Friday, March 14, 2008

State Legislature Considers How it Can Increase the Cost of Homes in Hawaii

With the median price of single family homes well over $600,000.00 in Hawaii, one would ask: Why is the legislature considering mandating solar heating at an average cost of $5,600.00 per home?

Add the above cost to the more than 10 percent cost of LEED Silver compliance for single family homes (the Office of Planning has been repeatedly demanding a LEED Silver mandate at the State Land Use Commission) and you have close to a $70,000.00 tax on all new single family homes in Hawaii.

The problem, however, is not the state's laudable (some would say, necessary) intent to curb our use of fossil fuels, but the means by which it has chosen to get there: command and control mandates. Mandates benefit no one. In this case, it would push home ownership out of the reach of many Hawaii residents. It would put up another roadblock in the already ailing housing market, which is limping along in light of the mortgage crisis and economic recession. A slower market means less supply, and it doesn’t take an expert to tell us that demand for affordable homes in Hawaii is at a crisis level.

The alternative to mandates is economic and regulatory incentives, like tax credits, rebates, a break in permitting fees, removing barriers to entry for alternative energy providers, and an incentive package that would encourage investment in the alterative energy industry. These are just a few of the tried and successful programs implemented in other municipalities.

Rewarding good behavior encourages the natural development and implementation of green technologies. Technology will improve and become more affordable as investment in those technologies increases and products become more readily available in Hawaii. It’s the law of economics, the same factor that pushes additional investment into the alterative energy market as the cost of fossil fuels rise.

Instead of taxing potential homeowners out of the housing market and slowing the supply of housing, the state should develop incentives that will encourage the use of green technologies in residential developments.


Manawai said...

I agree almost totally with what you've said here. I only disagree with one statement: "Technology will improve and become more affordable as investment in those technologies increases and products become more readily available in Hawaii." This is not always the case. It is with things like DVD players ans such, but not with automobiles. I think in the case of the latter that as improved technology and increased sales/profits tend to result in lower prices, technological improvements keep happening which tend to have the opposite effect. To obtain the newer, more productive technology, a high cost is maintained to pay for this ongoing R&D. Just a thought.

Hawaii Land Use Law said...

Thank you for the thoughtful comment.

I think we are both accurate to a certain extent. Green and sustainable technologies and providers in Hawaii are so new that the nascent market needs an injection of either private or public monies to establish themselves. Subsidizing R&D and incentivized policies can promote economies of scale, which will shave off some of the cost of new technology.

In addition, policies that promote flexibility in sustainable compliance will allow the use of second generation technologies, rather than mandating latest and best technology regardless of cost. For example, a Pentium 4 is just as good as the latest Intel computer chip for most common computer tasks, but it costs much less. An upgrade to the next Intel technology will be necessary at some point in the future, but the average user can save money by riding just behind the technology wave.