Zoning, planning reforms would help produce more Hawaii County housing
By Grassroot Institute of Hawaii, February 16, 2023
The following testimony was presented February 9, 2023, by the Grassroot Institute of Hawaii to the County of Hawaii.
PBN: Could ending zoning as we know it make Hawaii homes more affordable?
February 9, 2023
Submitted online via Virtual Open House
To: County of Hawaii
Zoning and Subdivision Codes Update
From: Grassroot Institute of Hawaii
Joe Kent, Executive Vice President
RE: Comments on Hawaii County’s Zoning and Subdivision Codes Update
Dear Project Team:
The Grassroot Institute of Hawaii would like to offer its comments on the project to review and update the Zoning and Subdivision Code for the County of Hawaii.
First, we want to offer our appreciation for the important and difficult task you have embarked upon. We realize there are many competing interests that must be balanced in your review of the county’s General Plan, zoning and related regulations.
Our goal is to make Hawaii County a leader in the growth of affordable housing by providing the Project Team with data-driven recommendations that will help update the county zoning code without compromising the island’s cultural or environmental resources.
To that end, we have divided our recommendations into four categories:
>> Enforcement and permitting.
>> Principles to follow.
We hope these recommendations will help the Project Team in its efforts to create a new and more workable framework for zoning, planning and permitting in Hawaii County.
>> Ensure that zoning and building codes don’t undermine housing growth.
Good intentions can quickly hit a wall if the support structure isn’t there to see them carried out. Thus, changes intended to allow for creative solutions to housing — such as allowing accessory dwelling units and ohana units, or permitting construction of duplexes, triplexes and fourplexes on single-family lots — can be rendered ineffective, if zoning and building regulations make them impossible to achieve.
In order to make these changes effective, it is important to revisit the elements of the zoning code that might become a handicap to their creation.
Regulations about minimum lot sizes, setbacks, parking requirements, height restrictions and floor-area ratio must be revised to ensure that they do not become a barrier to accessory dwelling units, duplexes and similar innovations.
>> Embrace the “Tokyo model.”
Tokyo, Japan, uses “light touch” zoning when it comes to determining where residential units may be located. Under this model, zoning is far less stringent. For example, residential projects are allowed in commercial zones, which creates walkable, mixed-use neighborhoods. Projects can also proceed “by-right,” which means without lengthy political approvals. As a result, Tokyo has for many years had relatively low, stable housing prices.
Tobias Peter, a research fellow at the American Enterprise Institute, discussed the “Tokyo model” during Grassroot Institution of Hawaii presentations last July on Hawaii island and Maui. He emphasized how the model creates new housing opportunities for lower-income residents.
“A lot of the new homes that get built in Tokyo are priced at the middle of the price range,” he said at the Maui event, “and that’s very important because now if someone buys such a home, they free up the home lower down the stream, which a lower-income person can now move into.”
>> Allow more multifamily housing.
Currently, very few parcels in Hawaii County are zoned to allow duplexes, triplexes and fourplexes. Approximately 1,700 parcels are zoned RS, which allows for single-family homes but no multifamily houses. Denser housing units are allowed in the RD and RM zones, but only 344 parcels are zoned for duplexes and denser housing types. These housing types are generally less expensive than single-family units, making them essential for providing housing to many of Hawaii County’s working families.
Applying for zoning approval can add as much as 3.2% to the cost of a multifamily project, according to a study by the National Association of Home Builders and the National Multifamily Housing Council. Since Hawaii County’s zoning codes are not friendly toward these types of housing projects, reform could help lower prices for isle residents. The County should consider allowing multifamily housing in all RS zones.
>> Allow more mixed-use development.
Hawaii County’s zoning code poses a challenge for any project that attempts to combine commercial and residential uses into the same development. It does have a category for “Residential-Commercial Mixed Use Districts,” which allows “a residential area to have certain convenience type of commercial uses so as to provide more of a neighborhood character to the residential area.” But currently only five parcels on the entire island fall into this zone.
In line with the “Tokyo model” outlined above, Hawaii County should consider expanding its mixed-use districts, to allow residential units in commercial zones and vice versa, subject to reasonable health and safety requirements. This mixed-use development would contribute to community character, allow for more walkable neighborhoods, and, most important, add more housing.
>> Incentivize adaptive reuse.
Adaptive reuse — using an old building for a new purpose — could yield significant gains to the county. Adaptive reuse projects can be completed without the waste of tearing down an existing building, and many times can be cheaper than starting a project from scratch. In particular, the county should focus on incentivizing the adaptive reuse of old buildings into housing units.
To accomplish this, Hawaii County could look to Los Angeles’ adaptive reuse ordinance. LA’s law, enacted in 1999, granted by-right zoning variances to adaptive reuse housing projects, exempted the projects from various reviews, and gave them density bonuses that allowed for the construction of new units. In total, LA’s adaptive reuse ordinance has been credited with adding 12,000 new units to the city’s housing stock.
PLANNING AND THE COUNTY PLAN
>> Look for ways to reduce red tape and conflicts in housing priorities.
Many of the barriers that hold up the growth of housing start with good intentions. The best example of this may be the county’s General Plan and the various community plans. Though they began as tools to help guide development, the plans have transformed into additional layers of bureaucracy and regulation that makes it more difficult to create new housing.
The expansion of county and community plans has been accompanied by a switch from recommendations to mandates, as the language of the plans has incorporated more “shall” and “require” phrasing. This has resulted in more red tape, more delay in the permitting and approval process, and higher development costs — all elements that lead to higher home prices.
It is no coincidence that housing growth has stalled while the plans have gotten bigger. The plans have led to community conflict that frustrates efforts to increase the island’s stock of housing. Community input into the creation of these plans has encouraged NIMBYism and overlooked input from those who are unable to participate in community meetings, such as people who do not yet own homes.
What is needed instead is an effort to reduce the size and scope of the community and general plans. One place to start is by getting rid of much of the “shall” and “require” language, replacing it with less restrictive “urged to” alternatives. If this were complemented by broad zoning and permitting reform, it would help reduce the thicket of bureaucracy that homebuilders must navigate to create affordable housing.
PERMITTING AND ENFORCEMENT
>> Third-party contracting.
Hawaii County has a significant permitting backlog, and research shows that delays, such as time waiting on a permit, increase development costs and housing prices. But contracting with private companies could significantly reduce it.
The concept has already been broached by the 2022 Hawaii County Cost of Government Commission, which identified private partnerships as a possible avenue to address the county’s wastewater infrastructure. In November 2022, the Grassroot Institute of Hawaii testified before the commission that private contracting could also assist in reducing the county’s permitting backlog.
Johns Creek, Georgia, a town of 80,000, contracts with a private entity to review its most complicated permits, such as for hospitals, while allowing its civil servants to review standard permits, such as for homes. This ensures the city does not have a permitting backlog. In fact, permits are often issued within five to 10 days of when they are applied for.
>> Require fewer permits.
Another way to reduce the permitting backlog is to reduce the number of required permits. For example, Hawaii County currently requires permits for sheds, fences, tents and even some air conditioning systems. In short, nearly every meaningful renovation that one might want to make requires a county permit.
Given that the current permitting delay in Hawaii County is currently 143 days, requiring so many different permits adds to the backlog and creates more expense and difficulty for homebuilders.
One simple solution would be to remove the permit requirements for all but the most difficult and complex renovations. While some might cite health and safety concerns, multiple other municipalities are able to safely operate with no building codes or permitting requirements at all. Those include Delta and Montezuma counties in Colorado; Arcosanti Urban Laboratory in Arizona; Wonder Valley in California; Brewster and Marfa counties and the city of Terlingua in Texas; and Miller County, Missouri. And Tennessee allows local governments to opt out of building codes for single- and two-family dwellings.
Hawaii County could reduce the permit backlog and promote housing growth by eliminating permits for improvements or renovations to certain kinds of dwellings; projects such as sheds, fences, accessory dwelling units and extensions; or for all projects below a certain cost or size.
PRINCIPLES TO FOLLOW
>> Incentives, not mandates.
In general, incentives are more effective than mandates at promoting new homebuilding. Requirements such as inclusionary zoning, which specifies that a certain percentage of homes in a proposed project be sold or rented at a certain price point, often do more harm than good.
For example, Maui’s inclusionary zoning policy stunted development of affordable housing between 2006 and 2014. Across the country, inclusionary zoning has been shown to have a similar impact, effectively lowering the return on new development. If projects don’t pencil out, homebuilders will not build.
On the other hand, incentives — such as the density bonuses in LA’s adaptive reuse policy — remove barriers to construction and can lower prices for homebuilders and prospective homebuyers.
>> By-right approvals.
By-right approvals allow projects that meet established code and zoning requirements to proceed automatically without political, discretionary reviews, which can delay construction and increase overall costs.
Researchers at the University of Hawaii’s Economic Research Organization have pointed out that by-right development ordinances “have the potential to speed project approval and substantially reduce project costs.”And the National Multifamily Housing Council found that by-right approval “reduces carrying costs, consulting fees and other costs associated with approval processes when compared to a lengthy discretionary review process.”
Hawaii County has some of the strictest housing regulations in the entire United States. When median home prices are at a level most residents cannot afford, lawmakers and civil servants should take this opportunity to revamp the county’s zoning codes with simplicity in mind. Smart, clear regulation can spur greater homebuilding and help keep county ohana on the island they love.
Mahalo for the opportunity to testify,
Executive Vice President
Grassroot Institute of Hawaii
 “Why Hawaii should consider the ‘Tokyo model’ for housing,” Grassroot Institute of Hawaii, July 25, 2022.
 “Zoning (Hawaii County),” Hawaii Statewide GIS Program, updated April 2022, accessed Jan. 26, 2023. See filter for RS parcels.
 “Zoning (Hawaii County),” Hawaii Statewide GIS Program, updated April 2022, accessed Jan. 26, 2023. See filter for RD and RM parcels
 “Quarterly Statistical & Economic Report,” Hawaii Department of Business, Economic Development and Tourism, Fourth Quarter 2022, p. 111.
 Paul Emrath and Caitlin Surgue Walter, “Regulation: 40.6 Percent of the Cost of Multifamily Development,” National Association of Home Builders and National Multifamily Housing Council, 2022.
 Hawaii County Code, Chapter 25. Zoning, Article 5, Division 4, Section 25-5-40., p. 101 of PDF.
 “Zoning (Hawaii County),” Hawaii Statewide GIS Program, updated April 2022, accessed Jan. 26, 2023. See filter for RCX parcels.
 “Adaptive Reuse: Reimagining Our City’s Buildings to Address Our Housing, Economic and Climate Crises,” Central City Association of Los Angeles, April 2021, p. 9.
 Jason Ward and Daniel Schwam, “Can Adaptive Reuse of Commercial Real Estate Address the Housing Crisis in Los Angeles?” RAND Corp., 2022.
 “Adaptive Reuse: Reimagining Our City’s Buildings to Address Our Housing, Economic and Climate Crises,” Central City Association of Los Angeles, April 2021, p. 7.
 Paul Emrath, “How Government Regulation Affects the Price of a New Home,” National Association of Homebuilders, Economics and Housing Policy Group, 2011, p. 5; Adam Millsap, Samuel Staley and Vittorio Nastasi, “Assessing the Effects of Local Impact Fees and Land-use Regulations on Workforce Housing in Florida,” James Madison Institute, Dec. 11, 2018, p. 19; and Dan Bertolet, “Housing Delay is Housing Denied,” Sightline Institute, Aug. 10, 2017.
 “Report of the Cost of Government Commission,” County of Hawaii, Oct. 2022, pp. 11-13.
 Joe Kent, “Testimony: Hawaii County could use ‘Konno’ exceptions to address permit backlog,” Grassroot Institute of Hawaii, Nov. 3, 2022.
 “Permit Information,” Hawaii County Department of Public Works, accessed Feb. 7, 2023.
 Noelle Fujii-Oride, “Here’s How Affordable Housing Policies Have Impacted Hawai‘i’s Housing Supply,” Hawaii Business Magazine, Jan. 25, 2022.
 Tom Means, Edward Stringham and Edward Lopez, “Below-Market Housing Mandates as Takings: Measuring their Impact,” The Independence Institute, November 2007; “Inclusionary Zoning: Implications for Oahu’s Housing Market,” The Economic Research Organization at the University of Hawai‘i, Feb. 12, 2010; “How land-use regulation undermines affordable housing,” Mercatus Research, November 2015; Paul Kupiec and Edward Pinto, “The high cost of ‘affordable housing’ mandates,” The Wall Street Journal, Feb. 12, 2018; Benjamin Powell and Edward Stringham, “Housing supply and affordability,” Reason Foundation, April 1, 2004; and “Inclusionary zoning primer,” National Association of Home Builders, August 2019.
 Carl Bonham and Sumner La Croix, “The Maui County Comprehensive Affordable Housing Plan: Understanding its Pros and Cons and Ideas for How to Improve It,” The Economic Research Organization at the Univesity of Hawai‘i, Oct. 21, 2021, p. 5.
 “Tool: By-Right Development,” National Multifamily Housing Council, 2019, p. 72.
 Rachel Inafuku, Justin Tyndall and Carl Bonham, “Measuring the Burden of Housing Regulation in Hawaii,” The Economic Research Organization at the University of Hawai‘i, April 14, 2022, p. 4.