Hawaii has the highest housing prices in the nation. We are in the Top 5 locations in the world for “impossibly unaffordable housing.” Our untenable housing costs cause homelessness and constant distress for local residents, while forcing many to leave our islands, including over half our Native Hawaiian population.

We need 50,000 new homes to meet current needs (per the 2019 Housing Demand Study). Yet in 2020, the U.S. Census Bureau reported we have more than 70,000 vacant homes in Hawaii! These include vacation homes, second homes, short-term rentals, blighted homes and many properties held empty for investment, rather than used for local housing needs.

Our property tax structure fuels our housing crisis by failing to prioritize Hawaii’s housing for Hawaii’s residents, while offering offshore investors the lowest property taxes in the U.S.

This forces local residents to compete with worldwide investors seeking a good investment. We know who loses that competition.

A 2024 Ward Research survey among Oahu voters found 74% support higher taxes for residential properties that sit vacant for more than six months out of the year.

Honolulu City Council Chair Tommy Waters and Councilmember Radiant Cordero have taken a bold step to help fix this problem, by introducing Bill 46, an “empty homes tax” that will prioritize Oahu’s housing for Oahu’s residents.

An empty homes tax can help address our supply and demand problems in housing, as well as create revenues for affordable housing. This tax:

>> Incentivizes owners to convert thousands of existing empty homes into homes for Hawaii residents, without imposing mandates on use.

>> Increases our supply of homes without costs or delays for construction, government subsidies, NIMBY (not in my backyard) challenges, altering neighborhoods or rezoning lands.

>> Produces major new tax revenues from owners who choose to keep empty homes, to create a steady new funding source for affordable housing programs.

>> Helps control rental and housing prices by discouraging short-term rentals, outside investors and speculation, without need for rent control or other market disruptions.

>> Protects our local families and kupuna, as Oahu residents (renters or owners) will not pay an empty homes tax if they live in their home at least six months a year.

While there is no one single miracle cure for our affordable housing crisis, an empty homes tax is an important part of the solutions that are needed. Multiple prior studies have shown why an empty homes tax would be a good approach for Honolulu.

The empty homes tax is modeled on Vancouver’s, which has reduced that city’s vacant homes by over 50%, and produced more than $140 million in new revenues for affordable housing.

How does the empty homes tax work?

There would be a annual tax up to 3% of assessed value levied on any dwelling on Oahu not used at least six months a year as the principal residence of an Oahu resident.

All property owners would be required to file annual declarations regarding the status of their property during the prior tax year.

Exemptions are provided to help avoid unintended consequences, such as death of owner-occupant, major construction, property sale, property title subject to litigation, medical care, etc.

City audits, investigation and fines will help assure owner declarations are accurate when exemptions are claimed.

The Honolulu City Council now has the opportunity to create reforms to prioritize for the first time Oahu’s housing for Oahu’s residents. It’s time to say farewell to tax policies that do not support Hawaii’s families.

Ellen Godbey Carson is a retired attorney and community advocate for affordable housing; Evelyn Aczon Hao is a retired public school educator and past president of Faith Action for Community Equity.