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Hamada hosts Helton for wide-ranging discussion

Converting offices to homes, coping with Maui’s at-capacity sewer systems and revising the rules for Residential A properties on Oahu. 

Those were three of the housing-related topics that Jonathan Helton, policy researcher with Grassroot Institute of Hawaii, discussed last week on Rick Hamada’s radio show on KHVH NewsRadio 830.

Helton said Honolulu’s office vacancy rate is 13% to 15%, and many homebuilders would like to turn those empty spaces into housing. He said one step toward making it less expensive for homebuilders to convert office spaces would be a bill before the Council, Bill 54, which would allow existing windows that can’t be opened to remain in place as long as natural light still comes in.

Because the sewer system in the Kahului area of Maui is full, anyone trying to build emergency housing to help victims of the Aug. 8 wildfires cannot hook up to the sewer. Maui already had a severe shortage before the fires, but now the situation is worse. 

He said an additional wastewater plant would free up additional sewer capacity, but that won’t happen “for several years out.”

Regarding property taxes, Helton said that the Honolulu City Council is looking at giving tax relief to those who own properties in the Residential A class — residences valued over $1 million, but whose owners don’t live in them. 

The Grassroot Institute, he said, suggests “not only talking about sort of a one-time tax relief for people who are misclassified, but trying to change that Residential A structure entirely because it has caused a lot of problems.”

Helton and Hamada also discussed the Honolulu Board of Water Supply’s potential 56% increase in Honolulu’s water rates over a five-year period. He said if the increase goes throught, “This will make it harder for people … to afford to be here.” He asked whether the Board “can spend money more efficiently so that we still get the water infrastructure we need without the rate increase being so high?”

To see the entire presentation, click on the video below. A complete transcript follows.

10-12-23 Jonathan Helton with Rick Hamada on KHVH Newsradio 830

Rick Hamada: [Grassroot Institute of Hawaii Executive Vice President] Joe Kent normally joins us, but we’re delighted that Jonathan Helton is with us. Grassroot Institute of Hawaii. Jonathan, I want to thank you for taking time today, and aloha and good morning.

Jonathan Helton: Aloha to you too, Rick, and I just appreciate the opportunity to be here.

Hamada: Oh, I can’t wait to get into the details. Jonathan, would you mind sharing a bit about yourself, and we’ll jump in.

Helton: Oh, of course. So I am a policy researcher at Grassroot. Which is a very fancy way for saying that I am the person who is behind writing a lot of our testimonies and our reports, in trying to find data and examples of all of the different things that we research about.

Hamada: What do you find fulfilling about your role with Grassroot?

Helton: One of my favorite parts about what I do is, first, I do really enjoy details. So this job is the perfect fit for me. 

But the second thing is, it’s really fulfilling when I find an example of where our policy has a real-world effect, and I’m sure we can talk about that later. But when you find a story of someone who is helped by a change in the law, that’s when you know that what you’re doing really matters.

Hamada: Amen. Amen, Jonathan, I appreciate that very much. The table is set. If we could jump into some topicality, I’d like to start with the Valley Isle.

We have information pertaining to Maui’s infrastructure. 

Sidebar: I just covered a story in regard to harbors and watermen that have no access, which is inconceivable to me. But, infrastructure on the Valley Isle; what can you share with us, Jonathan?

Helton: The major thing I would share relates to housing, kind of in central Maui. So, one of the things that we’ve learned recently — and this was from some people we’ve talked to on the ground, and then The Maui News ran a story about this a couple weeks ago — so the sewer system in the Kahului area is full. And you know, you might think, “Well, what, why does that matter?”

Well, you know, it matters for a couple of reasons. No. 1, anyone trying to build any sort of emergency housing in that area, they can’t hook up the sewer. And No. 2, I mean, in a bigger sense, even before the fires, Maui, and the rest of the state, has a housing crisis. So that was limiting the housing potential of the area even before the fires. And now, that’s even more acute.

Hamada: Is there any reply, response from the county or others about this condition and how to rectify it?

Helton: Yes. So let me discuss how someone’s trying to rectify it right now.

Hamada: Sure.

Helton: So, one of the reasons we know about this is it was a story about the Ohana Hope Village, which is going to be an emergency shelter in Kahului, that’s going to be built on the grounds of a church there.

And so what they’re going to do, instead of hooking up to sewer, they’ve said, “You know what, since we can’t do that, we’re going to install septic.” So that’s what they’re going to do as kind of a temporary response.

But I think, what the county’s goal is, if you remember, you know, they increased the general excise tax there on Maui earlier this summer. They added the half-a-percent surcharge there.

Hamada: Right.

Helton: So one of the things that the county was talking about doing is taking the money from that tax and using some of it to build an additional wastewater plant, which would hopefully free up some additional sewer capacity.

Now, obviously, we’ve had the fires, so those plans may change. But that was the talk at the time of them implementing the tax.

So, you know, maybe there’s a solution there as far as building more sewer capacity. But, as far as anything big, we’re looking several years out before that can be completed.

Hamada: Ah. Inertia is a word that I fear whenever we have conversations about timelines. And I’m just prayerful that we won’t rest until there’s resolution, not only to this, but also you mentioned taxes.

Can you share information about property taxes? Not only Valley Isle, but also bring it back here to Oahu.

Helton: Of course. Over on Maui, if you’ll remember in the days right after the wildfire, Mayor [Richard] Bissen announced that they would waive the property taxes for any buildings that were completely destroyed.

And he announced that right after the fire because the property tax bills were coming due, just in a few days. So we had to take that action then, and so that’s good. Obviously, you don’t want the county to be charging people for buildings that no longer exist.

But, to bring it back to Oahu and look at what the Council is doing here, you know, the Council did some real property tax reform earlier this year — which we were involved in. They increased the homeowner exemption. They gave everyone that $350 tax credit.

Right now, one of the conversations they’re having is about properties in the quote unquote “Residential A class.” So for those who aren’t familiar, properties that are in that class are ones that are valued over $1 million and that are residences, but that the owners don’t live in those residences.

So maybe you have a rental property valued over a million dollars. It would fall into this property tax class. And one of the conversations they’re having is: Can we provide property tax relief to people who are in this class, but who should have been in a different class? 

Because, I will say, the taxes in this Residential A class, they’re much higher than for your homeowners. So they’re looking at trying to get relief to people who are misclassified.

And I do think that’s a conversation they need to have. At the Grassroot Institute, we’ve been participating in that conversation and trying to suggest not only talking about sort of a one-time tax relief for people who are misclassified, but trying to change that Residential A structure entirely because it has caused a lot of problems in recent years.

Hamada: Absolutely. So I want to thank you for the due diligence on this particular issue and another where I actually believe I read your writings in regard to the office buildings to be converted into housing.

And some of the numbers of occupancy rates statewide, I believe — correct me if I’m wrong —  was at about 13.4%. But here in Honolulu, it is much higher, nonetheless. Can you share the conversion of commercial into housing?

Helton: Yes, I think that that number is somewhere in the 13[%] to 15% rate range, as far as office vacancies, is the last number I heard. But that — and that’s part of the reason that a lot of homebuilders are looking at, “Can we take this office building that has a lot of unused space and turn that into housing?”

And so, I was writing about this recently, in the context of a bill that’s being considered before Council, it’s Bill 54. And what this bill does is it tries to solve one of the problems involved in converting a hotel or an office building into housing. One of those problems is windows.

Hamada: Right.

Helton: As we know, a lot of office buildings, you can’t open the window. But, there’s a requirement in building code that pretty much all of the time, if you’re going to build a residential structure, you have to have openable windows. 

And homebuilders are saying, “If that’s the requirement, we’re going to have to tear out all of the windows in this office building and, you know, that can sink the entire project in terms of cost.”

So what this Bill 54 is doing, what they’re considering doing is kind of changing that requirement. 

So temporarily — I think right now the bill says, you know, for the next five years, if you’re converting an office building to residences — you can skip the openable window requirement, and leave the existing windows in there as long as you do a couple of other things. Try to design your unit so that there is still light coming in. You know, you don’t want someone to have a unit that has no window.

So that’s the goal of the bill there, is to make it less expensive to do these office-to-residential conversions.

Hamada: I think a primary area of that is ventilation …

Helton: Yes.

Hamada: … and I would submit that this is an open-market issue. If there is a buyer and/or renter that has no problem with no windows, or at least windows it cannot open, that it should be left to that individual. And I hope that’s facilitated.

Again, we get into a lot of bureaucratic morass that prevents us from achieving swift solutions to pressing issues.

And Jonathan Helton is with us. Grassroot Institute. Jonathan, give me just, literally, two minutes. I want to update our friends, and we’re going to return with more thoughtful conversation with Jonathan Helton. He, of course, with Grassroot Institute of Hawaii. Two minutes away.

***

Minutes remaining with Jonathan Helton, of course, with Grassroot Institute of Hawaii.

8:53. If you don’t mind, I’d like to transition, if I could, in this to healthcare. Can you share with us Hawaii’s certificate-of-need laws and what impact this could have on healthcare in Hawaii? Jonathan?

Helton: Certificate-of-need law, at least in the healthcare space, what this usually refers to is if someone wants to come to the state of Hawaii and they want to set up a dialysis clinic, a hospital, anything related to providing healthcare, what they have to do is they have to go through a special state process to receive a quote-unquote “certificate of need.” You know, we sometimes call them CONs, C-O-N.

So, to get this certificate, they have to go through a process of proving that the services that they want to provide are needed in the community. And a lot of times, what can happen here is that a competitor in the market, an existing healthcare facility, can say, “Hey, we don’t need this additional service.”

And so, they can kind of, they can encourage the state board that’s in charge of granting certificates of need, they can encourage them to reject that.

And so, I think one of the major problems with the C-O-N process is that it can slow down the development of new healthcare facilities. And, you know, at the Grassroot Institute, we’ve talked a lot about the doctor shortage.

And part of Hawaii’s doctor shortage — part of the reason — wait times are so long to see a physician, all of that — part of it is because, you know, there are not as many healthcare facilities as there probably would be if the CON law were less strict, or even if it didn’t exist.

Hamada: Talking with Jonathan Helton. I saw — and I could even forward to Joe or what have you — where there was a ranking of [ER] wait times. And I was surprised to see, I’d have to take a look at the methodology, but it placed us, I believe, third or fourth in the nation for shortest amount of ER wait times at approximately an hour and a few minutes plus.

So I only add that to supplement that there are a myriad of ways to have source information and apply it to our whole healthcare topic. But I appreciate that report.

And Jonathan, just in the few minutes we have remaining, if I could transition over a little bit outside the lines. But I became apprised of the Board of Water Supply here in Honolulu. Now there’s a potentiality of a 56%-plus increase in our water rates.

Now, that is usually an aggregate number that is going to be over a period of years, but it still bespeaks of an increase. Dramatic increase. Is this Red Hill-related and justified and what is your take on our utilities increasing again?

Helton: I can’t speak to whether or not this is directly related to Hill. I do think that some of it is related to Red Hill and that the Board of Water Supply wants to do some system upgrades.

There’s really two issues at play here with the increase in the water rate. The first one is that this is a cost-of-living issue, just like everything else. It’s not, you know, it’s not just taxes. It’s the price of electricity. It’s the price of water. It’s the price of food.

And so there’s a concern, obviously, that increasing this is going to possibly drive more people from Hawaii. It’s going to make it harder for people who are staying to afford to be here.

The other issue — and what really makes this a harder issue to resolve — is that the Board of Water Supply is kind of independent from the city. They don’t get city funds; they kind of, more or less, set their own budget. And so, when the Board of Water Supply raises rates, it’s using those rates for water infrastructure, which is certainly necessary to fund water infrastructure.

So, as far as, is this rate increase a good thing? You know, there may be a question, a third question that needs to be asked in terms of: What are they spending money on? How are they spending it? Is there a way that the Board can spend money more efficiently so that we still get the water infrastructure we need without the rate increase being so high?

And obviously, I would need to look more into that. But if that’s the case, I think that would be the optimal outcome.

Hamada: Boy, I wish we had more time. I’d sure like to talk to you about Grassroot and homelessness, and a recent op-ed that appeared, stating, “In this whole debate and discussion, we need to consider the retailers that are impacted by the actions of, not, I don’t consider them homeless per se, but criminals that are under the umbrella of homelessness. And what retailers, store owners, shopkeepers and more, what they are enduring right now is in just an intolerable situation.” And perhaps we can do that at a later time.

Jonathan, if folks would like to connect with you at Grassroot, how can they do so?

Helton: Of course. Well, our website is grassrootinstitute.org and if they want to reach out to me personally, it’s jhelton@grassrootinstitute.org. Happy for them to reach out to me or anyone else on staff.

Hamada: I appreciate you very much. Thank you for the help today and Grassroot with us every Thursday at this time. Wishing you all the best, Jonathan. Thank you so much.

Helton: Of course, Rick. Thank you for the opportunity.

Hamada: And that’s Jonathan Helton with Grassroot Institute of Hawaii. I admire the work they do and I appreciate the fact that they join us here on the program.

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