Many interventions could be put in place to address the housing crisis in Hawaii. One of the best solutions to the problem is the use of alternative product types and reduced-cost housing. The authorities may promote the development of modern, efficient, and minimalist prefabricated housing. These are designed and constructed to offer well-planned spaces. The authorities could also invest in ultra-low-cost houses and micro apartments; typically single-roomed self-contained living units (Erdmann, 2019). The authorities would evaluate if the plan is working by tracking the increase in the number of affordable houses, the percentage decrease in homelessness among the low income earners, and the decrease in construction costs for individuals involved in low cost housing constructions. This evaluation would compare the outcomes of such indicators with pre-determined goals and objectives over a given period of time.
Another method through which the authorities could reduce the housing problem is low-income housing tax credits. Private developers and non-profit organizations could be financed through a low-income housing tax credit so that they can build or repair affordable units for rent (Manaf, 2016). Tax credits may be used to secure a specified reduction in income tax liability for a given period. The tax credits would be sold to prospective investors in exchange for an equity investment in the project. The developers would then agree to keep the project as a low-cost rental unit for a minimum of a specified period. The number of investors taking up the tax credit would help the authorities in gauging the success of the policy. In addition, the authorities would keep track of long term objectives based on indicators such as the increase in affordable housing units constructed by use of tax incentivized funds and the percentage reduction in homelessness.
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Exemption from the general excise tax would also be an excellent approach to counter the housing crisis in Hawaii. Any prospective individual or organization involved in new construction or rehabilitation of low-cost housing projects could be exempted from the general excise tax (Fernández-Villaverde & Ohanian, 2018). Such housing projects would be determined to meet specific income and eligibility criteria. The authorities could also consider real property and income tax exemptions for specifically designated affordable housing projects made by organizations. Naturally, the incentives would include a regulatory agreement beneficial to the tenants. The authorities would track the number of people applying for such exemptions to see if the policy is working. Further, the authorities would study the increase in affordable units for the low income earners as well as the percentage fall in homelessness among the group to evaluate the effectiveness of the program.
Another response that could be used to promote affordable housing is the use of impact fees. An impact levy fee could be charged on market-rate housing units and used to capitalize and replenish a trust fund for affordable housing. Proceeds of such a fund could then be used to fund other projects that facilitate the construction of low-income housing. The trust fund money would be kept as a sustainable and renewable source of capital. It would be a source of funding providing zero, or less than market interest rate loans whose repayment would ensure continuity of the program (Moore, 2019). This approach would be better than conventional methods such as rent subsidies that don’t solve the problem. To ensure that the policy is working as intended, the government would need to monitor the activity of the money in the fund’s account by employing specific indicators. Such indicators include the rates of timely repayments, the growth of contributions over time, the actual increase in the number of low cost constructions, and the reduction in homelessness among the low income earners.
According to Nguyen, (2015) existing housing projects are losing their affordability restrictions and are converted to market-rate projects. This loss is occurring when the government is attempting to produce cheap and workforce housing projects (Nguyen, 2015). The result is that the progress in the provision of low-income housing will be slowed down. My recommendation is that the authorities should reconsider the policies so that the low-income projects are protected from adverse competition from market-rate properties.
References
Erdmann, K., Furth, S., & Hamilton, E. (2019). The Link Between Local Zoning Policy and Housing Affordability in America’s Cities.
Fernández-Villaverde, J., & Ohanian, L. (2018). Housing Policy Reform. Economic Policy Challenges Facing California’s Next Governor, 15-18.
Manaf, A., Yuzal, H., & Fisher, M. (2016). Inclusive approach: a perspective towards more equitable housing provision?. Housing, Care and Support, 19(3/4), 81-92.
Moore, C. D. (2019). Hawaii: Priced Out of Paradise. California Journal of Politics and Policy, 11(1).
Nguyen, M. T. (2015). The intersection of immigration and housing policies: Implications for the US housing market and economy. Housing Policy Debate, 25(4), 796-798.
