The Empty Homes Tax Debate Isn’t Really About Empty Homes

A proposal currently before the Honolulu Charter Commission would establish an Empty Homes Tax and dedicate the revenue to affordable housing and homelessness programs. On the surface, that may sound reasonable. After all, who wants homes sitting empty while local families struggle to find housing?

But before we start debating whether an Empty Homes Tax is a good idea, we should be asking a different question: Why is this proposal being pushed through the Charter process instead of the normal legislative process?

That question matters because Honolulu’s City Council already has the authority to create an Empty Homes Tax today. No Charter amendment is required. If a majority of Councilmembers believed an Empty Homes Tax was the right solution, they could introduce a bill, hold hearings, take testimony, make amendments, and adopt it through ordinance. In fact, the Council has already spent years discussing versions of an Empty Homes Tax. The issue has been studied, debated, amended, and analyzed. There have been concerns about enforcement, exemptions, administrative costs, and whether the tax would actually produce enough housing to justify the expense. Those concerns have slowed the proposal’s progress through the legislative process.

Now the conversation has shifted to the Charter Commission. That should concern anyone who believes in good government.

The Charter is essentially Honolulu’s constitution. It establishes the structure of government and defines how that government operates. It was never intended to serve as a place to embed highly detailed tax policy. Once something is placed into the Charter and approved by voters, it becomes significantly harder to modify when problems arise. Housing policy should be flexible. Conditions change. Markets change. Unintended consequences emerge. That is why tax policy is typically handled through legislation where elected officials can make adjustments as necessary. For small independent housing providers, those details matter.

When people hear the phrase “empty home,” many picture a luxury investment property sitting vacant for years. That image may generate headlines, but it does not reflect many of the real world situations that exist throughout Hawaiʻi. A home may be vacant because a family member is receiving long term medical care. A property may be tied up in probate after the death of a loved one. A military family may be temporarily reassigned while intending to return. A homeowner may be completing extensive repairs before offering the property for rent.

The challenge with policies like this is that government must create rules that distinguish between those situations and truly vacant investment properties. That requires exemptions, declarations, enforcement procedures, appeals, investigations, and compliance requirements. Those requirements rarely create headlines. They do, however, create bureaucracy.

The irony is that the people most capable of navigating a complex compliance system are often large institutional property owners with attorneys, accountants, and administrative staff. The people most likely to struggle with the paperwork are local families, retirees, and mom and pop housing providers who own one or two properties.

That is why HRHPA continues to ask a simple question whenever a new housing proposal is introduced: Will this proposed policy create housing? Not will it sound good. Not will it generate revenue. Not will it make a political statement. Will it actually create more housing opportunities for local residents? The answer is not always obvious.

If Honolulu wants to address its housing shortage, there are many policies that deserve attention. We can streamline permitting (Statewide SPED taskforce). We can encourage the rehabilitation of aging housing stock (recently passed ROH 26-7). We can reduce regulatory barriers that delay construction. We can create incentives for long term rental housing. We can help bring existing vacant units back into productive use. Those policies directly increase housing supply.

An Empty Homes Tax may ultimately prove to be good policy, bad policy, or something in between. Reasonable people can disagree about that. What should not be controversial is the idea that major tax policies deserve to move through the normal legislative process where the details can be fully vetted, debated, and adjusted over time.

The housing crisis facing Hawaiʻi is too important for shortcuts. We need solutions that create more housing, support local residents, and recognize that many of the people providing rental housing in our communities are not corporations. They are our neighbors. Those voices deserve to be part of the conversation.