Hawaii Governor Suspends Land-Use Law

by Randall O’Toole, The Antiplanner, July 28, 2023

Hawaii’s housing prices aren’t quite as high as California’s, but they are close. This isn’t because Hawaii is running out of land; the vast majority of land on each of the main islands is rural. Instead, it is due to a 1961 land-use law and subsequent amendments that placed most of the land in the state off limits to development. One result is that the state’s population is declining as people are leaving for more affordable places.

Governor Josh Green has responded by issuing a proclamation suspending the land-use law and several other laws, including a historic preservation law, for one year in order to allow homebuilders to construct 50,000 new homes in the next five years. Naturally, environmental groups are upset, and it isn’t clear to me that a governor can suspend a law passed by the legislature, but at least it will make people aware of what the real problems are and how to fix them.

California has a similar problem in that people don’t really understand why the state’s housing prices are so high. Land-use laws in the Golden State have put 95 percent of the state off limits to development and confined 95 percent of the residents to the other 5 percent. Abolishing single-family zoning isn’t the solution because such zoning didn’t make housing expensive in the first place and high-density housing actually costs more to build than single-family homes.

At least some people in California are beginning to see through the density rhetoric, as exemplified by the video above in which Huntington Beach city official Michael Gates objects to mandates that cities address housing by becoming denser rather than by allowing more development in rural areas. An Antiplanner commenter recently questioned how much authority city officials have over rural areas, but in California it turns out that they do.

A 1963 state law created local area formation commissions, or LAFCOs, in each county in the state. The LAFCOs have the power to approve or deny annexations, the formation of new cities, and the formation of service districts such as sewer or water districts. A developer building a master-planned community will need LAFCO approval to form special service districts or to have the community served by (and eventually annexed by) an adjacent city. But the cities have most of the votes on each LAFCO board, and they have a long history of rejecting all new annexations or formations of new cities or special districts because they want to force all new development (and the taxes such development would generate) inside their boundaries.

The legislature created LAFCOs in response to disputes over San Jose’s at-the-time aggressive annexations of land all over Santa Clara County, often including land that wasn’t even contiguous with the existing city. Other cities in the county complained that some of the land San Jose annexed should have been part of their cities instead. The legislature hoped the LAFCOs would reduce such controversies. Instead, they effectively shut down new greenfield development in much of the state.

According to the Census Bureau, about a third of Orange County, where Huntington Beach is located, is rural. But none of that land is near Huntington Beach, which is land-locked by other cities. Even if there was vacant land near Huntington Beach, the city could not encourage development of that land without LAFCO approval. So, via LAFCOs, cities have the power to prevent development, but not the power to allow it, at least not unless they can convince the other cities represented on the LAFCO board to go against their self-interest by allowing development that they won’t be allowed to tax.

Gates is pointing that cities have a choice: allow more development in rural areas that they won’t be able to tax (unless they annex it) or force high-density development that isn’t really affordable on residents of single-family neighborhoods that don’t want to be densified. Perhaps if more Californians are made aware of that choice, state land-use policies will be more sensible. Maybe, if Governor Green’s proclamation is successful, California will even elect a governor who will follow Green’s example of suspending state land-use laws that have made housing expensive.