 to Hawaii together on the ThinkTech Broadcast Network. My name is Jonathan Helton and I'm a policy researcher at the Grazer Institute of Hawaii and today I'm going to be filling in for our regular host which is Grazer Institute President and CEO Dr. Tilly Iakina. So today we're going to be talking about solutions to Hawaii's housing crisis and normally when we think about housing policy we think about state and local laws and regulations but that doesn't mean that the federal government doesn't have a role to play in fixing the housing crisis and in fact Hawaii's very own US Senator Brian Schatz recently introduced a bill in Congress that could help increase the housing supply at the state and local levels and especially near transit projects like Honolulu Skyline. So here to discuss this topic with me today is Andrew Justice. Andrew is a housing policy analyst at the Niskanen Center based in Washington D.C. He's also a licensed attorney and holds a master's degree in urban and regional planning from the University of Michigan. Good afternoon Andrew and thank you for joining me on the show. Thanks Jonathan thanks for inviting me on the show. Of course so just before we get into specifics would you introduce yourselves to viewers a little bit about how you came to work on housing policy? Of course my name is Andrew Justice and like you said I'm a housing policy analyst at the Niskanen Center. Along with my colleague Alex Armelovich we launched the Niskanen housing policy effort in May of 2022. Our focus is generally on growing housing supply nationally and recognizing that most of what limits American housing supply are not technical barriers but regulatory and procedural hurdles around things like land use rules, building codes and other areas. That's exactly what we've been looking at at the Grasser Institute as well trying to streamline state and local approvals for housing projects to hopefully bring down the cost. So just before we get into the meat of the discussion just a quick question about the Niskanen Center. So how is the organization founded? What is the mission of the organization? So the Niskanen Center is a nonpartisan think tank that tries to blend the best ideas from or the best ideas as we see them from the left and the right into solutions for America's more vexing challenges. We call this approach transpartisan rather than bipartisan because we don't merely seek to calculate the average between both sides positions on an issue. We try to come up with the best solution without being overly tied to either the red team or the blue team. Yes and I certainly appreciate this approach at the Grasser Institute we are also nonpartisan and and try to work with both sides of the aisle whatever the issue is we try to find the best solution. So let's talk a little bit about housing. So as you know Senator Brian Schatz recently joined a bipartisan group of lawmakers from the House and the Senate and proposed the Build More Housing in Your Transit Act. So you've looked into this can you tell the viewers a little bit about what the legislation is trying to achieve? Sure the Build More Housing in Your Transit Act is an elegant solution to this phenomenon of transit projects that are built away from where most people live or they end up where stations get built in lower density neighborhoods and the land and then once the stations are built land use rules don't change to let people and businesses locate themselves near the new transit system or expansion. This trend isn't good or we don't think it's good for the taxpayer who pays to build transit infrastructure through state local and federal taxes because it's not allowed to be as useful as it could be. It's not good for the prospective rider who can't get where they want to go and it's not good for the environment because even though we spend more to build more transit people still end up driving. But back to the bill the latest version as you might have seen is a bit different than last term's version of the bill but the latest version modifies grant scoring for new transit proposals or expansion of existing systems to favor those with land use rules and permitting procedures near stations that will allow the new transit infrastructure to be more useful. These are basic and we think non-controversial things such as not requiring a bunch of surface parking near homes and businesses not having big minimum lot sizes for homes near transit stations and allowing multifamily housing by right without needing discretionary approval from politicians or bureaucrats that almost always add cost and delay to construction. In the end I think this policy will help fix some of our recent you know in the last decade or so transit building issues that encourage bad projects and instead have planners prioritize ridership taxpayers and the environment when they think about how to build and expand transit infrastructure that maximizes its usefulness to people. Of course and so that that's what I was actually going to just ask you is I know there had been a previous version and you know what were the changes so it is my impression that the previous version of the bill did not focus so much on here's a list of policies that we would like to see cities and states take in order to be in order to fulfill the strings attached to the grant. If focused more on we would like to see some plans to pass policies is that a fair categorization? Right ahead a couple of elements one was plans to pass policies the other one was establishing like a local funding stream for TOD and then there was a third kind of catch all for anything that the secretary of transportation identified. The new bill also requires the DOT secretary and the HUD secretary to come together and kind of break down silos between the two agencies when it comes to deciding what policies help build more housing near transit to quote the bill title and that's kind of a core issue with public transit in the United States really since the founding of the DOT and the moving of the federal mass transit program from HUD to DOT is that it's siloed away from the people with expertise on home building. Yes and so when you've broken the people who fund the transit project from people who might be considered about you know what types of housing should be built around it I do understand how the miscommunication would result in what Hawaii has today with the skyline. The skyline was built started on the west side of Oahu and is being built toward downtown Honolulu but on the west side it's a lot of loaded city housing and it you know people do live there but nowhere near as many people or businesses as downtown so we I mean we're certainly experiencing what happens when you build it and then you don't zone the land so that people can build dense housing around it and as a result there's ridership has been low and there hasn't been as much housing being produced around the skyline but I do want to talk about the new starts program that's the program that is a part of the bill and it says you know if a state or a locality wants to receive transit money under this new starts program they have to take these deregulatory actions regarding zoning so Honolulu's skyline did receive funding under this program they haven't received all of the funding that they were kind of allotted is there any chance that this bill is retroactive so that Hawaii would have to pass some of these zoning reforms to get the rest of that money? You know I'm not really sure and I I don't think I could speculate on that yeah no that's that's that's fair it would be it would probably be good to encourage the state and the city council here to try to invest in greater to do zoning and density maybe to get part of that money that they're still looking for on the ramp but let's move on so there was this isn't the only federal bill or federal program related to increasing housing supply at the state and city level so I want to talk about the grant program that Senator Schatz helped get into law on this past year and the the technical name is the Pathways to Removing Obstacles to Housing program it's administered by HUD so can you tell me about some of the background of this and maybe what it's hoping to achieve? Actually if there's if we could go back to the Honolulu skyline just for a moment yeah yeah let's go back to that yeah I think like one thing if Senator Schatz's bill was law when this project was being planned maybe you know 20 years ago you would probably see the the proponents of the of the system build it in kind of the opposite order that that it's currently being built where phase three would probably have scored better relative to you know phase one and two and so they would have probably tried to start with that and then phase one would have been probably less competitive especially if you look at systems that were built around the or started around the same time like Denver or Charlotte where their light rail systems go you know right through the center of their downtown and are quite quite useful but that's not to say that vision one or not vision one phase one of the skyline has to be a white elephant you know in perpetuity if you look at photos of the elevated subway in New York City and Queens from like 1915 or 1916 when it was first being built you'll see a heavy rail subway system being built out into what looks for all purposes of rural area but we all know that they the city you know let people build lots of homes and businesses very quickly in that area which made that new transit system very very useful very fast and like you were talking about a few moments ago Honolulu can still let people build homes near that transit system and solve two problems more or less at once in boosting housing supply for the region but also allowing more people to ride the system yes so so in other words if this if this build more housing your transit act it been law back in 2005 2006 then Honolulu might have realized that the incentive was to start downtown and build west as opposed to starting on in the west side building east so I mean probably would have increased ridership I know the ridership numbers they were hoping for maybe 10,000 people a day by the end of the year right now it's looking like maybe 3500 a day on average it is it is not been what they've hoped for and so part of it is because not a lot of people live where the rail is at and where the rail ends I mean it's it's an abandoned stadium it's not it's not the most ideal ending so if you're good we can let's go on to the YMB grant I guess as people have called it before yeah it's had some some colloquial names but yes yes so what does it work and what's its goal so HUD as we've called it the the YMB grant program although it's officially called the community development block grant pro housing grants excellent excellent naming but it will reimburse communities on a competitive grant basis that are modifying local regulations and procedures to allow more housing production generally the program is more of a pilot program in its scale the total budget for the whole country is 85 million dollars and as you can imagine that would be spreading it quite thin so the amount won't reimburse every community that wants to rewrite their zoning code or encourage exclusionary places to you know change their ways all at once but the good news is the applications that do get funded in this fiscal year should be impactful and get homes built where they're badly needed so directionally it's probably a good thing and if it goes well you know we might see it get repeated yes so I know there's been there's been some criticism that this was more aimed at helping fund plans than helping fund direct policy change but with I think they've already started accepting applications do you know if the applications that we've seen so far have been for hey here's concrete policy change to reduce parking minimums reduce minimum lot sizes things like that I think it's been a pretty mixed bag and I saw recently that the the deadline for applications was extended but because there's so little money to go around I'm pretty confident that the the proposals that do get funded will be worthwhile and and have more concrete you know production-based results rather than just mere planning okay and so so I guess that's a PSA for any um Hawaii state or local officials who are listening or watching that the the deadline has been extended so you know it's it's possible that one of Hawaii's counties if they haven't already applied could apply and get some of this additional money but let's um before we move on to some of the other topics are there any other federal bills that are being considered or existing federal programs that create these sort of grant-like incentives for states and cities to boost housing stock not not grants per se you know one thing we're looking at and working with Senator Mike Lee's team on is proposals to transfer some federal federally managed land under the Bureau of Land Management particularly in western states uh to communities that have a lot of housing pressure and and are up butting and kind of hemmed in by by federal land in their area uh we think it's a pretty thoughtful bill in that they go to great lengths to to describe all the the types of federal land that are off limits things like national parks national monuments um environmentally sensitive areas of course like DOD land as well but um it was this working with them on this bill has been really illustrative not just in in how thoughtful they are but in just how much of the west um how much of the west is under federal ownership and how hemmed in a lot of these cities are um so I'm hopeful that you know in the you know months and and year ahead we might be able to make some progress on that um to help provide some relief for these cities uh and in exchange have them um you know commit to building building more housing in this uh in this land I mean that's sound that does sound like a as you said a thoughtful bill and of course we've worked with Senator Lee in the past on on Jones Act and Maritime related stuff which I know um you're familiar with but I do I do want to talk about uh pre-approved plans so you've written about this recently so can you describe to someone who might not be familiar with how pre-approved plans work just kind of how a city would go about creating one and what the advantages are sure as you know we're all kind of painfully aware of housing costs are influenced by a variety of factors um land the cost of land itself and zoning regulations are among the biggest pieces of the overall pie uh but things will call soft costs like building design architectural um design and uh zoning approvals are an underappreciated source of costs and delays soft costs generally account for about 30 percent of project costs and of course they're going to be a higher share for smaller or kind of one-off infill projects like you see in a lot of a lot of cities some communities though are taking what we think is an entrepreneurial approach to reducing these costs within their jurisdiction by drafting on their own what they're calling pre-approved and open source so you don't they're not like copyrighted or anything uh building plans that property owners and developers can use for either minimal cost in a place like milwaukee i think they charge like $50 or no cost in a place like south bend the developer can take these plans know in advance that they're going to be approved in certain residential districts and take them to a contractor and and have them get built we would say this approach not only saves on architectural engineering costs just in absolute but the time savings gets homes built and on the market faster than they would be otherwise with a kind of with one off you know to spoke design an approval process for each project so the way i see it it seems like the pre-approved plans would make it a lot easier for people who didn't have for people who were just maybe small-scale developers or maybe they have the money to put an adu on their property as like it would have a bigger benefit for those people maybe then some of the large development firms who have the the time and money to to sort of wait out the permitting process you think that's accurate definitely um and following that trend of any time you've got small or singular developments the the soft costs are going to be a bigger share than than if you're building you know a hundred unit apartment building at all at once or something um but i think we've seen in not only you know South Bend Milwaukee different cities like what is it Los Angeles and Seattle i think have adu oriented um pre-approved plans specifically for adus rather than like primary residences like in south bend in south bend which we wrote about recently um their their pre-approved infill program is um about one year old probably one in a few months year old now um but at the time of writing i think they had maybe one one home under construction and then like 10 more in the pipeline and then you know since then but then the last i think week or so a non-profit developer from i think Evansville Indiana committed to building 50 homes using those plans uh out of the city's catalog and you can pretty plainly see it's a win win because the city gets you know scores of homes built on vacant land but also that those homes are unknown quality since they would have you know designed them themselves um and they match their aesthetic preferences which is i i guess good and uh meanwhile the non-profit developer saves money that they would have otherwise spent on architectural and design services and can deploy the savings towards their core mission of building homes for people yes no for sure i i just will add to that i i was looking earlier today i found a report from 2016 um from the Maui county council and they were discussing this topic and at least in 2016 they predicted that pre-approved plans would have saved um three to six months on design and permitting and i i don't think that that report um precipitated created any action which which is unfortunate um and none of the other counties have any other approved plans either so it's definitely something to look at considering that in hawaii if you want to get a building permit in most counties you may have to wait for five months to even get your building permit and so compared to the mainland hawaii's programming process is usually even slower so i i think the this proposal is probably something that would be very helpful to people so i i do want to move on to talk about manufactured homes just for a minute um there's been a discussion about bringing manufactured homes to Maui to provide on temporary shelter for people who've been displaced by the wildfires um so you and i talked about this last week and you talked about how there's different building codes and different building standards in place for different kinds of manufactured housing so could could could you um could you break that out for viewers sure so within what we would call um as like a genre factory built or off-site home construction as distinct from on-site home construction which is you're literally building the house in the place where it's going to be used but so off-site or factory built includes three main types one is HUD code manufactured homes colloquially these are referred to as mobile homes but they all will adhere to the national HUD code meaning they're built to this code they can be put in any of the 50 states with you know kind of minimal changes um and then from there you've got modular homes those are going to be built either as you know wall modules a series of wall modules or room-based modules and then assembled um on-site kind of lego style uh and then the third third version is panelized construction where it's just the walls are premade in a factory and then they're all shipped in to the site and assembled on-site the distinction between modular panel and panelized from HUD code is modular and panelized have to adhere to the whatever the local building code is and so you lose some of the efficiency that comes with a national you know HUD code but you do get a little more customization for for local conditions so for the HUD code specifically is that does that just apply to what we would traditionally maybe call mobile homes or is that or is it more is it broader than that well HUD code is a is like a defined term and you know mobile home is just kind of a slang for it but if we're if we're going to get really into the weeds so you've got like a factory that's making HUD code homes on the same production line they could make what are called park models which are uh if you've ever seen like a tiny house those are often non-HUD code but still a uh a semi-permanent home on a trailer right on a trailer chassis but um as far as like primary residents full-time any anything that we would identify as a mobile home is going to be a HUD code home right yeah so that's that's what I was trying to get at is it whether or not there was any maybe any of the kind of penalized as you call them like lego style homes that might might fall under HUD code um oh no they're those are going to be under the whatever the local code is my god so so then talking about building code have you found any states or localities that have a building code that is particularly friendly to um off-site built housing not that i'm aware of most of our most of our efforts are around um you're trying trying to make HUD code homes um able to compete on a fairer playing field with uh with site built site built construction historically you know groups like the national association of home builders were opposed um to normalization of competition between HUD code and site built homes but um today there are HUD code builders as members of the NHB and um they're generally seen as being being on site and and recognizing that america has a a shortage particularly of starter homes for people and that um as the harvard center joint center for housing studies uh has found recently that HUD code homes for the same spec are generally 25 to 70 percent less expensive to build than uh the equivalent site built house and at that end of the market it's just the better tool for the for the job yes and i imagine with um the dramatic increase in input like like lumber prices recently that i mean that that difference may have grown i don't know when that study was was issued that you're referencing but yeah anytime that you know material prices are are higher factory built homes which not only HUD code but modular and penalized as well are going to have an advantage just because because they're in a controlled environment they're wasting less material yes and historically i i think what you're saying holds true for hawaii where a lot of the opposition to any of these prefab homes um comes from some from the home building associations and and some of your contractors so it was i mean it made news headlines after the wildfires when i think that um some of the governor's staff probably met with some of the contractors and and they agreed hey we're going to be trying to bring in a lot of prefabricated homes because we need housing and and we need it fast now we was already in a housing shortage before the wildfire it's it's much worse now but i'll you know i'll throw in one more nugget for viewers in hawaii there's not a lot of there's not a ton of zoning barriers to prefabricated homes although um according to the state land use commission if you want to build a home on agriculture land that is designated as agriculture land by this the state lc you cannot put a mobile home there so because um so much of the land in hawaii is designated as agriculture that that does limit the ability of someone to come in and say hey you know i'd like to use this vacant land and maybe put in some sewer and electric cookups and maybe create a mobile home park um under land land land use commission rules that would be a no go if that's ag land so that's something that i know we've been in discuss in discussion with lawmakers about why do we have this particular requirement when you can put a mobile home on other types of land so andrew i think that we've pretty much run out of time um so i'm just gonna ask you anything else um you'd like to add to wrap up this conversation yeah i think just to close i want to say that in the past you know when humans you know we didn't have elevators we didn't have tall buildings or sanitary sewer systems cars or electric trains um building enough homes so people could leave lead healthy and prosperous lives was a technical problem that was at that time beyond our collective ability to solve it but today we not only have all those inventions but they're mature technologies that can be deployed almost anywhere and used to unlock more housing supply to meet demand rather than an unsolvable technical problem today's housing shortage is an eminently solvable mainly legal and regulatory problem but we just have to let ourselves solve it yeah well i couldn't agree more so i appreciate you joining me for this discussion today um thank you to our viewers for watching i hope that you found this informative and i hope you'll join us again for the next episode of hawaii together aloha thanks jennan