In a previous column, I shared a little backstory to landownership in the Hawaiian Islands; how vast quantities of land were acquired by a handful of private owners; how the agricultural value of land in Hawaii was outmatched by its value for residential development; and how the largest landowners have the power to shape our collective future here.
Tourism and construction are among our largest economic sectors and both are reliant on development. The State of Hawaii must stabilize (and even bolster) our economy. In doing so, it has to inflate those interests that keep our economic sectors afloat, which means giving tourism and construction whatever they need to do what they do.
Therein lie some problems: It doesn’t leave much room for new sectors (such as high tech); and it’s not entirely accommodating of sustainable practices/development.
Take Castle & Cooke’s Koa Ridge project, for example.
“We in the Islands don’t sell land,” was the Big Five axiom offered by one of its directors to another, “in the late 1950s on the eve of the land boom,” according to “Land and Power in Hawaii,‘” by George Cooper and Gavan Daws.
Not long after, that sentiment was obviously chucked out the proverbial window and wallets were opened up to catch all the raining cash. As mentioned in Part 1, “in the 1960s, after statehood, development money started flowing into Hawaii from outside in unprecedented quantities.”
In the 1960s, Castle & Cooke had built the first phase of Mililani Town in the ahupua‘a (traditional subdivision) of Waipio, where it had extensively grown pineapples. Additional phases of Mililani would continue over the next five decades on previously cultivated farmlands. Even now, controversy looms as Castle & Cooke proposes an adjacent development on more agricultural lands.
Castle & Cooke’s Final Environmental Impact Statement for Koa Ridge rebutted the Sierra Club’s proposal for “a small scale development that uses renewable energy, has more open space, additional bike and walking paths, and that maintains the most productive portions of the proposed project lands for agricultural use.”
Castle & Cooke said that successful examples of such a project “are few, if any,” due to “limited demand for farm products.”
Call me a skeptic, but in this type of civilization, far-removed from age-old hunter-gatherer ways, the vast majority of our foods are farm products that don’t magically appear in grocery stores or restaurants.
Sierra Club’s proposal sounds great! Lack of urban congestion, renewable energy, and community-based organic farming? Count me in.
Now, cue ominous music, then, Castle & Cooke with its semi-cryptic bubble buster: “This is simply not achievable at ‘small scale’ given the significant offsite investment in infrastructure, protracted land use regulatory process, and pent up demand for housing and new jobs in the Central O‘ahu region.”
In human-speak, Castle & Cooke needs to get paid and there’s a lot of eager buyers.
We do seem “pent up,” don’t we? We need jobs and we certainly need affordable houses. It seems like we’ve been demanding these things for ages; and despite development run rampant, a sizable chunk of us are still waiting for our opportunity. Do you ever feel like you’re holding onto a raffle ticket and everybody else’s numbers are being pulled but yours?
Are we really expanding so fast and is housing in such short supply that we need 66,000 more homes by 2025? If anything, such rapid growth should necessitate the implementation of sustainable practices (like increased food security and renewable energy) at the policy level, but that really hasn’t happened.
There must be another layer to this tear-inducing onion that escapes consideration by most of us. What if the Hawaii resident housing demand is so high because the housing supply isn’t being sold to us, if, in essence, demand is being manufactured and sustained to drive development interests? Allow me to clear that up a bit.
Between January 2008 and September 2015, 27.5 percent of homes sold in Hawaii — or 38,499 homes — were bought by non-residents.
Let’s get mathematical for a moment: If “between January 2008 and September 2015, a total of 139,998 homes were sold,” and 27.5 percent of those homes were sold to non-Hawaii residents, then 38,499 homes (if calculated at one per person) were sold to non-residents. That’s 38,499 Hawaii residents (not including their families) who will be counted toward the aggregate demand typically factored in by businesses and state/county officials when promoting development interests. That’s a lot of demand.
The April 2015 Department of Busines, Economic Development and Tourism report, “Measuring Housing Demand in Hawaii, 2015-2025,’ gives us insight into the rising cost of real estate, which is basically demand-pull inflation: Prices go up when there’s a whole lot more demand than there is supply.
Hey, if you want to make money in this business, then it’s simple economics from here on out. All you need to do is meet demand with your supply. If you have a lot of supply, but there’s barely any demand, then you’re in trouble. So, keep demand going.
According to the DBEDT report, “migration is one of the most important contributors to the state’s population growth, with an influx of people from other states and abroad” at “above 40,000 people per year.”
When is the last time you heard a lawmaker or developer say that Hawaii needs more houses to supply the 40,000 incoming non-Hawaii residents each year?
When is the last time you heard a lawmaker or developer say that Hawaii needs more houses to supply the 40,000 incoming non-Hawaii residents each year? I don’t recall ever hearing it. Saying so probably wouldn’t float too well with Hawaii residents. It’s typically Hawaii resident demand that is cited.
It’s either an ingenious or devious formula: supply 27.5 percent of homes to non-residents, which increases population growth, which in turn, increases household growth and demand, while many Hawaii residents, who could have been supplied those housing units, are added to the ever-growing Hawaii resident demand for houses.
It’s a formula for long-term high demand that won’t end until all the available land is sold off. Or maybe it’s not a formula at all, but happenstance. You decide.
Whatever the case may be, so long as Hawaii residents demand remains higher than the supply, then developers will have all the data they need to lobby lawmakers to support over-developing these islands.
We’re a captured audience. We either take it or leave it. Leaving it means you’re either going to have to tuck your wings back up and tell mom and dad you’re not leaving the nest or you literally leave Hawaii; so start checking the Arizona and Nevada housing listings (or ask family members who were already forced out to hook you up).
We’re easily replaced by a non-resident with more money than us.
We’re the expendables (not Sylvester Stalone’s “Expendables”) and we’re easily replaced by a non-resident with more money than us – because chances are, their reduced cost of living allowed them to save more money than us.
And Castle & Cooke or (insert developer and affiliate here) needs to get paid.
The reality here, is that land is an incredibly finite resource – We’re on small islands! – and the price for land is going to continue to skyrocket (in a somewhat stable economy), so long as the supply of one of our most precious resources continues to be diminished.
The state has initiated a three-pronged approach to solve the housing crisis: (1) deregulate development to facilitate a construction boom, (2) go full steam ahead with transit-oriented development, and (3) let homeowners build more rentals on their property. This approach will supply Hawaii residents with homes, but it also perpetuates the long-term high-demand formula – and all of this plays a major role in the character of the Hawaiian Islands.
What do we want Hawaii to look like? And is there another way?