HB676: Land-use reform idea welcome but has several drawbacks

The following testimony was submitted Feb. 8, 2023, by the Grassroot Institute of Hawaii to the House Committee on Housing, and the House Committee on Water and Land.
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Feb. 8, 2023
11 a.m.
Conference Room 312
Via Videoconference

To: House Committee on Housing
      Rep. Troy Hashimoto, Chair
      Rep. Micah Aiu, Vice Chair

     House Committee on Water and Land
     Rep. Linda Ichiyama, Chair
     Rep. Mahina Poepoe, Vice Chair

From: Grassroot Institute of Hawaii
           Ted Kefalas, Director of Strategic Campaigns

HB676 — RELATING TO DISTRICT BOUNDARY AMENDMENTS

Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on HB676, which authorizes counties to determine district boundary amendments for county-owned land areas greater than 15 acres, provided the counties enact ordinances that meet certain criteria.

These criteria include that all the housing constructed on the lands be affordable for up to 140% of area median income; that the counties retain ownership of the lands for at least 99 years; that the district boundary amendments be consistent with the county or community plans, if such plans exist; and that the counties mitigate the impact the development might have on roads and schools.

This measure correctly diagnoses one of the causes of Hawaii’s housing crisis: excessive red tape. The state Land Use Commission’s authority over district boundary amendments greater than 15 acres often puts a roadblock in the way of new housing projects.

A Grassroot Institute of Hawaii report, “Reform the Hawaii LUC to encourage more housing,” discussed how state policymakers could encourage the growth of housing by reexamining the role and purpose of the LUC. Expanding the counties’ powers to reclassify land through the district boundary amendment process was just one of the report’s suggestions.^[1]

HB676 is a welcome proposal, but too narrow in its focus. County-owned housing projects might benefit from this measure, but should it become law, private homebuilders would remain stuck in the same arduous DBA process.

This measure’s potential could be better realized if it were amended to extend to privately held lands as well, not just those owned by the counties.

Additionally, HB676 is ambiguous about the point that the counties own and retain ownership of the lands for 99 years. This raises questions about whether the houses may be sold fee simple or through some other mechanism, such as a leasehold.

Moreover, the length of that term suggests that this situation ± leasehold or fee simple — is intended to end at some point, creating further difficulties for the county and uncertainty around the property itself.

Ultimately, the ambiguity of the 99-year ownership provision, combined with the budgetary and administrative implications involved, creates an unnecessary limit on the power of the counties to use their lands to grow housing.

The fundamental requirement that the counties own the lands makes sense in the context of this bill, but we suggest that the 99-year ownership and maintenance requirements be removed, thereby allowing the counties to develop housing according to local needs.

The measure’s limitation to affordable housing projects might also raise project costs for the counties. Known as “inclusionary zoning,” this type of set-aside for affordable housing can make private projects financially unfeasible, leading to fewer housing units being constructed.

For example, a 2020 survey of 1,030 municipalities across the U.S. showed that only three had inclusionary zoning requirements higher than 75%: Santa Paula, Calif.; Oxnard, Calif.; and Aquinnah, Mass.^[2] All three require 100% affordable housing, and all saw housing growth decline by more than 60% during the decade after the policy was adopted, compared to the previous decade.

Change in units built after 100% affordable housing requirement

Source: “Selected Housing Characteristics,” U.S. Census Bureau, Table DP04, 2019. “Inclusionary Housing Database,” Grounded Solutions Network, 2020.

It would be wise to consider amending this measure to eliminate or reduce the inclusionary zoning mandate. This would help prevent the counties from being bogged down in expensive projects that might ultimately slow the construction of new units.

Thank you for the opportunity to submit our comments.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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^[1] Jackson Makanikeoe Grubbe, “Reform the Hawaii LUC to encourage more housing,” Grassroot Institute of Hawaii, September 2020.

^[2] “Inclusionary Housing Database,” Grounded Solutions Network, 2020.