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Hawaii is suffering from a crisis of a shortage of affordable housing that is within the budgets of low- and moderate-income families. Hawaii’s housing market has largely ignored these families in favor of rich investors.

Tommy Waters, the chair of the Honolulu City Council, and Cordero, the council’s Budget Committee chair, , which would shift Oahu’s housing market away from its over-emphasis on developing luxury homes for nonresidents toward developing affordable homes for residents.

It is no surprise that private developers have built housing for the high-end market because that’s where the biggest profits are. However, government agencies have also contributed to the over-emphasis on luxury housing.

For example, the Hawaii Community Development Authority, a government agency, was supposed to transform Kakaako into a mixed-use area with a substantial amount of affordable housing for residents.

Instead, an overabundance of luxury condos has been built in Kakaako, where somehow a $600,000 studio is considered affordable.

According to a survey conducted among Oahu voters, 74% support a measure that taxes residential properties that sit vacant at a higher rate than occupied homes. The survey was conducted by Ward Research in February and March 2024 among 390 Oahu voters for a sampling error of plus or minus 4.9%:

Overall, Hawaii’s housing market is geared toward producing luxury housing. Most of the luxury housing is owned by out-of-state investors, and not by local families who are doing well. They are so rich that, in many cases, they live in their Hawaii properties for only a few weeks a year, leaving them vacant the rest of the time.

Hawaii’s housing prices have risen steadily for decades, and property taxes are low, so these offshore investors can make a profit when they sell their housing units even if they are left vacant. In other cases, investors use agents to rent their housing units to tourists — often illegally.

Luxury housing is being built in Hawaii at the expense of residents because truly affordable housing is largely ignored. Bill 46 is designed to shift the market.

The bill uses the tax system to create a disincentive to own homes that are either empty most of the time or are rented on a short-term basis. Homes that are the principal residences of the occupants — either the owners or renters — are not affected. Bill 46 does not tax homes where Hawaii residents live.

The bill is similar to one that was passed seven years ago in Vancouver, Canada, that has since reduced the number of vacant homes in that city by more than 50%. (There are an estimated 34,000 vacant homes on Oahu.)

Bill 46 would start with a tax of 1% of the assessed value of affected properties, which would be raised over time to 3%. The bill includes a grace period when owners who don’t know about the new tax would be notified about it so they can understand how it works.

Many affordable housing advocates support Bill 46, and we hope our community joins us. We will also request the bill to be amended to require the tax revenue to be used to build affordable housing. In this way, the bill would be twice as effective in creating truly affordable housing for Hawaii’s families.

The Honolulu City Council has scheduled a public hearing on Bill 46 on Wednesday (Aug. 7) at 10 a.m. Please join us in supporting the bill with this amendment.