‘Upzoning’ called key to boosting Hawaii’s housing

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Hawaii House of Representatives’ Shelter Working Group on Nov. 17, 2023.

November 17, 2023, 2:30 p.m.

To: Co-Chairs Troy Hashimoto and Luke Evslin
Shelter Working Group

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

Comments on the draft Shelter Working Group report

Aloha Co-Chairs Hashimoto and Evslin and members,

Thank you for allowing the public to weigh in on this draft report. We appreciate your diligence and attention to the issues facing Maui residents who were displaced by the August wildfires.

The Grassroot Institute of Hawaii believes removing barriers to multifamily housing would help boost Hawaii’s housing supply and lower housing costs. Studies have shown that “upzoning” — increasing allowable housing densities — lowers prices when pursued in a comprehensive manner.[1]

Currently, county zoning codes in every county except Honolulu place stringent requirements on the construction of multifamily housing in residential zones.[2] Maui’s zoning code does have zones where duplexes can be built “by right,” but those zones comprise just a handful of parcels and subdivisions on the island.[3]

These strict codes have helped cause Hawaii’s current housing shortage. State and county level action is needed to roll back the most burdensome of these codes and expand Hawaii’s housing supply, especially on Maui where housing was scarce even before the fires.

California’s SB9 could serve as a starting point for statewide reform. The 2021 law allowed up to four housing units on all parcels zoned residential and permitted homeowners to split their lots in two.

The law is not perfect and has run into implementation obstacles at the local government level, but nonetheless serves as a blueprint for housing reform.[4]

Adjusting parking minimums could also boost the stock of multifamily housing. The counties generally require two parking spaces per dwelling unit, which can add between $5,000 and $77,000 to the cost of the unit, according to a study conducted for the Ulupono Initiative. This range reflects a variety of factors, including land costs, whether the parking is provided as a garage or a surface lot, and overall project profit margins.[5]

Cities across the United States have reduced or eliminated their parking minimums, and research shows these reforms lower overall housing costs and reduce reliance on automobiles.[6] At either the state or county level, Hawaii would do well to follow this trend.

In an upcoming report, the Grassroot Institute discusses upzoning, by-right approvals, parking minimums and other zoning and permitting reforms that Hawaii’s counties could enact to boost the supply of housing in urban areas. We will share a copy of this report with you all once it is published.

In addition, we agree with the Shelter Working Group that creating emergency standards for prefabricated housing is a necessary step toward providing short-term shelter. These standards should be designed with the goal of establishing permanent statewide rules for prefabricated housing that would expand its availability.

The Grassroot Institute is concerned about the Working Group’s suggestion that counties be allowed to phase out existing short-term rentals. While the law is unsettled on whether short term rentals can be eliminated, courts have recognized the ability to rent for shorter periods as a property right, the taking of which can require compensation under the U.S. Constitution.

In 2022, a federal court enjoined portions of a Honolulu ordinance that eliminated rentals between 30 and 90 days. Though the decision relied on restrictions in state law regarding the phase-out of previously allowed residential uses, the court added that the short-term rentals were, “a vested property right protected by takings principles,” and that the ordinance likely violated the Takings Clause of the U.S. Constitution.[7]

The Shelter Working Group’s draft report also states that “the County of Maui should incentivize STR owners to convert to long-term housing through tax incentives or other necessary means.”[8] In fact, the Maui County Council is already in the process of creating a temporary property tax incentive program for long-term and short-term rental operators to provide their units as shelter for residents displaced by the fires.

Finally, we recommend the Shelter Working Group support a “Yes, in God’s backyard” law for Hawaii, similar to one recently enacted in California. Under a bill proposed in the Hawaii Legislature in the 2023 session,[9] churches, hospitals, schools and other charitable and community organizations would have been allowed to build housing on their own land without excessive discretionary hearings that could stall or sink these much-needed projects.

There is already at least one church on Maui seeking to build emergency shelter on its land. Mayor Richard Bissen’s emergency orders suspended normal zoning codes for some housing projects, which should allow this central Maui project to proceed. However, in normal circumstances, these shelters would have to go through a time- and resource-intensive process to obtain permission to build.[10]

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii

[1] Jensen Ahokovi, “Auckland, New Zealand, could be model for housing in Hawaii,” published in the Honolulu Star-Advertiser, Aug. 24, 2023.
[2] Honolulu allows duplexes to be built “by right” on all land zoned residential, while other counties have stricter requirements. See Jonathan Helton, “How to facilitate homebuilding in Hawaii,” forthcoming Grassroot Institute of Hawaii policy paper, 2023.
[3]Zoning (County of Maui),” Hawaii Statewide GIS Program, as of June 2022, accessed Nov. 15, 2023.
[4]  David Garcia and Muhammed Alameldin, “California’s HOME Act Turns One: Data and Insights from the First Year of Senate Bill 9,” UC-Berkeley’s Terner Center for Housing Innovation, Jan. 18, 2023. See also “Is SB 9 Working? Here’s What Early Data Reveals,” California YIMBY, Feb. 22, 2023.
[5]  “The Costs of Parking in Hawai‘i,” Prepared by PBR & Associates for the Ulupono Initiative, August 2020, p. 5.
[6]  C.J. Gabbe, Gregory Pierce and Gordon Clowers, “How Developers Respond to Parking Reform,” Transfers Magazine, Fall 2020; and  Adam Millard-Ball, Jeremy West and Nazanin Rezaei, et al., “How the Built Environment Affects Car Ownership and Travel: Evidence from San Francisco Housing Lotteries,” University of California Institute for Transportation Studies, August 2020.
[7] Hawaii Legal Short-Term Rental Alliance v. City and County of Honolulu et al, No. 1:2022cv00247 – Document 31 (D. Haw. 2022).
[8]Shelter Working Group Draft Report, November 1, 2023,” p. 15.
[9] HB814 CD1, accessed Nov. 14, 2023.
[10] Jonathan Helton, “Maui can take lead in ‘Yes in God’s backyard’ housing,” The Maui News, Nov. 10, 2023.

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