In regards to the proposed constitutional amendment to tax investment property to fund public education, I stand at its crossroad as a residential real property investor and as an advocate of public education.

After more than 10,000 hours of public education advocacy in Hawaii, my clearest takeaway is that grossly inadequate funding is at the root of every challenge facing our educational system: from unprecedented shortage of qualified teachers, to rampant bullying, to a deferred maintenance and facilities backlog totaling $3.8 billion (2015) — just to name a few.

When every other school district in the nation is funded by county property taxes, the Hawaii constitution restricts the funding of public education to the state and also restricts the state from collecting property taxes. Hawaii’s Big Five landowners had great influence when the constitution was drafted, ensuring that they were not burdened with the costs of educating the children of their workers.

The author and her daughter, Rory, after voting at Honolulu Hale. Courtesy of Kim Coco Iwamoto

When Democrats, unions and working people rebelled against this oligarchy, they made substantial amendments to the original constitution; unfortunately they overlooked this last remnant of protectionism for the wealthy landowners.

Today, 27 percent of privately owned land in Hawaii is held by out-of-state investors. We have one of the lowest property tax rates in the nation, which encourages speculation by foreign investors. So while Hawaii residents value land as a place to raise our families and nurture our communities, out-of-state investors see it only as a place they can grow their profits.

The more bids on a property, the more expensive it becomes. In this way, our artificially low taxes on real property works against local families. We can discourage outsider competition by increasing the exemption for residents while increasing taxes on residential investment property.

A few of my progressive brothers and sisters have spoken against this ConAm because of the propaganda that it will automatically hurt renters and small businesses. I have owned a small apartment building near Ala Moana Center since 2004. I have enough experience as a managing landlord to know that we do not set our rental prices based on our tax bills, but on the amount “the market” is willing to pay us.

Supply And Demand

The greatest impact on rental prices is the tension between supply versus demand. If the number of renters (demand) increases while supply stays the same, prices will go up. Likewise, if the supply of rentals decreases while the number of renters stays the same, prices will go up.

The worst case scenario for renters is when the number of renters increases while supply of rentals decreases — this causes rates to skyrocket. And that is exactly what has been happening in Hawaii. After the housing bubble burst, many homeowners became renters; meanwhile, Airbnb and similar short-term rental sites proliferated and removed dwellings from the long-term rental market.

The greatest impact on rental prices is the tension between supply versus demand.

Most of my apartments are rented to low-income families who rely on Section 8 subsidies. The same decreased supply and increased demand forced the government to increase its subsidy caps to keep up with the rental inflation. Until we address the shortage of affordable rentals in every community, prices will continue to rise way beyond any nominal increases to our property tax.

In the meantime, do we allow the “lower taxes, lower services” advocates to continue shortchanging our public education? I have been a tenant advocate since I was a Legal Aid volunteer in 2001. I am advocating for all the children who live in rented dwellings who depend on our public schools to provide them a game-changing education.

Insufficiently funding public education further exacerbates the economic disparities and injustices we see all around us in Hawaii. Please do not continue to protect the profits of landlord-investors at the expense of working families who rely on public education. Vote “yes” on the ConAm to fund our public schools.

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About the Author

  • Kim Coco Iwamoto

    Kim Coco Iwamoto was elected to the Hawaii Board of Education in 2006 and served until 2011. She also served on the Hawaii Teachers Standards Board from 2009 to 2011 and the Career & Technical Education Coordinating Advisory Council from 2007 to 2011. She was appointed to a four-year term on the Hawaii Civil Rights Commission in 2012.