It’s more difficult to get a construction project rolling in Hawaii County than anywhere else in the nation, according to a report released last month.
Hawaii County topped the list of counties with the highest average regulatory burden, followed by four California counties. Maui County came in sixth, Kauai came in ninth and Honolulu County came in 11th.
The Hawaii study noted there are a number of factors favoring limits on construction, such as ensuring development does not exceed the capacity of local infrastructure, helping to support ecological preservation, promoting energy efficient construction, ensuring a safe housing stock and encouraging the preferred mix of housing types.
However, the authors added, such rules come with lengthy permitting processes and other financial obstacles that create a disincentive for developers to build new homes.
The study, by UHERO, the Economic Research Organization for the University of Hawaii, surveyed the state’s four counties in 2021 on the same survey metrics in the Wharton Residential Land Use Regulatory Index that was applied to 2,400 other counties and municipalities throughout the nation in 2018.
“Even when you look at the most regulated markets in the country, Hawaii’s permit delays are almost two times longer,” UHERO Executive Director Carl Bonham said in a YouTube introduction to the study. “So we’re talking about between a year and a year and a half between applying for a permit and getting approval.”
Hawaii County Public Works Director Ikaika Rodenhurst, questioned about the findings Thursday during a Cost of Government Commission meeting, disputed the figures.
“I would argue that saying Hawaii County takes three times longer than other counties … I’m not 100% sure what the numbers are based off of,” Rodenhurst said.
Commissioner Matthias Kusch was sympathetic to criticisms of Public Works, but he said the public seems to prefer strict regulation.
“There’s a a lot of environmental and cultural safeguards put in place that’s widely supported by the public,” Kusch said. “It’s more difficult if you’re the one that’s taking it on the chin.”
Bonham was a co-author of the study, along with Rachel Inafuku, a PhD candidate in Economics and a graduate research assistant at UHERO and Justin Tyndall, an assistant professor of Economics at UHERO.
The Wharton survey correlated regulatory burden with the cost of housing but noted it doesn’t prove the regulations were the cause of high housing costs.
Daryl Takamiya, president of the Building Industry Association of Hawaii, said the trade organization’s Government Relations Committee met with Rodenhurst a couple of weeks ago to talk about the county’s automated building code system.
The group has also been meeting with state lawmakers, advocating for ways to reduce costs for builders, because those costs are ultimately passed down to consumers. Takamiya said incentives work better than mandates in these situations because mandates often have unintended consequences.
“First of all, we at the BIA are pleased to see UHERO taking an interest in this as it has been a priority at the BIA for a number of years,” Takamiya said Monday. “One of the bills we’ve introduced requires the State Building Code Council to consider cost and do a cost-benefit analysis before adopting new codes. Many codes, such as those requiring increases in efficiency face diminishing returns; the low hanging fruit has already been picked, and often a small incremental increase in efficiency will have disproportionate cost.”
Hawaii’s median home value is the highest in the nation, followed by California and Massachusetts, according to the U.S. Census Bureau’s 2020 American Community Survey cited in the UHERO article.
“One possible explanation for at least part of that exorbitant home prices is regulation,” Bonham said. “Anything that drives up the cost or delays production of housing, anything that makes it more difficult for a builder or developer to provide new housing, has the potential to restrict supply, reduce the number of houses that are available and raise the price of housing.”