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Further tax reform needed to fight affordable housing crisis

COUNCIL'S 3 MINUTES

As the Maui County Council’s budget session comes to a close — with first reading of the fiscal year budget 2022 set for May 21 — I am grateful to our community and my fellow council members for sharing their experiences and priorities with passion and wisdom. I hear you loud and clear.

During the budget session we all agreed we are in an affordable-housing crisis and Maui County can’t go back to business as usual. Even before the pandemic, the cost of housing was skyrocketing, our children were leaving for the continent and working families were left with limited options for buying a home.

For too long, our community has been challenged with inflated housing costs that leave local families with little hope for homeownership. The economic imbalance has forced people into homelessness, living in cars or garages and even tripling up families in one home, as well as overwhelming social service agencies trying to meet people’s basic needs.

The home is the foundation of our economy, and homeownership provides the pathway to the middle class. As a community, we have a responsibility to help our fellow residents achieve the basic human need of shelter and provide families with hope for a promising future.

I applaud the council’s work on real property tax reform in recent years, with new classifications and new tiered rates. But we can do more.

The council must take bold action now.

Hawaii has the lowest property tax rates in the nation, according to a 2021 report by WalletHub.com. I proposed we raise our rates in certain tiers and put this revenue towards affordable housing to elevate our poor and working class.

The draft Comprehensive Affordable Housing Plan, funded by the council, reported that 78 percent of developers surveyed agree that the cost of infrastructure is the biggest barrier to building affordable housing. Raising real property tax rates on offshore investors will help subsidize these costs.

Local government must take a more active role funding affordable housing projects. Finding innovative ways to subsidize the right kind of development encourages affordable housing availability — but requires further tax reform.

An equitable real property tax structure would include increased tax rates on luxury second homes, short-term rentals and hotels, paving the way for more affordable housing.

I disagree that taxing investors is a type of punishment. Wise investors know that they ultimately benefit from communities where everyone can thrive.

By bringing more people into homeownership, we can foster a circular economy that benefits the whole. A focus on circularity — promoting both economic and environmental sustainability — is timely as Maui County is one of five U.S. municipalities participating this year in a circular-economy pilot project led by Local Governments for Sustainability.

Even as we face the affordable housing crisis while still battling the global pandemic, there’s reason for optimism. We have a resilient, compassionate, active community, with residents continuing to weigh in on the council’s tough decisions.

President Joe Biden has proposed a serious investment in housing infrastructure under the American Jobs Plan, which he described in his address to Congress last month as promoting “real equity.” We can leverage this potential federal funding with our efforts to reform Maui County’s real property tax system by investing in affordable housing that will make a real difference to residents on Lana’i, Moloka’i and Maui and for years to come.

I hope with this year’s budget we can work together to rise up from the crisis and learn from the past failed winner-take-all economies. The time is now; the action is go.

Join us at 11 a.m. Friday at the public hearing on real property tax rates to discuss this important moral document known as the County of Maui’s fiscal year 2022 budget.

* Gabe Johnson is chair of the Affordable Housing Committee. He holds the council seat for the Lana’i residency area. “Council’s 3 Minutes” explains the latest news on county legislative matters. Go to mauicounty.us for more information.

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