THE SENATE	S.R. NO.	126
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

SENATE RESOLUTION

 

 

requesting the university of hawai i economic research organization to conduct a study on the POTENTIAL IMPACT OF THE use of taxation and eminent domain ON THE PRICE AND THE AVAILABILITY OF HOUSING IN THE STATE to address the concentration of residential property ownership among owners of vacant and surplus housing and institutional investor property owners.

 

 

     WHEREAS, Hawai i is experiencing a housing crisis, with high prices and low supply that makes housing "extremely unaffordable", according to the University of Hawai i Economic Research Organization's Hawai i Housing Factbook 2024; and

 

     WHEREAS, out-of-state buyers represent over twenty percent of single-family home transactions and nearly thirty percent of condominium transactions; and

 

     WHEREAS, over half of all condominium sales on Hawai i Island, Kaua i, and Maui are made by out-of-state buyers; and

 

     WHEREAS, approximately twenty percent of houses and condominium units statewide are held by out-of-state owners, with a substantially higher percentage on islands such as Maui, where nearly a third of all homes are owned by non-residents; and

 

     WHEREAS, institutional investors have further exacerbated the housing shortage through the purchase of large numbers of single-family homes for the sole purpose of renting homes back to the communities where the homes are located; and

 

     WHEREAS, Honolulu has the fifth-highest share of institutional investor-owned property nationwide; and

 

     WHEREAS, according to the 2023 American Community Survey conducted by the United States Census Bureau, almost eighty thousand housing units are vacant in the State, producing a statewide vacancy rate of fourteen percent, which is nearly fifty percent higher than the national average; and

 

     WHEREAS, existing conditions have created an abundance of "vacant and surplus housing", defined as houses or condominiums that are not used by the property owner as a primary residence or are unoccupied by the owner and are not rented for more than six months out of the year; and

 

     WHEREAS, property ownership by institutional investors has the potential to further increase rents and sales prices while decreasing the overall housing availability; and

 

     WHEREAS, the consequences of this long-term strain on the State's housing market has resulted in out-migration, families being priced out of the local market, and homelessness; and

 

     WHEREAS, despite meaningful efforts by the State and counties to address housing affordability issues by, in part, increasing housing supply, according to the University of Hawai i Economic Research Organization Housing Factbook 2024, "the ability to provide new housing remains extremely limited" with single-family home sales at a twenty-five-year low as "the rate of new construction...[is] unable to keep up with losses to the vacation rental market" on certain islands; and

 

     WHEREAS, the State must consider more aggressive actions to decrease housing prices and increase housing supply, including comprehensive taxation and potential condemnation of vacant and surplus housing and properties owned by institutional investors; and

 

     WHEREAS, the State, through its taxation power, has the authority to impose a large tax on the gross profit of the sale of homes by owners whose properties are held for a short term to "flip" the property, or by institutional investor property owners who hold single-family homes for the sole purpose of renting the property; and

 

     WHEREAS, the State also has the authority to impose an additional tax applicable to property owners of vacant and surplus housing; and

 

     WHEREAS, similar taxes in other jurisdictions, such as the Empty Homes Tax imposed by the city of Vancouver, Canada, have produced more than a fifty percent decrease in vacancies while simultaneously generating tax revenue equivalent to over $35 million United States dollars; and

 

     WHEREAS, the State also has the authority to impose a tax on rent increases by property owners beyond a certain amount determined in relation to the rate of inflation; and

 

     WHEREAS, the State has previously used eminent domain on a broad scale to correct a housing market skewed by artificial deterrents to its normal functioning, address inflated housing prices, increase the availability and turnover of residential property, and to stabilize the State's economy by containing the cost of living and the cost of public assistance, including via the Land Reform Act of 1967, which both the Hawaii Supreme Court and United States Supreme Court upheld as proper exercises of the State's eminent domain power in Hawaii Housing Authority v. Lyman, 704 P.2d 888 (Haw. 1985), and Hawaii Housing Authority v.  Midkiff, 467 U.S. 229 (1984); and

 

     WHEREAS, as the State's housing shortage persists, the State should utilize its eminent domain power to correct these conditions harming the existing housing market by seizing vacant and surplus housing and, upon payment of just compensation, acquiring and repurposing those properties as affordable housing for state residents; and

 

WHEREAS, these measures would apply equally to residents and nonresidents alike, but would likely fall heavier on persons or entities who do not meaningfully contribute to the State via labor, community and political engagement, or payment of taxes other than property taxes; now, therefore,

 

     BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, that the University of Hawai i Economic Research Organization is requested to study the potential impact of the use of taxation and eminent domain on the price and availability of housing in the State; and

 

     BE IT FURTHER RESOLVED that University of Hawai i Economic Research Organization is requested to include in its assessment of taxation and eminent domain, as applied to vacant and surplus housing and housing owned by institutional investors, findings regarding the impact of these policies on housing sale prices, rental prices, and housing supply, as well as on the state economy in general; and

 

     BE IT FURTHER RESOLVED that the University of Hawai i Economic Research Organization is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than forty days prior to the convening of the Regular Session of 2026; and

 

     BE IT FURTHER RESOLVED that University of Hawai i Economic Research Organization is requested to transmit requests or recommendations to any relevant agency or agencies as necessary to assess the legality and administrability of a taxation and condemnation program; and

 

     BE IT FURTHER RESOLVED that a certified copy of this Resolution be transmitted to the Executive Director of the University of Hawai i Economic Research Organization.

 

 

 

	OFFERED BY:	_____________________________

 

 

 

Report Title: 

UHERO; Vacant Housing; Residential Property Ownership; Surplus Housing; Institutional Investor Property; Taxation; Eminent Domain; Study; Report