The Civil Beat Editorial Board Interview: UH Economists Sumner La Croix And Carl Bonham - Honolulu Civil Beat

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Civil Beat Editorial Board

The members of The Civil Beat Editorial Board are Chad Blair, Patti Epler, Nathan Eagle, Kim Gamel, John Hill and Matthew Leonard. Opinions expressed by the editorial board reflect the group’s consensus view. Not all members may participate in every interview or essay. Chad Blair, the Politics and Opinion Editor, can be reached at

The economists say Maui’s economy appears to be in better shape than anticipated, and they don’t expect Japanese visitors to return to pre-pandemic levels anytime this decade.

Editor’s note: The Civil Beat Editorial Board and reporters spoke on Thursday with University of Hawaii Manoa economists Sumner La Croix and Carl Bonham. This interview, which has been edited for length and clarity, began with an update on current economic conditions for Maui and Hawaii.

Bonham: Things are probably better than we thought they were going to be. And I guess one of the ways that really shows up is the pretty dramatic decline in unemployment claims on Maui. We peaked in mid-September at about just under 8,900 continuing claims, and we’re under 6,000 right now. We just got data today for last week. It’s weekly data. I want to say we’re at about 5,600 claims.

There’s multiple things that could be going on. They could be leaving. So it might be a little premature to say things are better than we expected. Some of those people may have left the islands, but it’s also likely that many of those people have found jobs, either because the labor market was so tight before the fires, that someone who was waiting tables or working at a gallery in Lahaina and lost that job is now working at Home Depot. It’s not necessarily what they want to be doing, but it’s still work.

And the other thing is that the bleeding, if you will, from the immediate aftermath of the fire in terms of lost visitor spending has stopped. Visitors are returning to Maui and a little bit faster than we had expected. When you look at the passenger count numbers, they are about 20 percentage points of the share of passenger counts that would normally be visitors are now not visitors. They’re going up, but a lot of that is emergency workers or recovery workers — the Federal Emergency Management Agency, the Environmental Protection Agency, the Department of Housing and Urban Development, Army Corps, every agency that is on the ground on Maui.

And they’re traveling back and forth right now. They’re on a rolling deployment. They’re coming all the time. So it’s hard to read, but it looks to us like the visitor numbers are improving and faster than we expected. Another way to put this is, we were probably too pessimistic (with earlier forecasts). And it looks like we’re going to avoid a government shutdown at least until next year.

Members of the Civil Beat Editorial Board and reporters met via Zoom with Carl Bonham, upper right, and Sumner La Croix, not pictured here, to discuss the economic needs and projections for Maui and the rest of the state. (David Croxford/Civil Beat/2023)

So that’s not to say that things aren’t bad on Maui. I’m not saying that at all. I just thought maybe not as bad. And again, these are macro numbers. Like I said earlier, the person who lost their job, or maybe lost their business and now they’re working at Home Depot or Walmart — they are not showing up in the unemployment statistics, but they’re also not happy and they’re not as well off as they were before. And all of the macro data is going to tend to hide some of the real pain and suffering that people are dealing with. It doesn’t really tell you about that. 

That’s a good point. Sumner?

La Croix: Well, I’m mostly in agreement with Carl. I mean, I think the economy looks a little better than one might have thought that it would. But that’s also true for the U.S. economy. The U.S. economy is important because that drives a lot of the Hawaii economy. We like to think that most of what drives the Hawaii economy is what we do here. But actually, we’re a big, open economy. And what happens in the U.S. matters. And we essentially face the same constraints that people on the mainland do in certain respects — things like high mortgage rates. These mortgage rates are the highest that they’ve been since before the Great Recession. That’s putting a big dent in the housing market in Hawaii as it is on the U.S. mainland. It’s making housing a lot less affordable.

Things are probably better than we thought they were going to be.

Carl Bonham

On the other hand, we’ve had the stock market rallies. We’ve had the economy be unexpectedly strong on the U.S. mainland. GDP growth has been higher than expected. Unemployment rates have been lower, job creation has been really solid, much more solid than anybody would have expected. The general thrust of the profession is that the U.S. economy is going to do reasonably well.

But that said, there’s a lot of uncertainty. Is the Fed going to raise interest rates more? Are there going to be international events that disrupt this scenario, or are we going to find even higher oil prices because of an escalating conflict in the Middle East? Uncertainty also tends to weigh on economic growth. Ultimately that tends to depress investment and keep things down. That’s true here as it is in the mainland.

But this is another one of these cases where, surprisingly, we may be looking to that soft landing. A few months back people were kind of pooh-poohing a soft landing. That’s kind of one of those scenarios that you dream about but doesn’t happen very often. But that’s kind of the consensus right now, is that we’re moving toward a soft landing, albeit with all sorts of uncertainty out there. That’s good for the Hawaii economy.

Truth Excavation sprayed a soil stabilizer on burned ash and debris inside of a burned-out house Wednesday, Oct. 18, 2023, in Lahaina. Known by its brand name “Soiltac,” once dry, potential hazardous material from burned debris and ash will remain on the ground and not become airborne particles. It is difficult to visually discern what has been sprayed. But walking on the dried application of soil stabilizer is noticeably softer. (Kevin Fujii/Civil Beat/2023)
The Aug. 8 wildfire destroyed much of Lahaina and had far-reaching economic ramifications for the entire island of Maui. (Kevin Fujii/Civil Beat/2023)

On the other hand, Europe is kind of flatlining. Japan had a negative quarter of economic growth recently. There’s still lots of decoupling with China, but Chinese tourists are here.

On the tourist side, of course, the big question mark that’s just really hard to predict is, what’s going to happen to Japanese tourism? Right now the consensus view is that it’s just really expensive for Japanese travelers to come here.

Bonham: Let me follow up real quick about Sumner’s point about the strength of the U.S. economy. If you looked back at our forecasting behavior over the last year, year and a half, what you would find is that every time we released another forecast, we had to increase our forecast for U.S. visitors. We probably had to increase our forecast for the U.S. economy, and we had to lower our forecast for Japanese visitors.

And so that sort of speaks to the continued surprise about how strong the U.S. economy has been. In the last GDP report it was 4.9% growth, which is just gangbusters growth, and the U.S. economy has just continued to churn out jobs. Consumer spending has continued to be just incredibly surprising, how strong it’s been even in the face of these rising interest rates. And that has translated into continued U.S. tourism growth.

Japanese visitors in the past have been very Oahu-focused. They like Oahu.

Sumner La Croix

And so the reason that this is so important is because today U.S. visitors make up 75% of the visitors to the state, and they make up 75% of the spending in the state. And that’s roughly 10 percentage points higher than it was before the pandemic. And meanwhile, we keep waiting for the Japanese visitor comeback.

It isn’t just about cost. There’s no doubt that, with the yen almost 40% less, buying almost 40% fewer dollars than it did pre-pandemic, along with the rising costs of everything else that Japanese visitors would buy in Hawaii, whether it’s a third-higher room rates, a third-higher food outside of the home, restaurant food and so on. And compared to basically no growth in prices in Japan right away, Hawaii just looks super expensive. We’re talking 60, 70, 80% more expensive than it would have been pre-pandemic. 

So imagine that you were a potential Japanese visitor who booked a trip for Golden Week in 2020. And then, of course, you didn’t come. But you know exactly how much it was going to cost because you already had it all booked. And now you try to book the same thing? You’re talking 60, 70, 80% more expensive. And so that matters.

Waikiki Beach was packed with beachgoers as Hawaii was experiencing an uptick in COVID-19 cases statewide.
The visitor industry has seen larger numbers of U.S. tourists in recent years, but officials and executives still Japanese visitors will return in large number. Cory Lum/Civil Beat/2021

But the Japanese visitors are also not traveling to the rest of the world. So even though their currency hasn’t depreciated, say, nearly as much against the Australian dollar, they’re not flocking to Australia. Japanese potential travelers basically are at the top of the list for people who are intending not to travel. And so in our forecast, we don’t have Japanese visitors returning to normal levels anytime this decade. By normal, I just mean pre-pandemic.

La Croix: Traveling to Japan, I was there six months ago and I was just shocked at how cheap it was. Every place I went, things were incredibly cheap. And that tells you from the flip side how incredibly expensive Hawaii must seem.

People from the rest of the world, they see us very differently and we’re an extremely attractive place to visit.

Carl Bonham

Bonham: So let me follow up on that real quickly. If you look at direct flights from Japan to Hawaii and you look at the number of passengers on those flights and you ask how many of those are visitors? That ratio has also been skewed because so many residents are traveling to Japan. The share of passengers that are visitors is down between 5% and 10% on Japanese flights because it’s so cheap for us to travel to Japan. I mean, every one of us knows someone who’s taken a vacation to Japan — or two. 

So that’s something I was going to ask about, because if you look at the passenger arrivals, it’s down a lot from before the pandemic, but up quite a bit from 2020. It’s like 50% of what it was pre-pandemic. But what you’re saying is a lot of that 50% of pre-pandemic numbers are people traveling back here. 

Yeah. But if you look at the visitor numbers, I was getting something like 35% of 2019 levels for the most recent Japanese visitor arrivals. And as you say, the passenger count numbers are closer to 50%. We’re probably a little bit under 40% on arrivals and close to 50% on passenger counts. 

And is there a way to tease out visitor spending from Japanese travelers and how that is made up for by travelers from other places — like U.S. travelers?

Yeah. But the interesting thing is that on a per person, per day spending, the Japanese are not big spenders anymore. And that really gets at the currency story and the cost differential. So U.S. and Japanese visitors are spending almost exactly the same versus a premium for Japanese spending pre-pandemic. 

Sumner La Croix said it is important for Hawaii leaders to demonstrate directly to Japan the desire to have Japanese visitors return to the islands. (Screenshot/2023)

La Croix: I noticed at the airport recently going to greet some passengers from Japan that … there’s the empty-suitcase syndrome going on where you have passengers from the U.S. who are transiting here who are bringing empty suitcases to Japan. That’s an old syndrome from back to the 1980s where passengers from Japan came here with empty suitcases. So now the phenomenon is completely reversed. 

Bonham: Per person, per day spending by Japanese visitors in Q3 is $250. Per person, per day spending by Canadians was $229 and per person, per day spending by U.S. visitors was $240. And if you went back to pre-pandemic, per person, per day spending by U.S. visitors was $190. So really, the Japanese per person spending hasn’t changed much. It’s really the U.S. per person spending has gone through the roof. 

It really seems like the Japanese tourist is the biggest question and the biggest thing to be looking at. What do you think?

It’s possible that this particular forecast won’t be one where we raise our U.S. forecast because it is being impacted by what’s going on on Maui. And our story for the last year has been sort of an expectation that with a weakening U.S. economy, U.S. visitors were going to slowly go away, not go away, but the revenge travel was over, the pickup savings was over and so on. High costs would start to eat away at U.S. visitors. And we were seeing that before the fire. U.S. visitor demand seemed to be slowing slowly. And so it was important that we had the recovery of the Japanese visitor. Right now, I would say the most important thing is that the U.S. strength continues.

Carl Bonham and Sumner La Croix said, as serious as the crisis in Maui remains, it is far from the only challenge facing the entire state. (David Croxford/Civil Beat/2023)

Gov. Josh Green and House Speaker Scott Saiki are in Japan right now drumming up business. How much does it help for high-level state officials to go to Japan and say, “Come on back”? 

La Croix: I think to engage in that kind of symbolic behavior is important. It’s particularly important for Japan for people to feel welcomed back. I think those are trips worth making. I don’t think the effect is necessarily going to be all that large. But those are not unimportant trips just because of the symbolism of us trying to welcome visitors back. It’s extremely hard to measure those kind of events, because it’s not like all of a sudden we’re going to see people booking, travel and coming in the next day.

I think the critical thing with Japan is that we’re really facing that high cost pressure and other currents in Japan. There’s the weakening economy, still a bit of Covid pressure. But that type of trip I think is highly valuable for Hawaii to engage in and it reinforces to people that Hawaii is special. Word of mouth in tourism is still not a trivial thing. 

When I was in Japan in May, I went to a neighborhood that I just hadn’t explored before, and I ran into a massive Hawaii festival where every single possible firm from Hawaii had set up booths. There were people I knew. There were maybe 10,000 people at this festival. So I think those types of things aren’t trivial at all.

Bonham: I agree. And what would really help is if some Japanese celebrities, Japanese public officials made statements that were beneficial. We know that Japanese businesses and presumably Japanese citizens have also given to support Maui. And I think appealing to Japanese visitors to return is something very, very difficult to measure. But it is important.

One thing to keep in mind is that there is not a lot of room for visitors, say, on Oahu, for example. We’re running occupancy rates near 80% in Honolulu in traditional hotels. I think that third quarter, not seasonally adjusted, was 84%. Well, that’s not that far from where we normally are. We get to 95% in the Christmas season. So we can handle that for a short period of time, but that’s another part of the reason why in our forecast we always had U.S. visitors weakening and Japanese visitors strengthening. There had to be a place for them to go.

Carl Bonham said economic forecast after the Maui fires were perhaps too pessimistic. (Screenshot/2023)

And the more full we are, the harder it is for them to come back. Because when they finally make the decision — “Gosh, I haven’t been to Hawaii in four years or three years, I want to go” — and then they start looking and they see how expensive it is and they also find out they can’t get a room. That makes it a lot harder. 

La Croix: One other thing there is the Japanese have a history of responding to crises in the U.S. by not traveling, believing that it’s inappropriate to travel, to arrive here. That was seen during the two Gulf wars in particular, that just all of a sudden Japanese travel collapsed. And I remember governors visiting Japan during those periods, whether it’s the early 2000s or whether it was around 1990, specifically inviting people back and saying that it was okay to come here and to have a good time.

One other note, too, is Japanese visitors in the past have been very Oahu-focused. They like Oahu. And when I ask my friends who come here, they say this is an incredibly livable city compared to Japan. Japan cities are crowded — “We go out and there are just people everywhere. Whereas Honolulu is friendly, it’s nice. It’s not that crowded. The traffic’s not that bad.”

Bonham: That’s a really interesting point because that’s true for people all over the world. We think of ourselves very much narrowly focused, and we think about how bad things are or how much better they should be — everything from our beach parks to our traffic and everything else. But people from the rest of the world, they see us very differently and we’re an extremely attractive place to visit.

Do we need the Japanese to come back if it’s at 80% capacity without them? Could this possibly be a shift in Hawaii’s tourism if we’re getting more domestic tourists?

La Croix: It’s really important for tourism to be diversified from several sources. The more you’re dependent, say, on the U.S. West Coast, the more you might run into a problem say if there’s a California earthquake. A massive California earthquake could disrupt this economy enormously.

I also think, too, that it’s good to get visitors that come back again. Those are the visitors that actually tend to be more respectful of Hawaii, the second time arounders, and appreciate it. One reason they’re coming back is because they have an appreciation of the place, and I think those are the ones who will fit more into the models of tourism they’re looking for. 

The Japanese market’s also been an aging market for a long time. There’s a certain point where people get older and they travel more. There’s another point where also they travel a lot less. Japan is one of the three or four societies in the world that’s aging the fastest. One problem Hawaii has been dealing with the last 20 years is trying to attract a younger group of tourists from Japan. 

Bonham: I think Sumner’s absolutely right on the diversification front. One comment on the spending front. Japanese spending per person, per day hasn’t fallen. It’s that the U.S. spending has risen so much, and there’s no guarantee that will continue.

We really don’t know how much of our U.S. (visitor) experience continues to have been impacted by the pandemic. Certainly in 2021 and 2022, what we were seeing was sort of “revenge” travel. And particularly in 2021, the U.S. visitor couldn’t go anywhere else. And so we really benefited from that. They held us together, but it wouldn’t take an earthquake in California (to disrupt travel). It could be a whole variety of things. A U.S. recession would be a really bad situation for Hawaii right now, or U.S. involvement in a geopolitical war. So it’s very important that we have visitors from Japan, from Australia, from New Zealand, from South Korea, and that we have a diverse group of people spending across the state. 

About the impact on the economy due to the fires — how worried are you about what might happen with Hawaiian Electric Co. and if it does have a big hit through lawsuits — what that will do to the economy? Along those lines, how significant is HECO to the economy locally here?

Bonham: So, first of all, a disclaimer. You should know that UHERO (the University of Hawaii Economic Research Organization) has provided forecasts to HECO. We’ve been under contract with HECO longer than any other company in Hawaii. They’ve been a supporter of ours going all the way back to 1997. And Hawaiian Electric Industries is a supporter of UHERO. So just for complete transparency. I think it’s incredibly important. (It is one of the) largest private sector employers in the state. I haven’t thought hard about what the implications would be to the state if there’s a bankruptcy.

I’m not a bankruptcy lawyer, but utilities generally keep functioning in the face of bankruptcy. They’re a public good.

Sumner La Croix

One implication surely is higher costs for ratepayers. But again the Public Utilities Commission is involved with this as well. This isn’t all one-sided. The other economic implication of the fires I think is almost certainly higher insurance rates for all of us. Right now, we pay some pretty reasonable insurance. And so I think we’re all going to be facing rising costs from that. And it’s not just HECO, right, it’s the state, the county, it’s multiple players. 

La Croix: The damages that HECO ends up paying, we’re just not sure right now. And as to even its liability, I think it’s a pretty big assumption to assume that HECO is necessarily liable at this point or that they’re going to bear most of the liability. If that was to happen, of course, I think the stockholders would be the ones who would be wiped out. 

But my note here on this is, I actually think a bankruptcy could be well-managed. And it’s not at all clear that it’s going to cause chaos in the state. To say it could be well-managed doesn’t mean that it will be well-managed. There’s always that difference. But I certainly see the possibility of them facing large liabilities and their normal operations not being disrupted. If you look at, for example, the transition to clean energy, the clean energy transition is contracting with private projects that build the projects for HECO.

I’m just saying this generally, and you can go back and find exceptions to this, but in general HECO’s not building a lot of new plants. They’re not building the solar and the wind on the whole. They’re contracting with others to build the solar and the wind. That process will continue. They’re still under state mandates. We have a renewable portfolio standard in the state that mandates that they continue to do this. They will still be contracting with outsiders. I’m not a bankruptcy lawyer, but utilities generally keep functioning in the face of bankruptcy. They’re a public good. The courts usually order that they continue their services, that they find ways to proceed.

It may well be that the current management is gone if they’re found liable and there’s lots of damages. But I think we could survive all that. I don’t necessarily see this as being a place where the state goes down over the problems with HECO. On the other hand, if you’re associated with HECO or one of the stockholders, you should be worried about how are you going to get through this and everything.

Bonham: And the stock market is worried about it, right? We know that the stocks have taken a major hit, as you would expect. But to follow on that — that’s not my biggest worry about the aftermath of the fire. My biggest concern is that we don’t address the housing problem on Maui in a very timely fashion. And by very timely I mean in the next year, year and a half. And I think there’s a tremendous urgency to bring real housing on board to avoid large loss of population.

And obviously local families will band together. We’re stickier in terms of staying put than would be true in many places on the continent. When you experience a disaster in New Orleans, families leave to Houston and that’s true for all these people all over the country. That’s a little bit less true here. But we’re at pretty serious risk for significant loss of population on Maui. And yeah, that’s sort of what keeps me awake at night. 

Before the fire on Maui, housing for the whole state was a priority. So how much is it a problem that we’re not only really addressing Maui, but we’re not addressing everything everywhere?

Bonham: I think that’s a little too strong to say that the state is stepping back from housing outside of Maui. I think the state is nudging on Maui. Much of what happens there is really the responsibility of the County Council. And so what I assume what you’re talking about in terms of stepping back statewide is the changes to the governor’s emergency housing proclamation. What that’s really focused on now is the state projects. I know that there’s a lot in the works in the Legislature. The House has a working group on shelter, and I have interacted with several of these groups. And I see some real positive things coming up in terms of legislation, assuming that it passes, that can help.

Are you tracking things that are already happening such as the feared depopulation of Maui? 

Bonham: We’re trying. It’s incredibly hard to get the data. There’s no place where you, you know, punch out when you go to the airport and leave. There is no one data source that we can rely on to tell us what’s happening in real time. The one source that used to be pretty common is change of address forms. The Postal Service no longer provides that free of charge. We actually buy that data from a vendor who buys it from the Postal Service. But even so, we’re in conversation with them about trying to use that to measure what’s happening to the population on Maui.

FEMA disaster service assistants wait to help those affected by wildfires on Maui Thursday, Aug. 17, 2023, at the University of Hawaii Maui College in Kahului. A wildfire destroyed the historic town of Lahaina last week. (Kevin Fujii/Civil Beat/2023)
FEMA disaster service assistants waiting to help those affected by wildfires on Maui. (Kevin Fujii/Civil Beat/2023)

But basically we need more time to feel like we have real numbers. We’ve also seen some data from FEMA. FEMA and the Red Cross might presumably have something similar. So if you’ve signed up for support from FEMA, they have to have a way to contact you. And they have mailing addresses. And so they have reported through government channels a number of mailing addresses that are no longer on Maui. And the number was surprisingly large. If you add up the numbers of people that FEMA said they’re serving and have left with the number of people that the Red Cross says they’re housing and compare it to the population of Lahaina, it was more than the population of Lahaina.

And so we have thought about looking at the conveyance stuff as well. We have that data. The challenge there is that, if someone takes an insurance payout and they don’t expect to be able to rebuild for the next three years, four years, who knows how long it’s going to be. Then it might make perfect sense for them to pay off their mortgage. That doesn’t necessarily mean that they’ve left the state. So we’re sort of struggling to come up with a way to do it.

La Croix: One other point on housing. It goes back to the article in this morning’s Civil Beat that talked about the concept of the Council for Native Hawaiian Advancement’s post-housing program. They basically paid families to house them inside the family’s home. And the article went over some of the problems that that program is facing and the number of people that it was currently serving, which is not inconsiderable. It’s been a reasonably successful program. I felt good at the end of the article because the problems can all be solved. Like, OK, what’s the status with the state Department of Taxation on the taxation of these things. Hello? This is the kind of stuff where a little bit of forceful action by the governor’s office to call up the state Department of Taxation and get some rulings there and get that done. That’s the type of stuff that could be facilitated quickly.

Same thing goes with our state congressional delegation dealing with the IRS on the taxation of that income. Same goes for some of the bureaucratic hurdles. So I looked at (the article) and said, “Hey, this is a program that might need some retooling, but it’s a good program that has worked well and doesn’t require construction of new housing. It shows the aloha of people in the state of Hawaii to help some families out that might need the extra income and not be totally unhappy with the extra company.”

That’s the optimistic side. Sometimes you’re optimistic at the beginning and then you find this insurmountable obstacle. For example, perhaps state law has to be changed to have the income not be taxable or not taxable at a high rate. On the other hand, all it would take would be a news conference by the governor and the two leaders in the Legislature to say that’s going to be one of the first items this year that make it retroactive. That would reassure an awful lot of families. Let’s move ahead now. We don’t have to wait until a law has changed. There’s a lot of ways that those obstacles could be overcome. So when I see stuff like that, that’s the good stuff. That’s the easy lifting. And then there’s lots of other places where there’s heavy lifting or really hard to see kind of how to move forward or how to remove some of the obstacles. But here’s a good one. 

A crew works on utilities Thursday, Aug. 10, 2023, in Lahaina. (Kevin Fujii/Civil Beat/2023)
A crew working on utility lines in Lahaina on Aug. 10. It’s not yet clear what the liability from the fires might be for Hawaiian Electric. (Kevin Fujii/Civil Beat/2023)

Bonham: When I first was reading about this host family program, my first reaction was, that’s a really great program. But what if we tweaked it or what if we added an element to it? And that addition would require some effort on the part of nonprofits. It could require some financial support from Maui Strong or Maui County or the state, and some rule tweaks so it would require Maui County to act. And my thought was, you take the exact same kind of intent and you add on to it — basically, somebody like CNHA supporting owners from single-family homes who want to help their neighbors by making it trivial for them to add an ADU (accessory dwelling unit).

So you get rid of all the permit fees. You have a set of rules that are completely manageable and basically says you’ve got a lot that’s at least this big with only this much house on it already, and you can put an ADU of this size on that. And the nonprofit group would presumably work with contractors and architects and electricians and so on to basically be the one-stop shop. So anybody who has a lot that’s big enough to accept an ADU can very easily do it.

And you could imagine there being financial support. So through the nonprofits, they could provide financial support. And then the people who were spending $200 or $300 a night on a hotel room could be spending that money to be in ADU if you can build one that’s large enough for their family, or multiple ones even in the same neighborhood. 

You’ve got very low infrastructure costs. You don’t need to put a new sewer line into a neighborhood just to add five ADUs. This is marginal, incremental costs for sewer, water, electricity that could allow you to add hundreds and hundreds of new housing units that are here forever, that help with the immediate situation. It’s not the whole solution, but it just seems like something that ought to be considered. And maybe this is already in the works, I don’t know. But these are the kinds of things that we need to be doing in order to address the dire housing situation on Maui, because you can’t expect families to sleep on someone’s couch or in their spare bedroom for the next five years.

Gov. Green is working on creating this fund to pay victims and the families of victims of the Lahaina fires. How would a fund like this actually help the public as a whole? How does it fit into the larger economic picture?

Bonham: There are definitely some benefits to the community as a whole. One of the things that a fund like that would accomplish is potentially getting money in the hands of victims now as opposed to five or 10 years from now. If we go through the whole process of determining liability and going through the courts and paying lawyer fees — obviously the awards might be larger. Whether or not the victims would get more or less money, I can’t speak to that. But this gets money into their hands much more rapidly. That’s to me, the most immediate or the most obvious benefit to it. It’s not likely that this is going to eliminate the legal process. Not everybody’s going to jump into these and accept money from a pool like that. And so the legal process is still going to play out. Maybe it does reduce the cost to the liable parties a little bit. I don’t suspect it reduces that all that much, but I don’t know what kind of update that will have. So I know that’s not very helpful.

So if you were getting a million bucks in the hands of even 30, 40 people out of that 100 people who died in the Lahaina fire, I guess we could presume a lot of that would stay on Maui because those families were from Maui. Would that have a significant impact on the economy?

Bonham: Short answer, if you dump $30 million into the state economy today, you’re not going to see that in the macro data. It’s not going to cause jobs to surge. In the big picture of the economy in the very short run, no, it’s not going to change the trajectory. That’s a few days visitor spending. As I’ve often said, if you want to make a difference to the economic recovery, you’ve got to get the visitors back.

It will make a difference to those families. It’s very different to be living in a hotel room and suffering all of the impacts that they’ve dealt with, with no financial clarity, versus having accepted a $1 million settlement. You even have the potential to buy a place to live or to be able to afford rent.

If we don’t deal with housing adequately on Maui within the next roughly a year, year and a half at the outset, multiple things are going to happen. One, more people are going to leave. And two is you’re going to constrain the economic recovery because there are only so many hotel rooms and Airbnbs and condos and houses on Maui. If our displaced residents are in those units because we didn’t build new housing, then we will not be housing visitors in those units.

And it’s not just displaced residents, it’s also the recovery workers. It’s the wave of construction workers that are coming the end of next year and beyond to rebuild, to pave, to put in the sewer lines, etc. We’ve got to have housing for all of those people. Otherwise, we’re preventing visitors from coming here and spending $500 or $600 a night in hotels and hundreds of dollars in restaurants and shops. 

La Croix: On the Maui housing issue, there was a report on affordable housing in Maui issued back in 2021, and then Carl and I wrote in addition to the report for the Hawaii Community Foundation. And one of the things here is Maui needed fundamental reform to its housing regulation even before the fires. The county’s regulatory system was in terrible shape. It was very difficult to build affordable housing there. There were lots of places people could come in and veto projects. The report that was written on affordable housing by a whole coalition of groups on Maui was really quite good.

At the very end of the process they established would be one more veto by the community. Basically, Carl and I said, “That’s really not what you want. You want to basically set up lands that if they’re zoned for affordable housing, people can go in and build without much other community input.” That’s the community input — that if you zone lands for affordable housing, the building can take place relatively quickly. Maui’s already partway through this regulatory change. They ought to continue it. And I think there would still be a surge in other building on Maui besides just in Lahaina.

Part of it for Lahaina too is that not everything’s going to happen all at once. There’s room for other housing investments to take place on Maui. And that’s a critical thing because the market was already critically short units. There was already all the other acreage restrictions on single-family homes that made it difficult to build them and all sorts of problems with building affordable housing. Other islands have had some similar problems, but I think the Maui problems were some of the more extreme ones that we had seen.

So this is one of those things, when you have a crisis, do you want to drop all the long-term projects you’re working on and just focus on the crisis? Sometimes the answer is yes, that’s all your resources will allow you to do and the crisis is so overwhelming. But other times you’ve got to continue on also working on long-term solutions. And I think that’s absolutely critical from how you continue working on the long-term solutions.

Building new housing for the survivors — just how much confidence do you have in the county leadership to actually pull this off?

La Croix: I think there needs to be some type of emergency type of office put forth that essentially is a much expanded version of some of the current permitting offices and housing offices. And we’re talking a temporary agency that might last for three to five years. There’s an enormous number of extra employees. And that’s one of the things the state and the county need to cooperate and figure out how to facilitate that. On the basis of the current capacity of the county there’s no way they can do it.

New condominiums go up near Ala Moana Center.
The lack of affordable housing remains the state’s greatest challenge. (Cory Lum/Civil Beat/2022)

And then I listen to people talk about it — “Oh, you know, it’s hard to hire new workers.” They just plain need to move to an emergency agency that is able to move quickly. And they need to waive a lot of the fees and building permits and everything else. Once that happens I’d be reasonably confident.

I think that sometimes living on Oahu, we forget that the county governments on the neighbor islands are relatively small ventures. They’re not huge things. They have relatively limited capacity. That’s just part of the nature of serving a small population unit. But there needs to be a rapid expansion of that agency that oversees the housing thing.

Bonham: Yeah, I think I tend to agree with Sumner on that one. Maui County, like much of the state, didn’t have the capacity before the fire. There’s no particular reason to think that they have the capacity today. In fact it’s pretty certain that they don’t, although there’s room for nonprofits and others that are trying to help Maui to make a difference if the county will take that support, take that help.

I think there’s a tremendous urgency to bring real housing on board to avoid large loss of population.

Carl Bonham

I’m sort of less focused on the ultimate rebuilding of housing in Lahaina and much more focused on the need to add housing everywhere on Maui starting now. Any project that is already under review — I’m speaking from an academic’s perspective and not as a planner — but basically it just needs to get a green light.

What have we not talked about regarding Maui, the economic situation, the recovery, the state at large that you want to make a final point on?

La Croix: Well, I think the state both needs to walk and chew gum at the same time. It needs to be able to multitask. There are other big problems here in the state. And the most critical thing to do is to deal with the Maui fires. But that’s not the only thing going on in the state. When we talk about things like economic diversification — the key to that is a good education system, dealing with traffic and — most of all — dealing with housing. Housing is the number one issue when firms talk about staying or not leaving, or other firms talking about coming here. We need to work on the housing issue for the state as well as on Maui.

I think the governor and his administration made a big start last year. There are a lot of programs coming forth in the Legislature. It is really important that we keep the focus on housing and not just short-term relief. A lot of the long-term housing stuff is reforming regulation, looking at exactly how we’re going to do affordable housing. I think we’re off to a good start in a lot of ways with that, but we’re nowhere near the finish. This is the time to get this stuff done.

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The members of The Civil Beat Editorial Board are Chad Blair, Patti Epler, Nathan Eagle, Kim Gamel, John Hill and Matthew Leonard. Opinions expressed by the editorial board reflect the group’s consensus view. Not all members may participate in every interview or essay. Chad Blair, the Politics and Opinion Editor, can be reached at

Latest Comments (0)

I think this idea about controling rents is not my idea I think if rentals are going to lower there rental costs to tenants they have to be given a tax incentive. If rents are set at low cost than as a whole lower tax percentage. The money he saves from taxes are to be used to renovate the building and amenities. I'm not promising anything but it's a win win situation for the tenant and landlord.

lesfung2023 · 2 days ago

Thanks to the Biden administration who seem to work so tirelessly with the efforts to make the victums of the fire whose houses were lost content and promising that funds will continue to be available. I think it's a daunting task to promise something like Affordable housing when their is nothing in sight. If the Governor would have given all of them a round trip ticket to fly to a neighbor island and stay with relatives or friends it would have made everyone happy and a great Christmas gift. Hotel included of course. I think dishing out millions of dollars to build affordable housing raises a red flag do these developers have the blueprint and plans from start to finish plus the cost of material and all expenses in there planning stages from start to finish. Is this a calculated risk and dio they want more money to finish the job if they run out of money. Did they think this thing through thoroughly.

lesfung2023 · 3 days ago

Excellent article and comments however, I would like to add the Japanese custom is to honor the dead who died by fire. It is evident when I use to pick them up as a Uber driver and they would giggle when I said the Japanese words goodbye and thank you. They felt great that I could offer Hawaiian hospitality in Japanese. I think why they have stopped coming to Hawaii is to offer their custom as well as wait until the inflationary cost of goods and services get inexpensive to purchase.I think Hawaiian Electric if they have to pay all those expenses it will drive our prices higher to make a case for Hawn electric do they have a shut off switch in any other island. Did this fire happen by design or mother nature took its course and remember fire burns whatever is flammable. If we let Hawn Electric lose its capability to serve the islands will other companies come in to increase or lower prices. It's up to the courts but my bill has been what I pay for I use according to my meter.

lesfung2023 · 3 days ago

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