WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. If Housing Costs in Honolulu Are Bad Now…
by Tom Yamachika The cost of having four walls and a roof over your head in Honolulu has been staggeringly expensive relative to the rest of the nation for a while now. The median price of a single-family home on Oahu in July reached $835,000, while the median price of a condominium rose to $460,000, according to a report from Honolulu real estate firm Locations Hawaii. “This means that everyone is acknowledging that this is a very serious [housing] crisis that we are now in,” Councilmember Kymberly Pine is quoted as saying on September 21 in Hawaii News Now. Yet, the Honolulu City Council is considering Bill 25, which would add numerous energy conservation requirements for any residential dwelling that is new or remodeled. Among the new mandates being considered: Water Heating from Renewable Energy Only. This provision would effectively mandate solar water heating and outlaw gas heating. Some testifiers on the measure stated that this mandate alone would add $7,000-10,000 to the cost of a home. That could be the difference between qualifying for a mortgage or not, especially for residents making the area median income of $85,000. Other testifiers pointed out that all solar water heating systems have an electric heating element as a backup. This is because sometimes hot water is needed at night or in the early morning, or when the sun is behind cloud cover. So, this requirement might result in higher electricity demand, which might not be an intended consequence. Ceiling Fans and Air Conditioning. Ceiling fans or whole-house fans would be mandatory for every bedroom and the largest room, presumably the living room. A/C would be allowed in no more than half of the house. The bill does not explicitly say that the requirements apply only to new houses. Therefore, if you have an existing house and you need to apply for a building permit for some reason, you may have to retrofit to conform toPreview (opens in a new tab) these requirements, although the City’s Office of Climate Change says that no retrofitting is required. Electric Vehicle Charging: The current bill draft says that new residential multi-unit buildings with 8 or more parking stalls, and new commercial buildings that have 12 or more parking stalls, must be electric vehicle charger ready for at least 25% of the parking stalls. Residential buildings must be AC Level 1 charger ready, and commercial buildings must be AC Level 2 charger ready. (Level 1 is basically house current, and Level 2 must be fed by a 240-volt line.) Some of the testifiers state that the requirement isn’t good enough, and that the ordinance should require 100% of the parking stalls to be Level 2 charger ready. They point out that a Level 1 charger would need multiple days to charge a vehicle, and that there would be practical problems figuring out which stalls would get the chargers. Others argue that such a capability would cost $11,300 per EV-ready stall. They say that it’s a lot to ask given that 99% of us don’t drive electric vehicles. So, what is the takeaway from all of this? I’m reminded of one phrase drummed into my head when I was growing up: “If you aren’t going to use it, don’t buy it.” There seem to be some provisions in Bill 25 that will require potential home buyers to pay for things they might not use. If we as a people don’t care about that and want to force changes in social behavior to support The Environment and industries supporting The Environment, then this bill should pass. If we care about protecting consumer choice and the efficiency of the marketplace, or if we are concerned about the housing crisis and the availability of affordable lodging, then this bill should be shelved. Let’s see how the discussions on this bill play out.
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WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. A few months ago, we tried to remind folks about “It’s the Economy, Stupid.” There we reported that we had been getting lots of news about our economy, and none of it was good. This month, the University of Hawaii’s economics research organization, UHERO, released its third quarter economic outlook on Hawaii. The title of the paper wasn’t exactly comforting: “Already Weak, Hawaii’s Prospects Look Increasingly Dicey.” “All told,” the report stated, “the outlook is for Hawaii to tread water over the next few years, vulnerable to waves that could well pull us under.” What has gotten us to this point? One problem is our population, which fell in both 2017 and 2018. This decline isn’t simply due to reassignment of active duty military. As multiple news sources have been confirming, people have been, and are, leaving our fair shores. “[L]ikely responding to better work opportunities and lower living costs on the US mainland,” the UHERO study says. Policymakers take note! We, among many others, have long warned that if government squeezes our population too hard with taxes, regulations, and other impediments, people will vote. Not necessarily at the ballot box, but with their feet. UHERO has looked at the hard numbers, and they see that people are in fact taking their business elsewhere. Are you concerned about population decline? Or about “brain drain”? Then don’t deny the problem any longer. We need to do something about our cost of living. And by the way, what happens when the cost of government stays the same but the number of people contributing to that cost decreases? More cost per person results, which adds pressure to lawmakers to increase taxes and jack up our cost of living even more. Can the problem be solved by squeezing our tourism industry further instead of our general population? UHERO observed that the number of visitors in Hawaii on a typical day is flatlining, and visitor spending is trending downward. They are seeing “a sharp pullback in international markets, where the number of visitor days has declined across all major market segments.” More visitors may be arriving, but they are spending less. Translation: Tourists are taking their business elsewhere as well. Some of that may be due to federal action such as increased tariffs and strength of the dollar relative to other world currencies, but we probably are already at the point where further squeezing of the visitor market gives us economic trouble. On that front, the recent political spats about transient vacation rentals and the resulting crackdowns in Honolulu, Maui, and other counties have already put a big dent in the supply of places where tourists can be housed. UHERO says that the crackdown on Oahu alone caused a greater than 8% drop in Oahu’s overall number of units available for visitor accommodations. Maybe some or many of those places were illegal in the first place, but the economic result is in any event further squeezing that industry sector. Now isn’t the right time to attack it further. As policymakers begin their annual debate on how to finance government, they should consider that most of our tax laws depend on business activity. When the economic engine we call business makes money, they make money. Are we going to put more brakes on the engine with more taxes, fees, and regulations? Instead, we should be bending over backwards to find ways to help the engine spin faster. WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. By Tom Yamachika, President
On Wednesday, August 14, the Senate Committee on Hawaiian Affairs held an “informational briefing” so senators could question the Department of Hawaiian Home Lands over various topics, including on “Mauna Kea Access Road (ACT 14).” The Star-Advertiser summarized the issue: “About 50 years ago, the Department of Transportation built Mauna Kea Access Road over Department of Hawaiian Home Lands property without permission. That road and others throughout the state that were built on DHHL land became part of a much bigger $600 million settlement that the state entered into in 1995 to compensate DHHL for the misuse of Hawaiian home lands. As part of that agreement, known as Act 14, [Session Laws of Hawaii 1995, 1st Special Session,] the state was required to compensate DHHL for Mauna Kea Access Road via a land swap.” The land swap never happened. This gave Sen. Kai Kahele (Dist. 1 – Hilo) a chance to pounce: “If what you say is true, that the land exchange has never occurred, then without that compliance with Act 14, the state of Hawaii cannot claim title to Mauna Kea Access Road,” he told DHHL Chair William Aila. “That road belongs to the beneficiaries of the Hawaiian Homes Commission Act. When you have a beneficiary, as defined by the Hawaiian Homes Commission Act of 1920, sitting on Mauna Kea Access Road, what does not give them the right to be there if they are the beneficiaries of the trust and you just said it is still in your land inventory?” Let’s try to answer that question. Hawaiian home lands “are impressed with a trust whose co-trustees are the State of Hawai‘i and the United States,” our supreme court said in State v. Jim, 80 Haw. 168 (1995). That means our state and federal governments are supposed to make sure the land is used in a way that benefits our indigenous population. It doesn’t mean that anyone, even a native Hawaiian, can do whatever they please on the land. The Jim case involved two native Hawaiians who were arrested and charged with criminal trespass after refusing to leave the Prince Kuhio Plaza, a shopping center on Hawaiian home lands on the Big Island. Both defendants were demonstrating against perceived violations of the Hawaii Admission Act when they were arrested. They were fined after pleading no contest but appealed, contending that the Big Island police had no jurisdiction to arrest them. Our supreme court concluded that the state and county criminal laws applied, and upheld the defendants’ convictions. Let’s apply that to Mauna Kea Access Road. Even if the lands under it are Hawaiian home lands, it’s still a road and blocking it is a crime. Police can order that a road be cleared, and they did so. The protesters refused to budge. Criminal laws are still in force, even as to Hawaiian protesters demonstrating on Hawaiian home lands. So, there are and should be consequences for blocking the road no matter who owns the road. It’s a matter of public order, not property rights. There may be other consequences that were not yet thought through. If the underlying land is DHHL’s, shouldn’t they have been taking care of it? Our State (if it’s separate from DHHL, which the Senator seems to assume) has been maintaining the road, so isn’t the State entitled to some kind of compensation even if the State doesn’t actually own it? Those issues need to be considered as well. So no, the protesters don’t yet have the State over a barrel with this new-found argument. But instead of obsessing over it, the state should fix the land swap problem and stop the road blockages, not necessarily in that order. Our Annual Luncheon takes place on Tuesday September 10, 2019. Please click the button below for tickets, tables, and registration. |
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