what it is, is we have too many regulations. In particular, if you look at Maui County’s history of housing reports, one of the things that gets repeated in each report is, “We need less Council discretion.” We need less of these checkpoints along the way, where different groups get to insert what they want. And then another group can come in later on and say, “Well, we weren’t part of that, that decided that this was OK, so we want it this way now.”

And then when something finally does get through that a good portion of people can agree with, then there’s groups that come out and say, “Well, you didn’t agree with us, so now what we need to do is we need to abolish the three planning commissions that we have and make six planning commissions, plus a seventh planning commission comprised of all the planning commissions together, and then perhaps we’ll have enough public input that we’ll get housing.” And when in history has that many people making decisions actually accomplished anything?

Akina: There you go. Well, Jason will be performing at the comedy club at Wailuku later on this evening.

Economou: That wasn’t a joke.

[laughter]

Akina: It was painful, actually. I’m crying, really. 

Lawrence, going back to attitudes, a lot of people think that the developers on Maui are interested only in the wealthy and that they don’t do any good for the general population. They actually contribute to the divide between the haves and the have-nots. What’s your experience in this?

Carnicelli: Oh, man. Well, Alaula, what we’re doing is we’re trying — and all of my friends tell us that we’re crazy — that we’re trying to do nothing but 100% affordable, and we’re just getting our butts handed to us. 

We were in front of County Council the last two Mondays in a row, just as a real-life example: A piece of land that’s fully entitled two years ago, we could have built market-rate housing, sold it to mainland buyers, made a bunch of money.

We said, “You know what? Let’s build affordable housing,” and Kihei lined up to tell us, “No.” The neighbors, KCA [Kihei Community Association], they’re just like, “No, we don’t want that.” And it’s really interesting because first, they say no, and then they back into the reason why, that’s what sort of happens. 

Again, I go back to, “OK, we don’t really want affordable housing.” But to get to your question, as well as far as building to all strata, what makes a community healthy is the middle class, right? It’s essential workers. If we don’t build to essential workers, then we’re missing the whole point anyways.

When we say, “Hey, listen, we don’t want to build Makena, the Makena people buying Wailea, the Wailea people buying Maui Meadows, the Meadows people then buying Kihei, the Kihei people buying Pukalani, and then the Pukalani people buying Maui Lani. If we don’t build a whole strata and if we don’t build a healthy community, the intended or unintended consequence of that is, yeah, the fact that everybody’s moving to Vegas.

Akina: Well, Larry, what’s one thing that we could do to make housing more affordable on Maui? I’ll ask Jason the same question in a moment.

Carnicelli: Like Jason said, here’s the answer. But in my mind, the biggest thing that we could do is comprehensive rezoning. What we have here on Maui — for those of you that aren’t wonks — is you have state land-use designation, countywide policy plan, island plan, community plan, zoning and you may have like historical overlays, whatever. 

If all those don’t line up, guess what? You got to go get somebody’s opinion as to whether or not you can build there.

You got to get somebody’s opinion, whether it be the planning committee — then you got SMA [Special Management Area] too. It’s like whether it be a planning commission, you go to the County Council, whatever it is. Now it becomes a political issue, and affordable housing is political will. So if all those things don’t line up, then it’s like, “OK, what do you do?” So my short answer to the quick fix is comprehensive rezoning.

Akina: Thanks. And Jason, what would you add to that?

Economou: I’m going to do two, but I’ll answer shorter. Density. We need to get more comfortable with density, and that includes just allowing people to build up on their properties. That’s one of the huge ones. 

Two, there’s an idea that’s been going around where we really need to do — and this could be done at the same time as the comprehensive rezoning — an inventory of the properties that most of us can agree on. I see Judge Bissen smiling because I stole that idea from him. That’s where I heard it from. 

But, yeah, we need to get closer to that stuff we can agree on. And I think doing that inventory while also figuring out where the zoning is appropriate would be a major step in the right direction.

Akina: Both of you know that Professor David Callies, who retired from the University of Hawaii Law School, came up with a figure that astounded people. He looked at the development all across the state of Hawaii, and figured out a very simple fact: We end up developing on only 5% of the landmass in the state of Hawaii; 95% of the landmass in the state of Hawaii is not developed on. Half of it is for watershed preserve, which is very important, and half of it for agriculture. 

The fact is most of the agricultural land is not being used for anything at all other than lying fallow and creating dust bowls. So you’ve got this massive amount of land out there, which doesn’t necessarily mean to avoid development, but we only develop on 5%.

We’ve experimented with this idea at the Grassroot Institute and have charted out what may happen if we developed not just 5%, but 6%, if we went from 5% to 6%? You all know enough real estate math to know that that’s actually a 20% jump in quantity. If we were to go to 7%, that would be 40%. If we were to go to 8%, that would be 60%. 

I asked professor Callies, “What would this do to the aquifer?” He said, “Nothing.” There’s more than enough land in which to take these tiny increases in percentage points. We could easily have 80% to even 100% more land available for development.

I want to throw this out to you, starting with Jason. What are your thoughts about that kind of thinking? Because we always hear, “It’s a supply shortage, it’s a supply shortage.”

Economou: I think it’s a far more complex issue than just simple supply and demand, but supply and demand is a major aspect of it. And in that regard, if we have more supply of land where we can develop housing on, then we’ll obviously get more housing. It still opens up that issue of what we can agree on as a community, and there’s that constant choir of “We don’t want to be like Oahu.” And I think that’s reasonable.

So before we open up the land, we really need to determine what kind of practices, what kind of development we could agree on in those areas. But even before that, we’ve got a lot of places that are developed now that aren’t really being used. We have the Maui Marketplace, we’ve got a lot of these commercial areas that can also be developed for mixed use.

So I think it’s a complex issue. I think that opening up more land for development is one of those things that’s going to stir up controversy, and then you’re going to get everybody and their mother lining up to complain about it. The juice might not be worth the squeeze now, but yes, more land will create more housing, I think.

Akina: It’s part of the long-range picture, is what you’re saying. 

Larry, there’s another issue that really stands in the way of development, and it’s the issue of water. I don’t have to tell any of you here who live on the island of Maui how contentious water is as an issue. I myself face that in my own work as an OHA [Office of Hawaiian Affairs] trustee, listening to the voices of the native Hawaiian population, the environmentalists and the general population. 

And all I’m going to say about that is we have to come together to find a rational plan and logic behind the distribution of water, because there are so many needs. With that in mind, Larry, talk to me, or talk to us, about the problem of water availability for developers and what you’ve encountered.

Carnicelli: Thank you for the question. Without getting technical into it, I think it’s just something that we can all understand. “Show Me the Water” bill happened, right? And what that basically says is that the developer is responsible for finding the source of the water with which they have to provide to the neighborhood. Which then that means is, the cost of sourcing that and storing it and transmitting it gets placed into the price of the home, right?

If we just said it collectively as a community, if we said, “Hey, listen, we’re all going to pay for the source because we need housing,” then it would get spread over the course of everybody that lives here. But instead we’re saying, “Oh, we’re going to place it in the price of the home,” is really what it’s saying, is that “Show Me the Waters,” it says, “OK, those homeowners are going to have to source it. They’re going to have to pay for it,” meaning the price of a home goes up.

Akina: Well, let me dive into this a little deeper. Some of you in the room are familiar with what happened earlier this week. We were monitoring it very closely at the Grassroot Institute, that the state Commission on Water Resource Management voted this week here to designate West Maui as a quote “surface and groundwater management area.” 

There was a huge amount of political push, a huge amount of activism that did this. There are many people who believe that this is good for the aina, this is good for the culture, that this is good for Maui and so forth. You’ve sat on enough boards, Larry. What are your thoughts about what has just happened with the water designation in West Maui?

Carnicelli: I’m going to punt to Jason on that one. [laughs] Because I’ll just be honest. I’m not going to answer questions I don’t really know the answer to because I didn’t really follow that one as closely. I don’t know. Jason, you can take that question.

Economou: Man, this is a tough one, because it kind of came out of nowhere for me to tell you the truth. This was unprecedented. The CWRM [Commission on Water Resource Management] doesn’t do this. This is the first time in their history that they came up with their own proposal. It came out on 3 p.m. on Friday, which was a holiday. I don’t like to work on holidays. I’ll just get that out there right now. 

And we’re not entirely sure what the overall impact is going to be. We kind of expect that it’s going to make access to water for new uses more difficult, and such new uses would be planned development, it would be housing.

Our understanding of it is that only one of the wells out of six was in any way within the criteria for water-resource management, yet this has this huge impact. What Dr. Akina touched on again was that a lot of people view this as a positive thing for the aina, and you know what? It very well might be. 

But when you have a bunch of volunteers who are serving on commissions, making these decisions, they are not elected officials, and they don’t have to bear the responsibility of what happens to the people that live on the aina when they can’t get housing.

And we act like we care about housing, that we want housing, but quite frankly, it’s policies like what the CWRM is doing that is making it so Hawaii’s children can’t afford housing here and they need to leave. Hawaiians can’t afford housing here and they need to leave. And if we don’t get housing, more Hawaiians will leave and that’s not a very progressive policy in its impact. 

And that’s very troublesome to me as somebody who has a heart for people more so than, I don’t know, water for taro. But no, that’s not a joke. It’s not a joke because that is important.

The cultural practices need to be preserved, but there needs to be a balance, and this all-or-nothing approach of, “Let’s force water-resource management on an area that doesn’t need it,” because one small portion of that area needs it, that is a problem and that’s not a wise solution. 

And yeah, either people are going to be sacrificed, figuratively of course, or cultural practices. I think we can come to a path that allows us to keep most of both, if we’re smarter.

Carnicelli: If I could just add one thing?

Akina: Please, Larry.

Carnicelli: I find it kind of ironic that three government oversights didn’t work, so the answer was to add a fourth.

Akina: We could continue talking about this, and if you have any questions, feel free to ask when we open up questions and answers to the audience. But I really like the way Jason put it here, that there is this forced conflict between values that are worth cherishing — the value of culture, the value of aina on one hand, the environment — but on the other hand, the important value of making sure people, our children, our keiki, have a place to live. And a lot of times, the political discourse puts people at odds against each other, and we’ve got to find solutions.

I’m just kind of guiding where I’d like to be going in the remainder of the conversation. Where are those solutions that get us beyond this standoff? What can we do?

Jason, you talked about multiple layers of government that must be appealed to if a developer wants to move forward with a project.

Economou: That was Lawrence. I’m going to punt back to him.

Akina: I know you have some suggestions as to what we could do alternatively. And then I’m going to go back to Larry.

Economou: The multiple layers of government. I mean, this goes back to Lawrence’s comprehensive rezoning issue, where everything is layered one on top of the other. 

I really do want Lawrence to take a swing with this. He’s the developer guy. He knows it, so yeah.

Carnicelli: Well, in all the multiple layers, what it does is it allows people that want to kill something or stop something to chip away, right? You can pick and choose from wherever it comes from. “Oh, the community plan applies here. Oh, the island plan applies over here.” Those are things that are just getting weaponized. 

To me, something that’s very, very simple, that the administration could do, is tell long-range planning that when you go through the community plan process, the community plans have to follow the island plan. Seems like you’d do that, but that’s not the current way that they go.

When I was sitting through hours and hours, and days and days, and weeks and weeks, and months and months of the West Maui Community Plan, long-range planning said the community plan doesn’t have to match the island plan. It’s like, that makes zero sense. 

So first off, long-range planning, you got to change, you got long-range planning. We have an island plan for a reason. If you left it up to every community to decide what was in their community, you’d end up with nothing but affordable housing and parks.

That’s what came out of the West Maui Community Plan. They didn’t have industrial. They didn’t have a concrete plan. They didn’t even have recycling in the plan when it came out of CPAC, which is the Community Plan Advisory Committee. 

So if we left it up to every community, we wouldn’t have a dump. We wouldn’t have an airport. We wouldn’t have a power plant, right? There needs to be a comprehensive approach to this. That’s what the island plan is supposed to be.

So you go through the community plan process, the community plan has to match the island plan. 

Oh, and while we’re doing that, we’re going to rezone the zoning to match the community plan, which matches the island plan. Hmmm, seems pretty logical. 

Oh, and then once that’s done, we’re going to go get a district boundary amendment from the LUC [Land Use Commission] to line up state land use. Boom. 

Oh, then what we could also do is do a comprehensive EIS [environmental impact statement] for the whole entire community plan.

Now, suddenly everything lines up. Your EIS is done. Everybody knows what you’re going to get. 

So to answer your question directly, let’s be transparent. I think that’s kind of what we’re talking about: Where can we find common ground? 

If you’re going to do a hotel moratorium, be honest about why you’re doing it. Say, “Hey, listen, what we want is less tourists and more money.” 

OK, but what are the consequences of that? What are the unintended and intended consequences of that?

So let’s be transparent about what we’re really trying to do. I think that’s really important. For my friends here that are running for office, let’s stop being political, and let’s just be honest with each other. I’m looking at a couple of you guys, this is exactly how you guys are, which I appreciate. 

Because, hit me between the eyes, whether you like it or not, whether you’re going to take some arrows or not, that’s leadership. That’s what we need. We need to just go ahead and say, “Listen, this is the path we’re going to take. If it works, I’m going to take credit. If it doesn’t work, I’ll take the blame.”

Akina: Preach it, brother. Preach it.

[laughter, applause]

Economou: Aren’t you glad that I made him answer that question? Right?

[applause]

Akina: Let’s segue off of your mention of the hotel moratorium. The rationale behind that isn’t clear to a lot of people, but a lot of people seem to think that that’s positive for the housing supply problem on the island of Maui. 

Jason, use your logic here to parse that for us. What’s the relationship between the housing moratorium and the availability of housing people can afford?

Economou: So with the hotel moratorium, this is one that RAM [Realtors Association of Maui] stayed out of because it’s a question of tourism. It really comes down to the County Council decided they wanted less tourists bringing in more money, so the idea was to cap everything at 2019 levels and then jack up the prices.

I do have an opinion on it, because I think it will have unintended consequences when it comes to housing. And those unintended consequences are, if a one-night stay at the Grand Wailea costs the same as a one-month mortgage payment, then why wouldn’t I just buy a house here, and let all of my friends come and stay at that house, instead of having to go to the Grand Wailea? It’s not a short-term rental because we’re friends. They’re not paying the rent.

So now, instead of going and spending, you know, $60,000 to stay in Hawaii for a month, with all the dinners out, no hotel rooms and the massages and all that other jazz, now, I own a home, a second home in Hawaii, which the prices are only going to go up, and part of that is the whole supply-and-demand issue. 

But one thing that we’re always ignoring for living here is that this is paradise on earth. We forget that. That is always going to be expensive for a lot of people. They’re going to be willing to pay money to be here, and they’re going to be willing to pay even more money to own a part of it, especially when visiting here just doesn’t really make sense when you can own a part of it.

So yeah, I think that’s going to be the unintended consequence, and you’re seeing groups who are figuring out how to make fractional ownership of properties easier. You’re seeing groups that are figuring out that when you own a property, it’s just much easier to own it as a corporation and sell the corporation because then there’s no conveyance tax when you want to get rid of the property. 

So you’re going to get all of these rich folk who have good lawyers who know all these loopholes to set this stuff up, and it’s really not going to benefit us in the way we think it will. But it will limit jobs. That’s the one major thing.

You know, we had Paul Brewbaker do a study. The condominiums that they wanted to eliminate as TDRs [transfers of development rights]. Those condominiums, 7,000 units in the Maui inventory, represent about 14,000 real jobs for individuals. If you eliminate 7,000 accommodations, you eliminate about 14,000 jobs. That’s wild math. 

It comes out to about $2 billion for our annual GDP as well. Limiting tourism has consequences when tourism is your only real industry.

And a lot of folks in leadership haven’t really been doing a lot to figure out what’s going to fill that void that we plan on leaving behind, and that’s my No. 1 warning. We need to be focusing on economic diversification if we’re seriously going to reduce our only industry.

Akina: I’ve got one more question to pose to Larry, but before I do that, I want you to know that we want to hear your questions. We’re going to open up to audience question-and-answer for a moment here. 

Let me take a brief second to introduce some of our staff who are here and they’ll help you with the microphone. You’ve already met Kevin in the back, our director of development. Kevin Takamori, thanks for putting the program together today. Sean Mitsui, he’s still outside over there. You met him on the way in, and Jensen Ahokovi. Jensen, tell me what we’re going to do with the microphone. Do we have the microphone available for Q&A? Where is it?

Jensen Ahokovi: It’s behind you.

Akina: Who’s going to operate that? Kevin will. OK, here’s the instruction. Start lining up here next to Kevin. Kevin is going to have the microphone right here, standing right there. And you’ll be in view of the camera so that we can actually see you, for those who are not in the room right now, and Kevin will guide you as you give us your name and ask your question. So go ahead and feel free to start lining up while I pose another question to Larry.

Larry, earlier on, you talked about attitudes in the public, attitudes amongst public officials, and so forth. You’re very familiar with the resentment sometimes — and I don’t know how many people feel this way — that developers are favoring the wealthy and building mansions here on Maui. But I hear a lot of times from developers that if the government would get out of the way, they would be building housing that’s affordable to the general public. 

Is that a real good financial proposition for developers? Could that take place if the government did certain things? And what would you like the government to do to get out of the way?

Carnicelli: Well, at a rudimentary level, development is math, right? And time is money and things cost things, so you just go like, “So the more hurdles I got to go through, and the more things that I got to do to build a house, the more expensive it is.” Then, therefore, it’s just economies of scale. 

So, you know, fast track, what we do is what’s called the 2.97 fast-track process. We’re the only ones that have done it for for-sale homes. Concept to completion is three and a half to four years. That’s fast track on Maui.

Think about that. Fast track is three and a half to four years. 

So yes, every developer friend that I have would love to build affordable housing and do nothing but affordable housing. I wouldn’t say “nothing,” but every single one would love to do it. 

But the punishment is the process. The punishment is the process itself. It’s going like, “OK, there are some people that have been doing this a lot longer than I have, and they’re smarter than me, because they said, ‘You know what? People don’t want us to do this.'”

With government, they make things hard or they tax it if they don’t want it. They make it easier or they lower the taxes if they want it. So obviously, government doesn’t want affordable housing because they make it really hard and they make it really expensive. 

So we need to flip that. It’s like, if we want something, give us a carrot, and don’t hit us with the carrot.

Akina: Well put. Jason, anything to add to that?

Economou: I think part of it is an unrealistic view of how society works on the part of a lot of decision-makers. What I mean by that is, developers can’t build at a loss. It doesn’t make sense. There’s an obligation to your principals to build things without losing money because then you go out of business and you can’t build anymore. 

When Council members come with policies that say, “We’ll just change the 2.97 process. Instead of building 50% affordable housing, now you need to build 75% affordable housing or 100% affordable housing. Boom, I just solved the housing crisis.”

That’s completely ignoring the reality of the fact that materials cost things, labor costs money. Just all of it costs money. 

And so we live in a capitalistic society and then it’s — read that UHERO report if you haven’t done so already, because that addresses the reality of the situation which is, if a development firm wants to go through the 4-, 5-, 6-, 7-, 10-year rigmarole, they need to have money to do that. 

And what we’re doing now is we’re making it so that smaller developers can’t get through the regulatory process. So we have less competition, less competition from hometown developers that come up by their bootstraps. All that stuff that we love to talk about is being eliminated because it’s so skewed with the ability of developers to make it through the process. So I’ll stop ranting. But yeah, I agree.

Akina: We will hear more from both of you now as I open this up to the audience. If you’ll simply come up to Kevin here, stand in line, tell us who you are and ask your question. We really would love to hear your questions.

This is an important conversation we’re having today and I wish that every lawmaker could be here, every board member of every commission that has anything to do with housing. We really have to get some reality into this. 

Aloha. Thank you for being our first questioner here. Go ahead and tell us who you are and address your question. Could you move a little closer away from the speaker?

Tamara McKay: Aloha. I’m Tamara McKay. In full transparency, I am running for office. So it’s wonderful to hear everything that you’re talking about because it’s 100% what we’ve been trying to communicate. There is so much red tape to get anything done. That’s one of the reasons why I decided to run for office. 

We are also victim of being on the water-meter list for 14 more years. And then there’s subdivision issues. If we could subdivide, I think that that would also help people with their ohanas to create more sustainable housing or living and so forth.

But I think that there’s also an opportunity. It seems like part of the problem that you are saying is we need to change who’s in office. 

So the other thing is, I think there’s an opportunity for desalination, converting seawater to water. What are your thoughts about that, about building a plant to desalinize sea water?

Akina: Thank you for your question, Tamara. Either one can respond to that.

Economou: I’ll address it first. Regarding the people in office, I honestly don’t care if we change the people in office if we can change the mentality. That’s more important to me that we start talking all together, that we allow ourselves to listen to each other. Right now we have people in office who won’t even talk to folks like Lawrence because they’re attached to a development company. That’s insane during a housing crisis. That’s absolutely insane.

If those same people stay in office, I’m happy if they just change the way that they practice. That’s what I want. I want more open conversations. So yeah, I work with politicians so I got to tell you I love all of them. I love all of them equally and I’m friends with every one of them and I have nothing bad to say ever about any of them.

Akina: You sound like a politician.

[audience laughter]

Economou: Exactly. Now, desalinization. Yeah. Why aren’t we looking into that technology? We are surrounded by an ocean.

Carnicelli: I would also address the thing too, what you said about, it’s not the people, it is the attitude. We’ve lost the ability to have civil discourse, right? It’s positioning, and this is international, national, state, local, right? But all politics is local, right?

I think the reality is we all, whatever side we’re on, we have way more in common than we don’t. But for some odd reason, we keep talking about all the things that we don’t have in common. Find the common ground. 

I come from a big Italian family. We argue, right? That’s what we do is you argue, and then you hug, and then you’re just like, and it’s over.

Akina: That’s amore.

[audience laughter]

Carnicelli: There we go. That’s amore.

Akina: Very good. Thank you. We have another question for you.

Clint Hansen: Clint Hansen with Maui Luxury Real Estate and Maui Real Estate Radio. To some of the statements that you said earlier about having additional layers of government, and now these focus groups that put additional hindrances on the process, you know, why have I not seen more bonds getting issued in order to actually put the infrastructure in place for affordable housing as opposed to, again, leaving it to the developer to get done?

I mean, the timetable for the county to do something and the available tools that they have are so much easier and quicker by comparison. If we really have a directive for affordable housing, we can put the money into the infrastructure to build it. 

Then you know, the cart before the horse, once you have those availabilities, we can circumvent the “Show Me the Water” bill because we build water for affordable housing. If you build affordable housing, you get that water.

Akina: Clint, thank you for the question. Larry, you want to start off?

Carnicelli: Sure. To the Council’s credit, they put, what, $54 million in the affordable housing fund. I think there’s $54, $58 million sitting in the affordable housing fund right now, and they’re begging to spend it. They want to spend it. They want to put infrastructure in. I’m working with Yuki Lei Sugimura right now. We have a project, Kuʻikahi Village, that’s coming before the Council in August, and they want to build our roundabout for us.

To their credit, they’re trying to do that, but again, everybody talks about, like, say, Puunene. “Oh, let’s go build Puunene. Let’s put all the infrastructure in.” It’s still zoned ag. It’s still going to take – Mike Atherton has been doing this for 14 years. Everybody loves the Atherton project, right? Yes. I love it, because that’s what happens. They love the project that takes 20 years to build. 

Yes, infrastructure’s important. It is being addressed, but the other piece of this is the Council can’t spend a dime. They can appropriate the money, but the administration has to spend it, right? There actually has to be dialogue, not monologues and not name-calling. There actually has to be a dialogue between the executive and the legislative branch to actually get things done.

Akina: Great. We have another question.

Raymond Michaels: Hi, I’m Raymond Michaels. I represent the board of the Construction Industry of Maui. One of the questions I had is one of the most recent pieces of legislation proposed by County Council is capping the cost of housing at 31% of AMI — area median income. And I’m curious if that’s going to help or hurt development. 

I think there are detriments to having the cost of housing being over 35%. One of those detriments is cities that often have housing costs that are over 35% experience chronic houselessness. I think the intention is good, but I’m curious, especially from a developer’s standpoint, is that going to help or hurt development?

Carnicelli: Good question. I believe what you’re talking about is not 30% of AMI, but it’s 30% of your income, right? Is what they’re saying is you can only spend 30% of your income on your mortgage? 

You know, there’s lending standards for that. And here’s the irony of exactly what you’re talking about, Ray. This person is paying 50%, 60% of their income on rent, and then they go to qualify for a loan and our affordable house says, “No, no, no, you can’t spend that same amount that you’re spending in rent. You have to spend less than you’re spending on rent in order to qualify for this home.” That just doesn’t make sense.

Economou: I want to jump in here and give a plug to community land trust housing. So we have Cassandra Abdul here with Na Hale O Maui. If you guys aren’t familiar with Na Hale O Maui, you talk to her or go to their website and give them money. 

We have a problem with affordability, and Lawrence is spot on with what he’s saying. But really, if it’s a supply-and-demand issue, we have demand coming from everybody, everywhere in the world, limited supply here. 

And we have a lot of residents here that we really want to protect. We want to make sure that they can afford housing here. And if you’re gonna do that for a long term, what you really need to do is you need to essentially bifurcate the housing market and have a large stock of community land trust housing, where it’s long-term leases, where people can have a home for a hundred years. They don’t have to worry about their rent going up a hundred percent once the apartment building gets sold.

And you know, about that story about the guy who upped the rent when he bought the apartment building: If you limit people’s ability completely to change rents, then you have unintended consequences when it comes to foreclosures on properties. 

We’re in a really precarious situation and it’s really easy to point to landlords and blame landlords —  just like it’s really easy to point to tenants and say there are so many bad tenants. It is a really complex issue, and just forcing people to not charge appropriate amounts for the things that they’re building is not a solution, because it has all these other consequences.

Akina: Very good. Thank you. Another question over here from the audience.

Terry Lyon: My name is Terry Lyon. I was in this position I guess 10 years ago, talking about housing a community in New York City where I was the economic development chair. 

Within that, I have two questions, one comment and then two. One is that I forced the community to stop using the affordable housing term because it didn’t make sense.

What we created was something called income-targeted housing. If you make this amount, we built this housing for you. So people knew that affordable housing was just an open-market housing project. 

Second is, what we did in New York — and I don’t know if they do it here — is to encourage development, we deeded the land at $1 to developers to cut down the cost of development.

The land was deeded that the housing was built that the mortgage or the apartment that was built was limited to, capped off that it wouldn’t go above a certain market price for the history of the apartment or the house, whether it changed hands or not. 

One thing I haven’t seen here in Maui and model — maybe I’m asking you to do it — did we ever put out an RFP for an affordable housing project?

Akina: Thanks for sharing your background by the way from New York, and we’ll want to talk to you a little bit about that to help Hawaii become like New York City. In any case, Terry, you’ve got a good question. Go ahead, Larry.

Carnicelli: Thanks, Terry. I like that. Income target housing. We use workforce housing and we’re all saying that we’re affordable but it’s actually “workforce housing” is the term. 

Again, it comes out of political will. No, we haven’t done that. We haven’t said, we as a county, let’s just say, “Oh, here’s this piece of land that we have. We’re going to RFP it.”

Even right now there’s a project, the Hale Waipu’ilani project that we’re doing in Kīhei, that the neighborhood came out, they’re talking about doing a land swap. They say, “Hey, would you guys swap land?” The county doesn’t own any entitled land. The only entitled land that the county owns right now are the 52 Maui Lani lots. I don’t need to get into all that. 

So even this RFP thing would take the county to say, “I’m going to entitle it for you,” because, again, this entitlement, the arc to actually build houses, they could RFP it tomorrow and, say, give it to you for a dollar. I’m going to say, “OK, it’s going to take hundreds of thousands if not millions of dollars to get that thing entitled before I can even go in for a building permit.”

Akina: Thank you. We have got a couple more questions over here.

Gina Duncan: Aloha. My name is Gina Duncan. I’m the owner of Fine Island Properties and we represent Hale Kaiola with Alaula Builders. I have a couple of thoughts I shared with Jason before this started, and it goes to the whole picture. 

What do the renters do? There’s no place to rent. They can’t afford to rent, therefore they can’t afford to save up for a house. Therefore, when they save up for a house and they get a workforce housing, they’re given a restriction of 20 years before they can sell it and make money. 

Therefore, are we just cutting our local people off at the knees for equity growth, and not giving their children the same opportunities that other people enjoy to send their children to college using the equity from their homes?

There has to be a better solution than 20 years. We don’t want flipping workforce housing and people making the money, take it to the mainland, and go, where are they going to go? We also need to not cut our local people off at the knees, either. 

There has to be maybe a 10-year, and then from 10 years to 20 years is a sliding scale. Something like that has to be initiated other than the 20 years. Thank you.

Akina: Thank you, Gina. That’s a great question, Gina. It really does reflect this tension between polarized values. I would love to hear your responses, gentlemen.

Carnicelli: For those of you that don’t know what Gina is talking about, when you sell a workforce housing — thank you, Terry,  a workforce housing home — there is a deed restriction tied to that home. The current ordinance says that for 10 years, or, say, in our case at Hale Kaiola, it’s 20 years, the homeowner can only get 25% of the total appreciation of that house for that term. If the market rate goes up $100,000, you get 25 of that. That’s how the current ordinance reads in our Kuʻikahi Project.

To me, I think the conversation that you’re talking about — because I want to listen to all sides of this — is part of the reason why people are saying that they want the deed restrictions to be longer, is because they want the house to be affordable longer, right? If somebody moves, that the house stays affordable. That’s the argument in favor of deed restrictions. 

I have to say, Judge Bissen, I got a great idea from him. He says, “OK, first off, what we need to do is let’s make these homes owner-occupied, make the restriction owner-occupied, so now suddenly, it’s just like this neighborhood is a neighborhood, people are living there, not even tenants, right? Everybody in this neighborhood that lives here you know each other.” I think that that’s a fantastic idea.

The other idea that we’re coming in with our Kuʻikahi Project is, we’re saying, “OK, the deed restriction is totally different. This workforce housing home that you’re buying is discounted by the developer, right?” This house might be $700,000, you’re buying it for $500,000. Currently, that $200,000 discount that the developer is providing becomes yours at the end of the deed restriction, so the whole house goes from 25% to suddenly market rate. 

You literally hit the lottery at the end of that 10 years, or 25 years, or 20 years, whatever it might be. So what we’re saying is that $200,000 stays owner-occupied like the judge is saying, and the $200,000 stays in the home.

Now you get to participate 100% in market-rate forces. Whatever market appreciation is, you get to participate in that. You want to say you want to take a mortgage out, a second mortgage and send your kids to school, you can do that. Right? You want to trade up to the next level of housing, you can do that. So owner-occupied, and then the discount stays in the house. 

And then that way, the house still with those two forces, it’ll keep it affordable for local folks. Instead of 320 million people that could buy that house, it’s 170,000 people that can buy this house.

Akina: Thank you. I appreciate the practicality of that response. We’ve got a couple more questions, and then we’re going to close up so that we can have some time together and you can meet these speakers this afternoon.

Will Spence: Hi, my name is Will Spence. I know most of the speakers in one way or another. I’ve been a land-use planner on Maui for 30 years. I was planning director for seven and a half years, and now working as a consultant. But I think I have more comments than I do questions. 

One, Jason had commented, well, we need to come to agreement where we’re going to put this housing. We have these community plans, and they designate where housing should go, where business, hotels, etc.

Adopting those plans is a multi-year process with considerable community input from the environmental community, from housing community, from developers, etc. Those plans represent the agreement — in my thinking, anyway — they represent the agreement on where we’re going to put housing. 

When it comes to the Council approval, then they decide, no, we really don’t want to put it there, or sometimes Planning Commission approval. I’m not laying it all on the Council. So we know, through lots of community agreement, where we’re going to put housing. Following the community plans, and this is the stuff that keeps me up at night … 

Akina: Will, what you’re saying is fascinating, and I’d love to have a conversation further with you and Jason and Larry on this. But we want to move on to let people have some time together. If you had a quick question, we can throw it to them.

Spence: Let me comment once more on the comprehensive plan.

Akina: OK, make it quick, please.

Spence: It will be quick. Some of the most progressive planning communities in the country, in Portland and Seattle, they always follow up their general plan with a zoning bill, just like Lawrence has said. They do not sacrifice their environmental review. It’s after the zoning comes, each and every project goes through one environmental review and a project is approved or turned down or modified. I’ll just leave it with that.

Akina: Very good. Thank you, Will. Thank you very much. Any comment that either Jason or Larry might want to make quickly?

Carnicelli: I think Will nailed it.

Akina: All right. Appreciate that Will, thank you very much. Thanks. Go ahead with your question.

Julie Strong: I’m Julie Strong and I’m with Hawaii Life, and thank you for allowing me to just ask this quick question. First I just wanted to say that in some of those developments with workforce housing, it is a 10-year, but it’s a shared-equity program so that the homeowner, yes, they open up to the open market, but they share that equity split with the county. Sometimes that’s good and bad.

What I wanted to ask about is, is there a way to enforce that if there’s an agreement with the developer, that a certain percentage of the homes are dedicated to workforce, that they stay, no matter what, in workforce?

So if something comes up and the workforce buyer can’t follow through at closing, they go down the list. The rest of the people that were in the lottery or the people that didn’t make it into the lottery and we find a way to make it work for us, rather than say, “Oops, didn’t work. It’s going to go to open market.”

Akina: Thank you for your question.

Carnicelli: That is how it works. In our Hale Kaiola, it was 40 homes and we had 117 people sign up. So 40 lucky families were able to win the lottery and 87 didn’t. I’m sorry, 77 didn’t. It was very interesting to me. I was super-excited for the 40 families and all I could think about was almost twice as many people didn’t get a home; almost twice as many people didn’t get a home.

So what happens is we’ve actually already had one — Gina’s on the sales team and she told me today that we’ve already had one family fall out. We now have 76 people on the list, which is good. I don’t know what happened to the other family, but yeah, that is what happens is, you just keep going down. There are some projects that didn’t have as many people. 

We work really, really diligently to try to make sure that the word’s out and that everybody knows about our project because we don’t want it to go to market. We don’t want it to have to go to mainland people or whatever it is. We want to sell to people that live here.

Akina: Thank you very much. Now, if you would like to have a copy of today’s conversation, we want to send one to you. We have one final question. Before that final question, just let me let you know how we can make sure that we get a copy to you. 

You’ve got a comment card in front of you over here. Do you like these kinds of conversations? Is it important to take these issues and look at them in terms of their causes and solutions and look at what experts say? Did they do a good job today?

Audience: Yes.

[applause]

Akina: Fantastic. Larry and Jason, we thank you. 

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We have a final question. Sir, thank you so much for waiting until the end. Go ahead and ask your question. Tell us who you are.

Charlie Sobel: My name is Charlie Sobel.

Akina: Aloha, Charlie.

Sobel: I’ve lived here all my life, never went away for education or anything else. I’m a poster child of affordable housing. I mean precisely Maui Lani. You guys are all above my paygrade, obviously. I’m a little disappointed in the rhetoric because you guys talk to local people, I mean people like me, that we can understand what you guys are talking about. You guys talking way above most of the people’s capability of understanding what’s going on.

As I said, I’m a poster child of affordable housing. I’m a little crippled on my left side. That’s why I’m shaking, so excuse me. Georgia Stevens from Ōlelo TV on Oahu turned me on to this conference today. I wasn’t going to come because this is what I expected. How many are local people here, lived here all your life? That many? Lived here all your life? Went to school here and all that  … 

Audience member: On Lanai.

Sobel: Good for you, girl. 

[laughter]

Akina: Charlie, let me just say thank you for being here.

Sobel: OK. He’s cutting me off already.

Akina: I do want to say your voice is important and I’d like you to stay around and we chat with everyone here. I understand that they’re important perspectives we have to consider. Give Charlie a hand. Thank you.

[applause]

Economou: I would like to touch on that. Do you mind if I address Charlie’s comment?

Akina: Absolutely, Jason.

Economou: I’m sorry, Charlie. You dress just like my dad dresses to this day, every day. 

I didn’t grow up on Hawaii, but I didn’t grow up with great wealth either. I was fortunate enough to be able to get an education, and it wasn’t because my parents could pay for it. I had to get a scholarship and take out a large amount of student loans and have a lot of debt, and work my butt off. And I got that education to talk policy in rooms like this, to people like these, candidates for County Council, candidates for mayor, people who have influence and can change the system. I’m not ashamed of that.

We do need to have conversations with people just like you. This way we can get to that “we” agree, and I absolutely agree with you on that one. And I’m glad that you’re here, 

But I don’t think that you can’t understand me. I don’t look down on you. I think you know what we’re talking about, and I think you know, from being here, that our hearts are in the right places and that we really do want to change this system so it better serves people like you. 

And I’m sorry if you’re disappointed by what you see here. But I’m telling you, I’m here, and I think a lot of us are here, because we genuinely want change that benefits you. I’m sorry if you don’t like it, but that’s the truth here.

[applause]

Akina: Thank you, Jason, and thank you, Larry. This is the reality that we live in now. We can’t solve these problems unless we listen to each other, hear each other and work together. There are values on both sides of each issue, multiple sides of each issue, and we mustn’t push against these values. We have to bring people together to look at the real causes of our problems, and then to work together on those solutions. 

I believe that today you’ve heard the hearts and the minds of two gentlemen who are doing that in their daily work: Lawrence Carnicelli and Jason Economou. Let’s give them a big hand for what they’ve contributed. Thank you.

[applause]

Akina: Thank you very much for being here at Grassroot Institute. Please fill out your card. We want you in our family. Aloha. Mahalo for being here today.