 Aloha and welcome to Hawaii Together on the Think Tech Hawaii Broadcast Network. I'm your host, Kelea Ikeena, and president of the Grassroot Institute of Hawaii. I'm here today with Jason Ekonimo, who's with the Realtors Association of Maui. He has some great insights into the housing crunch on the island of Maui and to some of the recent events that have happened that have complicated it. And hopefully we've seen a good victory down at the county council in terms of built-in, which could have made it even worse. But in any case, Maui as well as any other island in the Hawaiian islands is a very difficult place to find affordable housing, regardless of what level of the market you're in. And it's getting worse. Unfortunately, efforts to solve that problem through affordable housing programs of the government don't always turn out the way they are intended to turn out. We're going to talk a little bit about that today as well. But let me welcome to the program Jason Ekonimo, who is with the Realtors Association of Maui. Jason, thanks for taking time to be with us today. Thank you so much for having me. It's really a pleasure. I'm a fan of your work. I love what the Grassroot Institute does. And I always look forward to seeing your newsletter. Well, thanks a lot. I appreciate that. Jason, the Realtors Association is filled with people who make their living from real estate. But they have a deep heart as well, I think, for the needs of the people on Maui at all levels, especially the opportunity for everyone to afford a home. Tell us a little bit about them. Yeah. So RAM is a big, diverse organization. We have over 1,800 members. A lot of those, the overwhelming majority are Realtors and Brokers. But we do have affiliate members who might be appraisers. They might be house inspectors or even photographers or mortgage professionals. So it's a pretty big and diverse group. And our vision statement pretty much sums up my role, which is home for everyone. That's what we want. And so my role as government affairs director is to try and inform our local government in the best way possible to create a setting that's conducive for more housing production and ideally for us to get a home for everyone. Your organization as well as the Grassroot Institute of Hawaii and other organizations were involved recently in trying to do just that. Communicate with our public officials on the island of Maui about a recent legislation. And that was Bill 10. Now Bill 10, I understand, had to do with what is called 201H housing. It's a type of affordable housing. And it basically said that if the government was going to allow a developer to develop a project into a 1H affordable housing, 75% of that project had to be devoted to homes that would be sold below market rate so that those of lower income could qualify for them. Now on one hand, Jason, that sounds like a wonderful idea because we all want to see more housing that's affordable for those who can't afford it. And so I'm sure that was the intention of that bill. But when we look into the details, we see something else and your organization, an organization of realtors was able to look at the economics of all of that. How did you analyze the bill? So Bill 10 was a troubling bill because it largely ignored reality. Ignored the reality of the situation that we live in as far as just having capitalism. It ignored the reality that the government cannot mandate for private businesses to do things that are not economically beneficial to them. And the government can't mandate private businesses to build really anything, let alone affordable housing. So the idea behind Bill 10 was that Maui County is going to ask for more and do less when it comes to affordable housing. So rather than making it so that the 201H process for fast tracking that applies throughout the whole state of Hawaii applies the same in Maui County, they decided to make the threshold requirements for that process higher than any other county. Maui is already not a very easy place to get anything built, and they decided to make it harder. And I don't know why, I think it might have been, it was certainly well-intentioned, but it ignored some basic facts. So we looked at that bill, Bill 10, and initially the first draft of it was even worse than what you're describing. The first draft of Bill 10 tried to cut out any household making approximately $116,000 or more from any benefit of Hawaii's 201H process. So it was really just trying to limit access to housing to our working middle class families and really demanding that more housing be built at lower pricing than is currently allowed. So we knew that version of the bill was going to kill affordable housing developed under the 201H process. Thankfully, you had Council Member Yukile Sugimura on here last week, and thankfully she saw that, she recognized that huge problem, and the council rightfully amended the bill to remove the most troublesome and detrimental parts of that legislation. Notwithstanding, it was still a bad bill. You know, it was very reminiscent of the changes to the workforce housing policy that were made to the county code back in 2006, 2007. Council Member, or then Council Member Victorino, now Mayor Victorino, was on the council during that time, and he saw the impact. You know, he saw that when the county raised its inclusionary zoning requirements to 50%, housing didn't get built for, you know, a decade. And raising the inclusionary zoning requirement to 201H projects to 75%, well, that was just outrageous, especially with that history that we knew would result in less affordable housing. From a business point of view, what does it look like to housing developers if they're told 75% of the project has to be sold at below market rate? In terms of their ability to afford the cost of actually building the project, what does that do? I mean, it's highly unlikely. It's extremely unlikely. The real disincentive because they can't afford to do that, is that right? Yeah, I mean, it's kind of basic math because that would require that 25% of the housing units built really pay to build the other 75% of affordable housing. You know, that math, if it's 50-50, if you're having half the houses subsidize the construction of the other half, that's doable for a lot of developers, even private developers. But when you get to affordability levels of 75%, unless there is significant public subsidy elsewhere in the financing package for that project, it is highly unlikely that a developer can make 75% of affordable housing work, especially right now with the conditions that we have as far as building materials, as far as labor, as far as every other regulation that we have. Sorry to cut you off. Go ahead. Oh, I was just going to say, so it was really creating a landscape that wasn't conducive to development. Now, supporters of Bill 10 said that there are developers who would have been able to hit higher affordability targets, and that mandates like that are actually a good way to focus all development on affordable housing. What do you think about that argument? It's not a very nuanced argument. So, you know, yes, as I said, there are projects that are in the pipeline right now, and those same advocates, like the point to those projects saying, you know, oh, nine of the 13 projects being proposed for 201H right now are 75% affordable or above. If you look at the details, though, they are getting heavy public subsidies elsewhere in their financing. And even aside from that, you know, Councilmember Molina, who's the author of the bill during the debate of whether or not to overturn the mayor's veto, he said that he's been talking to housing developers. And he said he talked to one developer that after seeing what happened with Bill 10 said that they can up their affordability is 68%. That's somebody who is trying their best to compromise with the assumption that the mayor's veto would be overturned. And even still, this person or this developer who's already invested so much time and money into getting this project off the ground now is still faced with the uncertainty of whether the Council will say that 68% is good enough or if it must be 75%. It's that uncertainty in the development of housing that really has a significant impact in whether that housing gets built or even planned. You mentioned earlier that those developers that could afford to build at a 75% rate are those that are receiving public subsidy. And I wanted to just punctuate that for a minute so everybody heard that. In other words, the funding for the project would actually be coming from tax dollars. It would be coming from the residents of Maui. And that would be something that would ultimately burden the very people who need to be getting affordable housing. Yes. I'm not of the mindset that taxing people to help build affordable housing is in itself a bad thing. So the public subsidy, I don't think it's necessarily a bad thing to have public subsidy go into affordable housing. Preferably, if there is going to be subsidy and if it's going to be raised by taxes in Maui County, I think it should be subsidy that's going towards infrastructure development. Maui County does extremely little when it comes to infrastructure development. And infrastructure development is a huge cost for housing development. Also infrastructure is a way for the county to guide where housing development go. So I think Maui County is losing out on a major opportunity to really do targeted development and also to do targeted subsidy to get the housing that they want. Sure. Well, Jason, I would agree with you that there are more intelligent and less intelligent ways of using public subsidies. And certainly you've pointed one difference out between directly subsidizing housing projects and versus subsidizing infrastructure, which is so necessary as part of the inducement for developers to actually build. We'll talk another time about the overall tax burden that is carried by the people of Maui. But going back to this issue of affordable housing, there's a lot of blame that's been passed around on why housing in Hawaii is so expensive. From your perspective, what are the biggest factors that make housing so expensive on the island of Maui? There's a lot. It's a complex issue. And anybody that says, oh, it's simple, it's just X, Y, and Z, they're lying to you, or they have an agenda. It's just not simple. But a couple of the major issues are basic ones that we can kind of examine. One major issue is the supply and demand issue. We have real limitations on our supply, but we also have self-imposed limitations on our supply. And we have essentially exponential demand because this is paradigm. So it really makes it difficult to ever patch up with the supply necessary to ease the prices that rise with the demand. But even aside from that, just last week, I think it was being reported that some lumber prices are three times higher than they were at the start of the pandemic just a year ago. So if you just take that into account, a house that was built a year ago, the price of lumber might have been three times less than a house being built today. If it costs more for all the materials to make the house, whether steel prices are up because of tariffs on a federal level or because of shipping costs or because of anything, it'll cost more to build houses now. And it did a year ago, or then it did five years ago. And the longer we go without building houses, the more expensive that gets. Same with labor. So it's all of these other costs associated with it. And then what you might call regulation or time and compliance issue are the other ones. Let me give you an example. You pointed out before we got on the air, how much land is zoned agricultural. So let's say a developer gets a big swath of land and they've got a plan to build 200 housing units on this piece of land. Well, it's going to take time for it to get rezoned. There's going to be all sorts of questions as to what they can do on that land and what sort of additional conditions are put on them. So there's a long time before any houses even get built, let alone that project becomes profitable at all. And all of that is time where money's going out and nothing's coming in. Sure. And I've heard that story over and over from developers who've been stymied by the difficulty of getting their projects done even within a decade. And that's something that we're seeing too often on the island of Mali. I'm going to be right back in just a moment. We'll take a break, come back with Jason Economo of the Realtors Association of Mali, talking about the high cost of housing on the island of Mali. Don't go away. I'm Kili Iakina with the Think Tech Hawaii Broadcast Network. Hi, we're back with Jason Economo talking about the housing crunch on the island of Mali and maybe we'll get to some solutions by the end of the program. But let me ask you a little bit more as you analyze with us why housing costs so much on Mali. Some people place the blame for high housing costs on non-residents purchasing real estate or on people who run short-term rentals. What do you think about that? So I think it would be dishonest to say that it's not a factor because it's definitely a factor that impacts demand, right? If you have non-residents that want to buy here, they add to the demand of housing here. We already have an insufficient inventory of housing. So it is a factor. I don't think it's as big of a factor as people assume though. And also it's a really difficult issue to address the non-residents buying houses here because the truth is there are laws that allow non, you know, they guarantee the right of non-residents to still purchase property here. Realtors or anybody cannot discriminate against a non-resident because they're not from here. So we can't block them from purchasing property. And it's kind of absurd to think that a homeowner is going to refuse to sell to the highest bidder because they don't happen to be from here. And honestly, I think it might actually be a violation of that person's rights if a homeowner refused to sell to them because they weren't a resident here. Though I'd have to check on that. Don't quote me on that. So I think it is an issue, but there's not much that could be done about it other than trying to create inventory that's more focused on local residents. The similar thing, I want to address the short-term rental stuff too because that really isn't as big of an issue as that's made out to be in my personal opinion. And the reason I say that is because if you look at the actual numbers of single family homes that are short-term rentals, they're not very high at all. It's a very small percentage. And those homes generally wouldn't be what you would fall into the affordable housing category. When you look at condos that are used as short-term rentals, once again, those aren't going to be conducive for long-term occupancy or affordable occupancy for a couple of reasons. A lot of the condominiums that are short-term rentals that were created were built at a time for the purpose of having visitors come. So it's like trying to count hotel rooms in the inventory of housing stock. Yes, a person can stay in a hotel room and habitate a hotel room for an extended period of time, but it's not really a place for them to live. That can be said for a lot of these short-term rental condos. There's no storage, even the appliances aren't that great for long-term usage. So it's kind of comparing apples and oranges when you're talking about the housing price. And along those similar lines, when you talk about the fees for ownership and maintenance and upkeep for these condos, they are never going to be conducive for affordable housing. The prices would be outrageous for your average person to try and live their long-term or purchase their long-term. So I don't think that that is as big of a factor as it's made out. Jason, sometimes when I watch hearings of bills like bill 10 or other similar legislation, there's a lot of emotion really in the room. There are a lot of people who feel very deeply and it's understandable because it's their lives that are at stake and their ability to afford a place in paradise. But there are also some deep-seated conceptions and some of those have to do with the motives of developers and realtors. They often get a very negative view when many people testify. They're seen to be the problem itself or part of the problem rather than the solution in terms of housing development. How do you account for this and what is your assessment of it? I think if we're being honest with ourselves, there are good people and bad people in every profession. In my professional background, I'm not a realtor and I'm certainly not a developer. I come from a background of law. I'm an attorney by trade and I can tell you that a lot of historical injustices have been perpetrated by attorney but that doesn't mean all attorneys are evil. It certainly doesn't mean that all attorneys are working to impose injustice on people. In fact, it's attorneys who are trying to solve a lot of those problems and the same can be said for the housing crisis. Yes, developers were at fault for historical injustices and realtors have been at fault for historical injustices but it's also developers and realtors who are working for the real solution that we are going to need to solve this housing crisis. It was realtors on Maui who started Nahaleo Maui as a way to provide affordable housing in perpetuity. They were the first real housing trust in Hawaii. They're still working to get more houses and to provide affordable housing in perpetuity that has the building improvements uncoupled from the land. It's realtors that came up with that system. It's realtors who administrate it and it's realtors who advocate for it. When people point at realtors and say, they're the problem, it kind of blows my mind because really we're just intermediaries in a business transaction. Realtors are just trying to advocate for their client to make sure that the business transaction is fair and that it is conducted in an appropriate manner that complies with all relevant laws. There's nothing wrong with that. The realtors aren't setting the prices and honestly realtors constantly give back to the community. You can look in your paper at least once a week, you're going to find a story about realtors giving back to their community. For Ram, for the Realtors Association of Maui, I can tell you that the overwhelming majority of our members are working class Maui residents who are raising families here and who want their kids to be able to grow up here and afford houses here. They want the friends of their kids also grow up here and afford houses here when they grow up. We're in the boat with you. Some realtors are falling out of control and they are selling these multimillion-dollar properties and making huge commissions, but just if you stop and think about it, there aren't enough multimillion-dollar properties for all 1800 of my members to be these profiteering, evil folks that some folks make us out to be. It's just not true. We as an organization are advocating for housing and realtors as individuals are very active participants in the community that are just trying to do some good and trying to make a living. What would incentivize developers and realtors as well in the profession to pursue the development of more affordable housing? Sometimes it's said that developers will make more money off of multimillion-dollar properties. I've heard some things that actually challenge that, that in many cases it's possible for them to make a justifiable profit off of affordable housing projects. Yeah, as far as realtors go, you don't need to incentivize us to sell affordable housing for us to advocate for more affordable housing. Home ownership matters. Ram recognizes that. The National Association of Realtors recognizes that. There is a ton of data that shows that home ownership creates healthier and more economically beneficial communities for everybody. We want more affordable housing because we know that if we can sell somebody their first home and it's an affordable home, then we'll probably be able to sell them another home down the line when they want to upgrade and we'll probably have a relationship with their kids and maybe their grandkids helping them to get homes as well. Because if you're able to own a home, then there's a higher likelihood that your kids will be able to own a home as well. Jason, how about for developers? For developers, honestly, the county needs to do more and stop just pointing fingers. If the county actually steps up and assists as far as infrastructure development, if the county streamlines its process, if it takes some of the risk out of the creation of housing, then those will all be incentive. Businesses respond to incentives. They don't respond to threats. It is literally easier to build pretty much anywhere else in the United States than it is in Maui County. So as long as the county keeps on pointing fingers and doing nothing to assist in the creation of new affordable housing, then developers can find a better landscape to build elsewhere and I can't blame them for trying to do that. Any other policy changes that you'd like to see the county council or the state consider? We need more capacity building. We need to make it so that our residents, our people can compete in the market against those non-residents. We need better jobs. We need better education. We need better wages. We can keep on being upset at mainlanders for competing for the same houses, but that doesn't change the circumstances for our people. We need people that know how to buy houses, how to make money. We need that for our residents. Until we really invest in our people and the industries on Maui and in Maui County that can create those jobs, then we can't be surprised if our residents are being out competed. Well, Jason, that's been very informative. I appreciate your time today and thank you very much for being on the program. Thanks for having me. My guest today is Jason Economo with the Realtors Association of Maui. We'll be back next week on Think Tech Hawaii's Hawaii Together. Until then, aloha.