 and welcome to World of Books, a talk show on books that we think you should read. I'm your host, Mihaila Stubbs, and I should mention that I'm also real estate broker with Coldwell Banker Island Properties in Kapalua Maui. I mention this simply because today's book is Fixer Upper, How to Repair America's Broken Housing Systems by Jenny Schwetz. And my guest today is Jason Ekonimo. Jason is the government affairs director for Realtors Association of Maui. I've invited Jason today for two reasons, besides the fact that he is super smart. The first reason is that I wanted to discuss this book in the context of Maui's affordable housing crisis that has reached unprecedented levels. And secondly, because the Realtors Association of Maui's vision is a home for everyone. And if our technician can pull up the website, we could see the entire vision and mission statement for the Realtors Association, whereby it clearly states that we provide resources focused on consumer protection and thoughtful growth with the Loha spirit. So Jason, thank you for joining me today. And I'd like to dive into this discussion and ask you which of these solutions to the broken housing system could be applied in Maui and why and how long it will take? Big question. The housing crisis in Maui is a big crisis. So one of the things that the author acknowledges in the book is that some of these possible solutions haven't really been tested. So even when we go into the solutions, there might not be proof supporting some of them. But I think there actually are a few that could be done. One of them might be allowing for higher density through our zoning regulations. Another might be changing the way we do our taxing on real property, where we split the structures from the land. And maybe a third might be as simple as buy-right development, really eliminating some of the discretion in the process. So we mentioned what would work. And I'm sure that you've read through this book, you've come across some solutions that you thought, no, this is just, you cannot do this on Maui. And we all know that we're a very culturally sensitive environment. We have challenges with shoreline erosion, sea level rising. And what solutions don't you think they just don't work at all? So one of the things that I mentioned was eliminating some of the discretion when it comes to the process of approvals for maybe workforce developments or developments in general. It's usually the workforce ones that have more discretion involved. That can't be eliminated entirely, largely because of what you mentioned. The really sensitive nature of the land that we have as far as cultural resources, but also water is another great example of the types of situations that are unique to Maui, not unique overall, but make it difficult for us to streamline our processes too much, because you really can't be too careful when it comes to over development when you have a resource like Maui. So the question is, can we build more? Can we just keep building? Yes, we definitely can build more. We just need to be smart about what it is we are building and where we're building it. Maui has a lot of land. A lot of it is great for agriculture, but a lot of it isn't. A lot of it isn't really suitable for building anything on it right now. And a lot of it is being used for stuff like, let's say, shopping. The old Sears is a great example. Being used for purposes that aren't really useful. Having an abandoned Sears is less useful than having housing. So we could totally build more and we could change some of the buildings we have, but we do have to be careful as far as sprawl, because Maui has the issue of a lot of people desire a single family home to themselves. But if we do single family homes for everyone, then we lose what makes Maui so special in a lot of ways. Are you aware of any efforts to maybe convert some of the commercial space into housing space? Is that possible or is retrofitting too challenging? What do you think? There have been some recent efforts. So not too long ago, there was legislation that was introduced in the Maui County Council. And what it would have done was allowed for housing in the light industrial zoning districts. The real goal of that legislation was to make it so that housing could be tested inside the Queen Kahu Manu Center. A lot of folks came out and rightfully so and said that if you allow for housing in light industrial, then suddenly there's a premium on light industrial land because you can put very expensive housing there. But what will also happen is it'll increase the rents for all the folks who need light industrial zoning for their businesses and it'll create conflict in the community. So the county council very wisely decided not to move forward with that bill. But we could definitely do spot zoning changes to places like the Queen Kahu Manu Center so that we could try experimental housing in those areas. Well, you know, over time we've seen, you know, various challenges to what we can build and where we can build. And particularly shoreline erosion and sea level rising have been very obvious challenges. And yes, we can build more, but we can't just build anywhere, first of all. And one of the solutions to this issue is coastal retreat, which means essentially move the buildings up the hill or away from the ocean. Now, of course, you know, there are issues with ownership. There are issues with fact that I mean ownership of the land where these buildings would have to be relocated. There may not be any land available. And, you know, as you pointed out, sometimes these decisions regarding housing may affect the economy of the community. And I'm thinking of all these units that or resort units that are located on the coastlines. And can we just let them fall in the ocean? If we cannot relocate them, and if they fall in the ocean, how are all the businesses associated with them going to be affected by it? So I think it is very unwise to let them fall into the ocean. And I don't really think we should. And in that regard, no, we can't. But what happens is if we refuse to talk about sea level rise and possible solutions, and if we're just going to gridlock everything, unless we come up with the solution that one group wants, then the ultimate consequence is that we don't come up with solutions and these buildings eventually fall into the ocean, whether we like it or not. So managed retreat is the official policy term for running uphill. And it is an incredibly controversial topic nationally when you talk to different realtors associations. In Maui County, it hasn't been as controversial, though it still very much is. Because of that balance, so much of our of our economy is tied up with real estate. And so much of the individual wealth in America is tied up in real estate. And in the book Fixer Upper, the author, she's an economist, and she does a really excellent job of kind of touching on that fact that America is largely obsessed with with tying wealth to real estate and real estate debt specifically. So so Maui County is not different in that regard. A lot of wealth, a lot of our economy is tied up in those properties. But a lot of our wealth and economy is tied up in our beaches. It's tied up in the really the the pristine environment that we largely are able to maintain here. And if we do let these condos fall into the ocean, if we don't do anything, then then that aspect of our economy goes away. And all the businesses that serve those beaches can't really serve them if if there's a broken down condo in the waves. So so manage your tree to something that is not easy. It will cost people money and it and it will be unfair to to many property owners. However, it is something that needs to be discussed now, because we're already seeing the consequences of sea level rise. We certainly do. And for me, you know, as an agent and also somebody living in West Maui, it's it's one of the biggest questions to answer when it comes to housing and to real estate. We, as I mentioned, we already we all know that we're dealing with a severe crisis. And it makes me wonder if you remove this inventory of units, that crisis is only going to to be bigger, not not smaller. And there's there's some aspects. Oh, sorry to cut you off. I just wanted to throw in that that there's some things that have to be handled a certain way. So for instance, once that property is condemned, either by the ocean encroaching on it, or the fact that it becomes so dangerous that people can't live there, a fair market value will need to be paid to the owners. Now, the fair market value is going to be significantly lower. Once the ocean encroaches on it becomes to, you know, to beat down. We hope that insurance might cover this or we hope that that homeowners might think to move while they still have the opportunity. But that doesn't solve the problem because it just passes it on to another set of homeowners. So you're absolutely right. I think one promising thing that Maui County is doing is they recently have been moving legislation that would create a managed retreat revolving fund or they might be calling it shoreline adaptation revolving fund. I forget the actual term for it, but they are going to start collecting funds in order to do the research and the work necessary to start adapting some of our shorelines. So that's promising, but the government works slow and sometimes nature works much faster than government as we've seen. And I have to say, you know, over time we've made small steps in trying to solve this, even if we cannot build more because of, you know, zoning restrictions, the lengthy time that it takes to develop any project. But we, there was a decision to allow for accessory dwelling units on lots at only 5000 square feet. And I think that has solved this crisis in a small measure as well. I think there are efforts from our government to improve the situation, but we still need to do more. And I'm very encouraged, for instance, by this new, I guess, public private ownership for the development of Pulele Hoa in West Maui, where essentially the county is sponsoring or subsidizing the building of affordable rentals. And I wanted to move our discussion towards something you've already mentioned, this thought or philosophy that the way to build wealth is to own real estate. And I've been, you know, trying to figure out what are the ways are out there to build wealth? And what does it take? And in my opinion, it's still real estate is the easiest investment you could possibly make in terms of amount of information that you need to make a smart decision. And it's an investment that you could use, you can live in it. And I don't see what else could possibly work, basically. Have you given any thought to this? I have given thought to this. And you're right. In America, in really the world, in our system that we have now, real estate is the most straightforward way to develop wealth. And it's also pretty much the best way to consolidate wealth across multiple generations. That isn't something new, though. That has been the case for, I mean, literally millennia since feudalism, except instead of having kings that hand out parcels of land now, we have counties that divided into flats, and then we have banks that finance it. And then we pay our mortgages to the banks instead of paying our taxes to our feudal lords. And then oftentimes, the landlord will have tenants. And these are terms that we have used for centuries in our law. And they still work because the system hasn't changed drastically when it comes to developing wealth. And that is sort of one of the things that gets addressed in the book. Not the alternatives, but the fact that our system is really weighed in favor of home ownership as opposed to leasehold, renting. So part of what the author calls for is broader systemic change. And that's change that would need to take place on national or even international level. So that's something that Maui County can't change itself. And because of that, the system, it still remains that property and home ownership is really the basis for building wealth for most people. I don't know if that's hopeful. Sorry. Well, I think it's important that we try and find alternatives. And I see the point where we have to support renters as well, not just homeowners, but I don't know how you can support renters and, at the same time, help them build wealth. But there may be some other smart people around that can figure that out. Speaking of mortgages, one of the authors is pointing out that the exemption on the mortgage interest or the deduction on mortgage interest is contributing to this housing prices. And I tried to wrap my mind around this and understand, sure, of course, a deduction on your tax liability, of course, it helps you financially. But I don't see how it directly affects renters. I don't see how it affects this housing prices. I have been doing a good amount of thinking about this because in the book, I honestly think she doesn't do a great job of explaining the issues with the mortgage interest deduction. And I was a little bit curious after finishing the book. So I did a little extra research. And there are some good arguments. The mortgage interest deduction is really fascinating because homeowners who are a target audience for politicians love it because homeowners get the primary benefit from it, especially the wealthiest homeowners. There was one figure that I saw that said 63% of the benefit from the mortgage interest deduction now goes to households making $200,000 or more annually, which is only about 8% of our population. So in that regard, economists view it as a regressive tax. The way that it works is the more you spend on your mortgage, the higher your mortgage interest payment, the less of your income that gets taxed. So there's no corollary for renters. If I spend, let's say $1,000 on my interest for my mortgage per month, that's $12,000 of my income that won't get taxed. Whereas if I was a renter and I was spending $2,000 per month on my rent, all of that is still going to be taxed from my income. So in that regard, it favors homeowners over renters. And that comes to the question of, you know, and this is more of a conservative argument. But if we live in a system that is quote unquote a free market, should the government be really propping up or favoring one section of the housing industry, so to speak? So if the government subsidized the purchase of all jewelry with diamonds, but you had to pay full taxes on all jewelry with any other gemstone, diamonds would become more prevalent. And that's sort of the idea with the mortgage interest deduction. That's why a lot of economists don't like it, because the higher subsidy ends up going to the highest priced housing. And that's really how you maximize the benefit. And so it leads to higher priced housing, increased mortgages, more reliance on debt as a means of carrying wealth. So there are a few reasons that are actually pretty good to be suspicious of the mortgage interest deduction. However, it likely isn't going anywhere. It would need a lot of bipartisan support. And the general public is actually very much in favor of it. Even renters don't want to see it go away, because American politics is largely aspirational when it comes to what people get behind. Yeah, you know, you're making a very good point is that at the end, we all make these decisions when, of course, we elect our officials. And we are the ones that go to community, we the community, I mean, we go to all these meetings where the developments are proposed, and we are the ones that say no to them. We're also the ones that, you know, engaging endless lawsuits against developers. Some are more founded than others. So I was very, it gave me a lot of pause when I thought, when I read the chapter in the book about how the community actually has an impact on this issue and how typically that the people that typically attend these community meetings are already homeowners, and they have no interest in reducing the values of their properties. They, you know, look for obviously their own wealth and not the wealth of others and definitely not renters. You're absolutely right. And the book really, I'm glad that they touched on the NIMBY problem. And I'm glad that she touched specifically on what is the progressive NIMBY problem right now. For years, people thought that housing was getting jammed up primarily by, you know, wealthy, older white neighbors in these beautiful gated communities that didn't want low income housing around them. You know, that's the stereotype, and that's often true in a lot of communities. However, what we've seen in some recent projects here is that, you know, pieces of land that are already entitled to have housing built on them are getting stopped from having workforce housing built on them because the neighbors come out and they say, oh, well, you know, this floods, this is in the 100 year flood zone. And so even though all of this market rate housing can be built here, we don't want any low income housing. And there are good policy arguments to oppose that. She touches on that in the book, you know, stop building housing in the wrong places. But by the same token, ultimately, it's going to lead to more market rate housing because that land is already entitled. So I think it was President Obama talked about not letting perfect be the enemy of good. And that's a real danger that we're seeing in housing this go around, not just folks who want to keep their property values up, but also folks who got theirs and now they want a nitpick for anything that might be wrong with future housing. And it's a problem. Yeah, you know, the author, Jenny Schwitz, she also suggests different different kinds of housing when it comes to increasing density, you know, do we need to have apartments where each apartment has a bathroom? Would we have apartments that share a bathroom? Well, I, you know, it's getting into lifestyle choices. And I know we cannot go for perfect solutions. And that's where the debate is we need to find something that is reasonably good for everybody. So overall, I think there were some interesting ideas. They definitely made me ponder and think about what can we do here in Maui. And Jason, I really appreciate your input today and your expensive research to enhance this discussion. I didn't do too much research. I really appreciate this opportunity, though. I want to recommend this book for anybody that might be interested in housing policy, but they don't really know where to start. In my opinion, I don't think this book breaks a lot of new ground, but it's a great consolidated primer of all of the policy thought that's currently out there right now. It's well written, the chapters you can bounce around. And I was an English major. So I always love the opportunity to come and give a book report. And I am a fan of what you're doing here with this show. So thank you for this chance. And I hope we get to do it again sometime. I hope so too. And to our viewers, thank you for watching us. Think Tech Hawaii is an amazing source of information. And please follow them and watch the shows. And until next time, a hui hou. 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