Study the Empty Homes Tax Again?
One concept that has popped up again, more often than the little animals in a Whack-a-Mole game, is the prospect of an “Empty Homes Tax.” Simply put, if someone owns property here but doesn’t live in it for, say, six months out of the year, then we charge that someone a hefty real property tax surcharge. Why? Because that someone has removed a housing unit from circulation in a place where we really, really need housing units. Just last year, for example, the Honolulu City Council was considering a bill (Bill 9 of 2022) that would have set the tax at 3% of the property value, per year. Last year, when we wrote about this development, we pointed out that there would be lots of devils in the details. How does one hope to enforce such a tax without running roughshod over people’s privacy (which is constitutionally protected in this State)? Do we simply require everyone to file a form, every year, saying that “1234 Aloha Drive is my home, and I have lived in it for more than six months this year,” assume that the folks who haven’t sent the form in have vacant property, and then throw them to the wolves in the City’s tax collection agency? How would we deal with the resulting flood of people who (1) never heard about the new law, form, or tax, (2) figured out that there was a tax and a form, but for whatever reason filed the form too late, or (3) had good reasons for not living in the house, such as being hospitalized for a substantial part of the year? This year, the City & County of Honolulu is trying again. They are on the path toward commissioning a study, projected to go out for bid in August, that seeks to determine “why so many homes are vacant, and how a vacant homes tax could benefit Honolulu’s many residents who lack suitable housing. Benefits to be explored should include contributions to a housing fund, discouraging the ‘hoarding’ of empty properties and encouraging owners to rent these properties to Hawaii households.” The Star-Advertiser appears to be on board with this idea, as it stated in an editorial on July 14th. City officials say that the study will be paid for with federal pandemic relief money, so residents don’t have to worry about its cost. First, am I the only one wondering what in the world a vacant homes tax has to do with the COVID-19 pandemic so as to justify funding this study with pandemic relief funds? Second, what about the study done by the UCLA Luskin School of Public Affairs that the City had done in 2021? Is this new study going to cover the same ground, and if it does, why are we taxpayers getting hit for another one? So that two independent consultants, when the City asks, “Can we, pretty please, impose this tax?”, reply with, “Yeah, we suppose so”? If we can’t get out of that second study, we should at least have it address new developments, such as a paper put out by the Grassroot Institute saying, in effect, “Vacant homes don’t cause obscene housing prices, but a screwed-up building permitting system sure does!” Folks on the Neighbor Islands: Don’t laugh. You might be next!
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How Not to Cool the Schools
Imagine Hawaii’s keiki sitting in hot classrooms. That has been an issue for our public schools for many years, with then-Governor Ige signing several bills, such as Act 47 of 2016 that appropriated $100 million toward heat abatement upgrades, and Act 260 of 2022 that appropriated another $10 million. At the time, people in the communities involved were ready and willing to donate air conditioners for the classrooms. Some did, and to their dismay, found out that the existing circuits in the school simply didn’t have the capacity to handle the unit. The Department of Education (DOE) found “circuits are blown for a couple of classrooms or even whole wings of campuses. With that comes a potential fire hazard.” Following that revelation, facilities geniuses at our DOE came up with the idea of using solar powered air conditioners. They managed to install them in 880 classrooms and spent $122 million in the process, according to reporting from Hawaii News Now. This translated into a cost of more than $138,000 per classroom. Regular air conditioners could be bought for $2,000 per classroom, according to former HSTA president and Campbell High School teacher Corey Rosenlee. Then came the real kicker: The solar-powered air conditioners conked out midway through the school day. They were designed to operate for less than five hours per day. “We got schooled on that, right, because classrooms operate more than four and a half hours,” Randall Tanaka, assistant superintendent for the DOE’s Office of Facilities and Operations, is quoted as saying. At that point, the real geniuses in the world stepped up to resolve the issue. They noted that many of the lights in the classrooms used incandescent lights and other inefficient (by today’s standards) fixtures. They retrofitted many of the schools with LED lights and other energy-efficient lighting. As an example, a common light bulb on the market today, an LED bulb designed to replace a 100-watt incandescent, only uses 15 watts of power. After the lights were replaced, lo and behold, the energy consumption of the lights plummeted. The schools then found that they could disconnect their pricey solar air conditioners from the solar power circuits and simply plug them in to the regular power circuits without blowing them out because the lighting retrofit freed up capacity in the system. Problem solved! Except that $136,000 per classroom, perhaps $120 million in total, was basically wasted. Obviously, the DOE has a different take on the matter. Now, they are touting a “new process designed to more quickly deploy air conditioning units in buildings that can accommodate the increased energy use.” It’s simply up to the school to get an electrical assessment from the facilities folks, which will use up no additional money, and then the school will “have a range of options to move forward, including starting to budget for the project, partnering with community groups for equipment donations, engaging area lawmakers, or seeking funds through the Department’s legislative budget request.” But can we get a refund on that $120 million they overspent? For a goof this big, a simple “Oops” isn’t nearly enough. The 2023 Intent to Veto List
On June 23, Gov. Green issued his intent to veto list. Any bill that is now pending before him and not on the list will become law. Any bill that is on the list may or not be vetoed; the Governor has until July 11 to make a final decision. None of the tax bills we have been following are on the list. But some very interesting bills are. There’s House Bill 999. We mentioned that bill when we covered the State’s “shadow budget” last month because the budget included some $50 million for a first responders’ training facility in central Oahu that HPD and the House didn’t like, but the Senate slipped the millions in anyway. And, for good measure, the conference committee on that bill overhauled it to effectively kick one person, who happened to be critical of the first responders’ park, off the board of the High Technology Development Corporation that was tasked with building said park. The Governor wasn’t having any of this, however. This bill made the list because the proposed modifications to the Board were “too substantial.” And by the way, the Governor also gave notice of intent to line-item veto the $50 million appropriation. Bully for him! Revenge and retribution don’t properly have a place in moving our State forward. Then there is Senate Bill 1518. It gives the Department of Education several procurement exemptions. Why? According to the bill’s preamble, the DOE is a big honkin’ department and doesn’t have time to be bogged down with such silly things as procurement laws. And, by the way, it says that the State’s electronic procurement system is “complicated and onerous,” placing a heavy burden on school administrators who need to comply with the law. The Governor’s answer? We have a system of procurement laws that is supposed to give us an open and transparent process. Carving out exceptions to it would decrease efficiency, create administrative burdens, limit competition, and open unfair advantages to certain vendors. In my book, I chalk up one point for the Governor and zero for cronyism. Another interesting one is House Bill 475. That one would create a pilot program for monetizing art. The State, through a set-aside program administered by the State Foundation on Culture and the Arts, has a lot of very significant artwork. So, the bill proposes to loan out the art to private individuals, businesses, or entities – for “reasonable financial consideration.” That way, we make the art available for a lot more people to enjoy, and the State gets some money for it. Win-win situation, right? The Governor doesn’t think so. His veto rationale is that property bought with taxpayer money should be used for a public purpose, and the pilot program looks more like money-grubbing, which could get the State into all kinds of trouble such as compromising the State’s tax-exempt bond program, increasing debt service costs and tarnishing the State’s financial reputation. If there are technical, federal tax, and constitutional concerns about the bill, however, why didn’t someone from the Attorney General’s office make them known in testimony? This bill’s history makes me worried that someone has been sandbagging. And last but not least, there is Senate Bill 945, relating to special purpose digital currency licensure. It would have Hawaii start to regulate cryptocurrency. The 80+ page bill contains a lot of words but no money for DCCA to turn those words into action, as the Governor’. Clearly, if Hawaii wants to play in this space it needs to put some money where its mouth is. The Governor’s intent to veto list is here, where you can see descriptions of some of the other bills that made the list – eleven on this list plus the State budget bill for which the Governor has proposed line-item vetoes. |
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