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The problem is developers are granted the right to double the density of their structure but the additional profit they make from the wildly higher building density they receive is not relative to the "affordable" housing that is built in exchange.
Why should the developer/landowner be rewarded a MASSIVE windfall because someone at the state swipes the pen across a piece of paper allowing for higher building density? Shouldn't THE PEOPLE also reap these rewards? Since we have to endure looking at these monstrosities that destroy our view planes for perpetuity, shouldn't we at least be provided better public services in exchange? Maybe a reduction in taxes? Something???? The "affordable" housing that is required to be built is NOT appurtenant to the additional density they receive with these new height restriction waivers.
I agree with you that developers should be allowed to build whatever the heck they want to build but that means adhering to the Land Use Ordinance as written, not receiving exception after exception that ultimately provides them massive windfall profits.
"Up-zoning" precious (but dirt cheap) ag land is no different than height restriction waivers. Castle and Cooke and DR Horton owned ag-zoned land that was worth about $20-$40 cents/SF. With a swipe of the pen, their land skyrocketed by nearly 100X. That is a 10,000% profit margin with a swipe of a pen. This is not exchanging money like most people understand it. They literally created money OUT OF THIN AIR. And the locals have to come up with their hard earned money to pay developers for something they literally created out of thin air. And even better, the traffic infrastructure improvements that these developers are required to build (in areas serviced by the train) are mostly waived due to all the bent-over taxpayers (that's you and me) footing the bill for rail. Yes, rail is enriching these West Oahu landowners/developers by having us foot the bill for improvements they would normally have to pay for.
Meanwhile, all the small time developers working on small time projects are stuck adhering to Land Use Ordinance requirements. They have to make the numbers work after paying market for the land they are building on.
If the state makes ANY exemptions on density requirements (i.e. up-zoning of land, increases in building height restrictions), The People should benefit equally with the developers. As it stands, we just end up paying for it. It's the typical way of business in Hawaii.
And I entirely agree with HBH on all of this. While we can't tell the developers what they can and can't do with their land, we can definitely make them share their profits with us. The city already does this through the "Park Dedication Fee" that ALL developers have to pay regardless how luxurious or basic the project is. The government is supposed to be an extension of the public; if WE are making these gross exceptions for developers which ultimately land them insane profits, we should all share in them. Otherwise stick to the rules and build what you're allowed to - BY THE BOOK.
I agree with most of this. Particularly about the exemptions. However, I believe they need to stop allowing the exemptions. And need to adhere to their existing zoning and building codes. I'm ok with development but I feel it must be balanced and tempered by government. Building super tall skyscrapers for example, will hurt the long term beauty of the island and as such, the livability of the city.
The problem is the government granting building exceptions and not enforcing existing rules.
How so? I'm serious. There are a lot of posts of making it more affordable in Hawaii.
I'm wondering - if you make it more affordable - how do you slow the growth? And not make it worse.
How does one stop the increase of population in Hawaii unless you make it much more expensive? Way more expensive.
I've said - make it painfully expensive. I'd love to hear alternative ideas on how to stop the growth - more specifically on Oahu. I'm open. I'm offering an idea - I'd like hear alternatives.
I struggle with this affordability equation but nobody wants to address how to stop growth if you do that.
It is easy to not like my position - but at least offer an alternative solution.
Looking at my tax bill of my property in SF, I think to myself that property tax should be 10X than what it is in Hawaii. Make it 10X - and education should improve and it will seriously weed out who can live here. Oahu is a 20 x 40 mile island - it needs less growth or even downsizing - and my perspective is to price people out of the market. And for those who worry about the burger flippers, I just came back from SF and there was no lack of burger flippers despite how much more expensive it is to live in SF despite a higher min wage.
I know nothing about San Francisco but I don't doubt that you are correct. However, I do have a sincere question for you. If you do "weed out who can live there" where will the "burger flippers" live? Also, is there a chance that you could go too far with your weeding and actually hurt businesses and even property owners? It seems to me that if you did go too far in a place like San Francisco or somewhere else on the mainland, it would be easy to correct the mistake and for people to migrate back. However, with Hawaii being an island in the middle of the pacific, I think that might be a much harder correction to make.
I know nothing about San Francisco but I don't doubt that you are correct. However, I do have a sincere question for you. If you do "weed out who can live there" where will the "burger flippers" live? Also, is there a chance that you could go too far with your weeding and actually hurt businesses and even property owners?
As I said - despite San Francisco being far more expensive than Honolulu - burger flippers, maids, janitors, etc seem to make it fine. I lived in SF for 15 years and just came back recently - I go every couple of months or so - I didn't see all the hotels and burger places go out of business. It is thriving. A good example of being very expensive and still making it fine.
You cannot rent or buy a place in the city of San Francisco for as cheaply as you can here on Oahu in comparable neighborhoods or size of place.
My position is that it needs to be far more harder to live in Hawaii to sustain Hawaii. Sharing profits with us - I just can't agree - that is a growth strategy.
Let's try to put this into perspective here...
If a significant increase in building height and FAR is granted, the value of the project would skyrocket to unimaginable levels. If the condo on the 20th floor sold for $1,000/SF, the condo on the 50th floor would sell for $2,500/SF or more. 60th floor would command well over $5,000/SF. Simply because of the extreme scarcity of such real estate product (only such property at such height in the state). The Penthouse in the Waiea is asking for nearly $100 MILLION (nearly $5,000/SF) and that's just at the run-of-the-mill ho-hum yawn 400 ft height.
Assuming NO property height limit variance and NO increase in FAR (buildable area) -
Land purchase - $25,000,000
Construction/design/permit/sales/etc cost for 200 each 1,000 SF units @ $400/SF = $80,000,000
Total cost to build - $105,000,000
Total market value of 200 each $1,000,000 (average price) units - $200,000,000
Total profit - $95,000,000
Assuming granting of height limit variance and increase in FAR (buildable area) -
Land purchase - $25,000,000
Construction/design/permit/sales/etc cost for 200 each 1,500 SF units @ $500/SF = $150,000,000
Total cost to build - $175,000,000
Total market value of 200 each 1,500 SF units $3,000,000 (average price) units - $600,000,000
Total profit - $425,000,000
I applied an additional $100/SF for all SF in the larger building because of the higher level of opulence (higher end interiors/appliances/bathrooms/kitchens/etc) and increased foundation/elevator/crane/structure cost.
$95 MILLION profit vs $425 MILLION profit simply by granting a condo project an additional 250 FT in height limit and 50% increase in FAR. While the average selling price (per square foot) is only 2X, it is a 4.5X increase in profit. All from the swipe. Of. A. Pen.
To put into perspective how much $330,000,000 in additional profit is... we could completely gut and repave every other square foot of road surface on Oahu with that money. That is half of ALL lanes on Oahu completely repaved. If we can provide those kinds of insane margins for developers by allowing them to break the rules, how on earth should we not share in any of that?
If the developer can be reasonably profitable by following the Land Use Ordinance without any variances/exemptions/etc, why should we be granting them if we aren't provided incentive in doing so? When these landowners purchased the land, they did so understanding the building restrictions imposed by the city/state. They don't acquire land on the premise that they will be granted variances and exemptions in order for their projects to pencil.
A developer should provide two individual proposals to the city/state/community - one utilizing a design that follows the rules. The second would be a design with the height/density exemption.
Appraisers can appraise the value of the finished projects (that is what ALL developers already do to determine financing needs). The difference in profit to the developer between the two designs should be equally split between developer and city/state/People Of Hawaii. That is fair. If the market crashes or other unforeseen events create an environment where the developer cannot make the profit with the larger structure, the city would reduce its 50% profit share accordingly. This balances the risk (the city takes no risk, developer takes no additional risk). This is just one example of what could be done instead of just granting developers insanely massive profit margins for nothing.
If we can provide those kinds of insane margins for developers by allowing them to break the rules, how on earth should we not share in any of that?
If the developer can be reasonably profitable by following the Land Use Ordinance without any variances/exemptions/etc, why should we be granting them if we aren't provided incentive in doing so? When these landowners purchased the land, they did so understanding the building restrictions imposed by the city/state. They don't acquire land on the premise that they will be granted variances and exemptions in order for their projects to pencil.
You wrote a lot of things - and I get the passion, really. I do agree about breaking the rules - if they are breaking the rules from a legal perspective they should be punished. Follow the rules.
I believe, personally - Hawaii is different as in giving to much to residents encourages growth, which is not good. I'm open to how you share windfalls with residents and keep growth at check.
How so? I'm serious. There are a lot of posts of making it more affordable in Hawaii.
I'm wondering - if you make it more affordable - how do you slow the growth? And not make it worse.
How does one stop the increase of population in Hawaii unless you make it much more expensive? Way more expensive.
I've said - make it painfully expensive. I'd love to hear alternative ideas on how to stop the growth - more specifically on Oahu. I'm open. I'm offering an idea - I'd like hear alternatives.
I struggle with this affordability equation but nobody wants to address how to stop growth if you do that.
It is easy to not like my position - but at least offer an alternative solution.
I am not disagreeing with the affordability aspect. Yes, things do have to get more expensive here to keep our population in check but increasing real property tax rates 10X as you suggest would have a far greater negative impact on locals than non-locals. If you're a local homeowner and home prices increase due to increased demand, your taxes may go up a little... but the increase in equity (i.e. wealth) would more than offset that small bump in real property tax. But if the same homeowner sees his/her taxes increase by even 2 or 3X with no to little change in real estate valuations, the impact on living costs would be severe.
Increases in real property tax will only make it more difficult for locals to afford to stay here. We need to let more locals keep their homes and not make it any more cost prohibitive to own/maintain them thus forcing them to sell to non-locals.
Increases in real property tax will only make it more difficult for locals to afford to stay here. We need to let more locals keep their homes and not make it any more cost prohibitive to own/maintain them thus forcing them to sell to non-locals.
10x is extreme, I'll admit - but it is tax deductible. If not 10x , then somethingx
How does the state help "locals" keep their home and yet discourage growth at the same time? Personal opinion some "locals" get pushed out who can't afford to live Hawaii yet it is for the greater good in the long term.
I just don't see how you make Hawaii more affordable - yet, keep growth in check. If it so affordable, how do you stop the floodgates?
10x is extreme, I'll admit - but it is tax deductible. If not 10x , then somethingx
How does the state help "locals" keep their home and yet discourage growth at the same time? Personal opinion some "locals" get pushed out who can't afford to live Hawaii yet it is for the greater good in the long term.
I just don't see how you make Hawaii more affordable - yet, keep growth in check. If it so affordable, how do you stop the floodgates?
Locals don't "get pushed" out... if the families didn't opt to sell in the first place (which is what smart locals do), the equity/wealth stays in the family... essentially for perpetuity. If they do sell because they want to move to another neighborhood on Oahu or downsize/upsize, etc that's fine too. Once you permanently sell though, you are SOL. The key is to never sell. The parents of those kids old enough to buy their own home can use a portion of the equity in their homes to assist them with the cash down they need to buy. Simply rinse and repeat generation after generation. If you don't quite have enough equity, then save up until you do by living together under the same roof for a little longer - a common living arrangement for Hawaii families. Most locals can afford the mortgage payment if they can scrape up 20% in cash. But many locals can't save up that much cash.
If your house increased in value by 30%, it's pretty much life as usual. If your $260/mo real property tax (average bill for SFH owner) bill jumped just 3X and increased your cost of living by $520/mo your life would likely change quite significantly.
To me, it's less so the valuation of real estate that pushes out locals and more so the high cost of living caused by higher taxes, fees, etc.
As I said - despite San Francisco being far more expensive than Honolulu - burger flippers, maids, janitors, etc seem to make it fine. I lived in SF for 15 years and just came back recently - I go every couple of months or so - I didn't see all the hotels and burger places go out of business. It is thriving. A good example of being very expensive and still making it fine.
You cannot rent or buy a place in the city of San Francisco for as cheaply as you can here on Oahu in comparable neighborhoods or size of place.
I believe you. However, I am wondering how the "burger flippers" in San Francisco are doing it and can what works for them in San Francisco also work in Hawaii?
Do they live where they work or do they live in a cheaper area outside of San Francisco and drive or bus in?
Are you saying that property taxes should be "painfully expensive" everywhere in Hawaii or only in certain areas? If everywhere, then where will the "burger flippers" live?
You didn't really address this, so I will ask again. Is there a chance that you could go too far with your weeding and actually hurt businesses and even property owners in Hawaii? It seems to me that if you did go too far in a place like San Francisco or somewhere else on the mainland, it would be easy to correct the mistake and people could easily migrate back to the area. However, with Hawaii being an island in the middle of the pacific, I think that might be a much harder correction to make.
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