“Failure is a feeling long before it becomes an actual result,” writes Michelle Obama in her impressive and convincing memoir, “Becoming.”

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She was describing the section of Chicago where she grew up, but her words pertain to Honolulu today. There is little escaping the sense that Honolulu is failing too many of its residents, particularly in providing the housing they require. The city needs to find new solutions to ensure local residents have a future here.

Obama writes of parents unable to get ahead financially and children “who were starting to suspect that their lives would be no different.” That doesn’t sound unlike portions of present-day Honolulu.

Viewed from 2019, Honolulu’s growth was far too rapid for its infrastructure to keep pace. In 1900 its population was less than 60,000; at the time of statehood it approached half a million, and then nearly doubled in the subsequent 50 years. Of the nearly 350,000 housing units in Honolulu, 86 percent were built in the 20th century, with nearly 64,000 housing units built before 1959.

Overall, development has often been haphazard and without a sustaining vision. Honolulu’s growth came partly at the expense of land once used for agriculture. (None of the state’s 14 sugar plantations in 1980 remains today.) Western Oahu’s development has been key to Oahu’s expansion in recent decades, but a huge increase in traffic has served to isolate the region as much as integrate it.

Navy Marine Golf Course Military housing Aerial Salt Lake Aliamanu aerial3.

Affordable housing in Honolulu remains a struggle. What if we dedicated a portion of property taxes to build more affordable homes?

Cory Lum/Civil Beat

Honolulu’s run of population expansion has stalled, which isn’t a characteristic of a thriving city. More local residents are deciding they can’t afford to stay. For a growing number of younger residents, it is the limited availability of jobs paying enough to live and raise a family here. While many from outside Hawaii aspire to retire here, too many older Honolulu residents can’t afford to remain once they do.

Honolulu has long been the state’s most transient county. This has helped mask what we now recognize to be an affordable housing shortage.

Too Many Vacant Properties

Honolulu’s ratio of owner-occupied homes is the lowest in the state. Nearly 15% of Oahu residents weren’t living in the same home a year ago, the highest rate in the state, according to Census Bureau data, which also show that just over 10% of Oahu residential units are vacant.

What is less obvious is that county finances are benefitting from the inflated housing market that the shortage has caused. In 2018, the combined gross valuation of Honolulu’s “residential” and “residential A” (defined as non-primary residences valued more than $1 million) properties, the tax categories into which its housing falls, was $204.6 billion. That accounted for 79 percent of total property value.

Housing value has risen disproportionally to housing supply. In 1980, the value of what was then termed “improved residential” properties was $56.2 billion (in 2018 dollars). It accounted for only half of total property value.

This drastic appreciation of housing prices is a result of not enough resident-appropriate housing being built.

Those who own homes and can afford to pay property taxes benefit from the high property values, at least on paper; those who lack the means to own their own homes clearly suffer, assuming they can earn enough to stay. The financial positions of too many residents border precariously close to failure.

The current policy of increasing taxes on non-primary residences doesn’t address Oahu’s housing crisis.

“Residential A” properties accounted for over 8% of gross residential property value in 2018. Taxing them at a higher rate has resulted in greater revenue for Honolulu.

The current policy of increasing taxes on non-primary residences doesn’t address Oahu’s housing crisis. Unless the proceeds are directed differently, specifically toward creating new housing, both for purchase and for rent, it exacerbates a bad situation.

When “residential A” tax rates rise, owners of units which are long-term rentals have reason to raise rents, which serves to ratchet up what renters pay to live here. If homes are vacant, or used by their owners on occasional visits, they will likely stay that way. Higher tax rates aren’t creating additional housing – instead, they can make our limited supply less affordable.

For a city to thrive requires it to be more than a luxury vacation destination, which is what Honolulu has become for many.

Housing inequity qualifies as failure. Until the proceeds from higher “residential A” rates are dedicated to funding affordable housing, little will alter Honolulu’s affordability imbalance.

Aloha needs to be about welcoming local residents as well as visitors and investors. The city’s willingness to promote construction of top tier housing — the towers of Kakaako and Waikiki most obviously — must be accompanied by a willingness to help those struggling to find a foothold, and a place to live, at the bottom.

Dedicating a portion of property taxes to funding affordable housing is a step toward increasing housing equity.

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