Surplus can ease acute housing shortage

WITH projections of a large surplus in the state's General Fund (estimated at more than $600 million) and a projected strong economy over the next several years (based on forecasts of military expansion and a strong tourism market), the governor and state Legislature now have the ability to correct major problems that have accumulated during the recent lean years. Chief among these are the well-documented needs in education.

Equally in need of being addressed is the lack of affordable housing. This is resulting in increasing numbers of homeless and the flight of the middle class to the mainland, possibly preventing the development of a strong and viable technology industry in Hawaii. The end result, which we are beginning to see, is a Hawaii with only the wealthy and poor, a very unattractive prospect. The rich diversity of local cultures is disappearing.

A current manifestation of the problem is the rapidly rising property values, fueled by the rise in homeownership costs. This is an important element in the increasing property taxes, which could drive people to sell and move to the mainland, where many have grown children who cannot afford to move back to Hawaii. How long can Hawaii remain Hawaii under such pressure?

What is driving up the costs of housing? Simply, supply is not keeping up with demand. On the demand side, the major factors are:

» A strong economy. While it is a plus, it also causes more people to move here, or stay here. These are in addition to natural population growth.

» The increasing presence of the military, with housing allowances. The basing of a Stryker Brigade, the C-17 transport planes and, in all likelihood, an aircraft carrier group will bring thousands of families here. Also, as the military draws down its troops from war zones, they will add to the demand. While housing is being built for the military, much of it is to replace older units and not to add to the supply.

On the supply side, the major factors are:

» The already high cost of land because the high concentration of land ownership in Hawaii is being driven even higher as people with money from all over the world buy land here. When a vacant house lot in Waianae sells for more than $800,000, sight unseen, we have a problem.

» The slow county development approval process caused by understaffing in the Department of Planning and Permitting slows the production of housing. Staffing needs to be increased.

» Many landlords are raising rents simply because they can and frequently use renovations as the reason to raise rents significantly, or they are selling to investor/speculators. Rent increases of several hundred dollars a month are not uncommon.

» A labor shortage of up to 10,000 construction workers, partly caused by the need for military housing, is slowing the production of housing for the civilian market.

» For the construction of affordable rental housing, the lack of community development corporations in Hawaii is a problem. Other states have fostered the creation of CDCs. They build and keep affordable housing affordable. We should do the same.

The imbalance between supply and demand is helping to drive up the cost of housing, which in turn drives up property values and taxes in a spiraling cycle, pushing the middle class out of Hawaii, and driving the lower-middle class and the poor into homelessness.

While the governor and others have proposed plans to end homelessness in 10 years, the major issue is the building of affordable housing, especially rentals. A significant step was taken last year by increasing the funding to the Rental Housing Trust Fund, for which the Legislature and governor should be commended.

However, more is needed. This can be done in several ways. One is to take that part of the conveyance tax that still goes to the General Fund and put it into the other three funds it supports, including the RHTF. Another is to place as much as $200 million of the General Fund surplus into the RHTF, or put that amount of bond funds into the RHTF over several years. Such ideas are being discussed, and one or a combination of them should be done, especially when it takes an income of nearly $150,000 a year to support the kind of mortgage it takes to buy a median-priced home. (The median income in Hawaii today is about $67,000.)

The other factors affecting supply and demand also need to be addressed, but do not mean much without the allocation of funds. The present healthy, long-term economy makes this one of the best times to make such a commitment.

Realistically, it will take some years to build affordable housing. Here, the governor should be commended for requesting $20 million to help various existing shelters for the homeless with repair and maintenance, and additional services and programs. However, still missing is a way to care for the existing homeless population, especially the growing numbers of working poor families that are falling out of shelter. Inadequate as they may be, supervised tent cities, with rules and requirements for maintenance and participation in security watches, are needed until the supply of housing catches up with demand. This array of programs will reduce homelessness and maintain Hawaii's multiethnic, generally harmonious society.

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