Testimony of
Pacific Resource Partnership
County Council
County of Maui
Councilmember Alice Lee, Chair
Councilmember Yuki Lei Sugimura, Vice Chair
Relating To Council Discussions on Rent Stabilization
Tuesday, September 24, 2024
Aloha Chair Lee, Vice Chair Sugimura, and Members of the Council:
Pacific Resource Partnership (PRP) is a nonprofit organization that represents the Hawai‘i Regional Council of Carpenters, the largest construction union in the state with approximately 6,000 men and women throughout Hawai‘i, in addition to more than 250 diverse contractors ranging from mom-and-pop owned businesses to national companies.
Mahalo for the opportunity to provide testimony regarding the Council’s ongoing discussion surrounding rent stabilization in Maui County. As you address this important topic, it is crucial to examine the potential consequences, especially given Maui's unique housing challenges.
Impact of Past Housing Regulations in Maui
Maui’s housing policies over the years have contributed significantly to our current affordable housing crisis, and this crisis has been exacerbated in the aftermath of the tragedy that was the Lahaina wildfires.
Key regulations like the 2006 Residential Workforce Housing Policy, the 2011 "Show Me the Water" bill, and the enhancement of environmental constraints approved in 2022 have slowed housing development, contributing to the deficit of affordable units. As of 2023, Maui faces a shortfall of nearly 14,000 housing units, with demand especially high for households earning less than 80% of the area median income (AMI). Past efforts to regulate the market have inadvertently discouraged developers, stifling much-needed housing growth.
Rent Stabilization: Lessons from Other Cities
Evidence from cities across the U.S. shows that rent stabilization, while well-intentioned, can have significant unintended consequences that exacerbate the housing crisis:
San Francisco saw a 15% reduction in rental supply, as landlords converted properties to condos or withdrew from the market entirely (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
St. Paul, Minnesota, after capping rent increases at 3%, witnessed an 80% drop in new housing permits, with 3,000 planned units canceled or delayed (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
Santa Monica, meanwhile, has seen a 20% reduction in rental units due to conversions and market exits (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
Economic Strain on Housing Providers
Rent stabilization policies force housing providers to absorb rising maintenance and operational costs while limiting their ability to generate revenue.
Alternatives to Rent Stabilization
Rather than imposing rent stabilization measures, which discourages development and investment, Maui County should focus on solutions that incentivize the construction of affordable housing:
Streamlining the Permitting Process
Simplifying and accelerating approvals for affordable housing projects can lower costs and bring units to the market faster.
Incentivizing Private Investment
Offering tax credits, density bonuses, and subsidies can encourage developers to build affordable units without resorting to market-distorting regulations.
Public-Private Partnerships
Collaborations between the government and private sector can reduce the financial risks of developing affordable housing, making projects more feasible.
Conclusion
While rent stabilization efforts might appear to offer immediate relief, it risks deepening Maui’s long-term housing crisis. PRP urges the Council to consider policies that encourage growth and investment, rather than those that deter them. Let’s focus on solutions that will increase housing supply, create sustainable affordability, and meet the growing demand for homes in our community.
Mahalo for this opportunity to submit written testimony.
Testimonies received from HLU Committee
Testimony of
Pacific Resource Partnership
County Council
County of Maui
Councilmember Alice Lee, Chair
Councilmember Yuki Lei Sugimura, Vice Chair
Relating To Council Discussions on Rent Stabilization
Tuesday, September 24, 2024
Aloha Chair Lee, Vice Chair Sugimura, and Members of the Council:
Pacific Resource Partnership (PRP) is a nonprofit organization that represents the Hawai‘i Regional Council of Carpenters, the largest construction union in the state with approximately 6,000 men and women throughout Hawai‘i, in addition to more than 250 diverse contractors ranging from mom-and-pop owned businesses to national companies.
Mahalo for the opportunity to provide testimony regarding the Council’s ongoing discussion surrounding rent stabilization in Maui County. As you address this important topic, it is crucial to examine the potential consequences, especially given Maui's unique housing challenges.
Impact of Past Housing Regulations in Maui
Maui’s housing policies over the years have contributed significantly to our current affordable housing crisis, and this crisis has been exacerbated in the aftermath of the tragedy that was the Lahaina wildfires.
Key regulations like the 2006 Residential Workforce Housing Policy, the 2011 "Show Me the Water" bill, and the enhancement of environmental constraints approved in 2022 have slowed housing development, contributing to the deficit of affordable units. As of 2023, Maui faces a shortfall of nearly 14,000 housing units, with demand especially high for households earning less than 80% of the area median income (AMI). Past efforts to regulate the market have inadvertently discouraged developers, stifling much-needed housing growth.
Rent Stabilization: Lessons from Other Cities
Evidence from cities across the U.S. shows that rent stabilization, while well-intentioned, can have significant unintended consequences that exacerbate the housing crisis:
San Francisco saw a 15% reduction in rental supply, as landlords converted properties to condos or withdrew from the market entirely (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
St. Paul, Minnesota, after capping rent increases at 3%, witnessed an 80% drop in new housing permits, with 3,000 planned units canceled or delayed (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
Santa Monica, meanwhile, has seen a 20% reduction in rental units due to conversions and market exits (“Examining the Unintended Consequences of Rent Control Policies in Cities Across America,” Donovan and Pham, March 2023).
Economic Strain on Housing Providers
Rent stabilization policies force housing providers to absorb rising maintenance and operational costs while limiting their ability to generate revenue.
Alternatives to Rent Stabilization
Rather than imposing rent stabilization measures, which discourages development and investment, Maui County should focus on solutions that incentivize the construction of affordable housing:
Streamlining the Permitting Process
Simplifying and accelerating approvals for affordable housing projects can lower costs and bring units to the market faster.
Incentivizing Private Investment
Offering tax credits, density bonuses, and subsidies can encourage developers to build affordable units without resorting to market-distorting regulations.
Public-Private Partnerships
Collaborations between the government and private sector can reduce the financial risks of developing affordable housing, making projects more feasible.
Conclusion
While rent stabilization efforts might appear to offer immediate relief, it risks deepening Maui’s long-term housing crisis. PRP urges the Council to consider policies that encourage growth and investment, rather than those that deter them. Let’s focus on solutions that will increase housing supply, create sustainable affordability, and meet the growing demand for homes in our community.
Mahalo for this opportunity to submit written testimony.