Sunday, February 12, 2017
Hawaii heading inexorably for the cliff on affordable housing
by Larry Geller
We’re headed for a cliff, and no one is doing anything to save us from our fate.
An op-ed in today’s Star-Advertiser co-authored by Victor Geminiani, Bob Nakata and Rene Berthiaume clearly states the impact that illegal transient vacation rentals are having on the supply of affordable rental units. Along the way it drops some of the numbers we’ve been seeing in the news that describe the severity of Hawaii’s housing shortage. Here’s a snip:
A recent report by the state Department of Economic Development and Tourism determined Hawaii will need 65,000 more homes by 2025. That estimation is similar to the Hawaii Housing Finance and Development Corporation’s (HHFDC)’s projection that between 2015 and 2020, we have a housing shortage of 29,500 units. The Hawaii Tourism Authority estimates over 27,000 vacation rentals in the state are advertised online. The overwhelming number of these rentals are illegal. Every home used illegally as a visitor lodging business is one less home for our residents.
In tight housing markets with low vacancy rates, any reduction in supply naturally increases rents, particularly because neither the market nor the public sector can quickly add to housing stock. Airbnb indirectly reduces the affordable housing supply by reducing the overall housing supply of units available for long-term rentals.
[Star-Advertiser p. E3, Illegal vacation rentals harming community, 2/12/2017]
Airbnb and its ilk have drastically exacerbated a problem that has existed for years: the tolerance of county government for these illegal short-term rentals.
Yes, the problem is the non-action of government. Where there is money to be made, people will go for it. The complaints from Kailua residents and others over noisy illegal vacation rentals have appeared in the papers for as long as I’ve lived in the state. Government has not moved against this lucrative black market and so it has prospered—and now, aided by software, it has drastically expanded.
While some tiny steps have been proposed or implemented towards creating affordable housing—such as a process to efficiently permit Accessory Dwelling Units (ADUs)—those steps are insufficient at best. For example, the number of ADUs that will ultimately be constructed will not approach the number of housing units needed, and the chance that they will end up on Airbnb’s website or otherwise used illegally is likely quite high. So-called Ohana add-on units have been rented out at market rates, which was and is not allowed, but who is paying attention?
A perfect storm is brewing as housing resources evaporate
Today’s op-ed reports and laments that listings for long-term rentals have declined to as little as 10 percent compared with three years ago.
This, at a time when demand is at an all-time high and people are leaving the state in order to find housing.
This, at a time when housing for the rich and ultra-rich is being constructed in Kakaako instead of the workforce housing that would make more sense.
This, at a time when homelessness in the state, a marker for the shortage of affordable units, is increasing year over year.
This, at a time when American soldiers are to be relocated to Guam and then to Hawaii, further (due to their housing subsidies) competing with and displacing others in need of housing.
This, at a time when the state continues to demonstrate that it has no intention whatsoever to make housing available as Hawaiian Homesteads, despite an obligation the state assumed as a condition of statehood in 1959.
This, at a time when Honolulu, for example, still has no viable plan to build those 29,500 or 65,000 housing units.
A complex problem requires a complex solution
Hawaii government has a habit of confusing goals with plans. A goal (“65,000 housing units by 2025”) is something on a PowerPoint chart with a bullet at the front of it. A plan is complex and detailed, with timelines, budgets, personnel assignments, projections, and so forth. It does not fit on a PowerPoint slide.
A plan requires first of all a clear strategy and then it lays out the steps to implement that strategy. Given where we are now, the strategy can be expected to be complex. I think this scares the hell out of our city and state leadership and so we never get there. We don’t have any plan to look at. Instead, developers find they can get exemptions to even the requirements that are currently in place. It’s as though the only plan is not to build the required number of housing units.
A strategy may include modelling the problem and the program. Inputs to the model might be some of the things I’ve mentioned above along with an accurate description of the housing market today. We’ll need to model the market so that we can see how to arrive at 65,000 units or whatever the correct target is.
And then the model and the program get tweaked as time goes on.
Is there any will to do any of this in Hawaii?
Not that I’ve noticed.
Now, someone prove me wrong. Please. We’ve had enough of nothing. It’s time to not only do something, but to figure out what’s necessary and do that.