Hawaiʻi has made strides in addressing its housing crisis, yet examples from other states and countries indicate there is potential for further advancement.
In recent years, the state has ramped up its efforts to tackle the pressing issue of affordable housing.
The core challenges that residents face in affording homes include complex regulations, high land prices, limited financing options, and notably, years of insufficient investment in public infrastructure.
This deficit in investment forces developers to shoulder the costs of necessary upgrades, which they subsequently pass on to renters and buyers, driving housing prices higher.
Statistics reveal the severe impact of stalled infrastructure investment on housing development.
In areas like Iwilei-Kapālama, plans for 27,500 new homes hinge on a substantial upfront investment of $667 million in infrastructure.
Similarly, Maui’s Kaʻahumanu Avenue initiative requires $7 million for water infrastructure to support 2,200 units.
With the Līhuʻe Town Core aiming to add 775 homes, it also faces an $8 million requirement for essential last-mile water and wastewater connections.
The Ane Keohokalole Highway Corridor’s projected 4,200 units depend on a staggering $462 million investment.
The conclusion is stark: Hawaiʻi’s housing crisis is ultimately an infrastructure crisis.
When the state holds back on funding essential utilities such as water, sewer, and electricity, developers are faced with tough choices.
They may abandon projects, opt for development outside urban centers, or, regrettably, pass these hefty costs onto future buyers and renters, exacerbating the housing affordability issue.
To acknowledge the positive strides, the administration of Governor Josh Green and the Legislature have made commendable progress toward addressing this crisis.
The governor’s emergency proclamation provided a reprieve on school impact fees for around 1,600 affordable units, translating to approximately $3,800 saved per apartment.
Furthermore, the state secured $6.6 million in infrastructure investment from the U.S. Department of Housing and Urban Development.
Significant legislative actions in 2024 include Act 034, which expanded the Hawaiʻi Housing Finance and Development Corp.’s authority to finance regional housing-enabling infrastructure.
Act 30 clarified that counties can utilize the general excise tax surcharge for housing infrastructure costs that they appropriate.
In 2025, Act 252 further expanded the bonding authority of the Hawaiʻi Community Development Authority to aid in financing infrastructure development beyond designated community development districts.
To date, over $70 million has been allocated for infrastructure improvements within the Transit-Oriented Development (TOD) areas of Kapolei and Iwilei-Kapālama.
Despite these initiatives, the ongoing needs for infrastructure investment continue to eclipse the current funding levels available.
Relying solely on individual developers or sporadic state funding results in an unbalanced approach that lacks adequate resources.
What emerges from these lessons elsewhere is the recognition that sustainable solutions require more reliable and consistent funding sources.
Fortunately, states and countries with successful interventions provide valuable insights into effective financing methods for infrastructure investment, tying it directly to affordable housing production.
Washington state, for instance, has introduced the Connecting Housing to Infrastructure Program, which finances the often-overlooked groundwork that enables development.
Since its inception in 2021, this program has invested $88 million in infrastructure that supports over 7,800 affordable housing units statewide, illustrating that housing relies heavily on sufficient infrastructure.
Similarly, Ireland’s commitment under the “Housing for All” plan links over $4.7 billion annually in housing investment directly to its expansive $194 billion National Development Plan, ensuring a coordinated approach.
As a result, Ireland has successfully reported over 54,000 homes either completed or underway since the program’s launch, underscoring the importance of stable financing for infrastructure in achieving broader housing goals.
Consistent multiyear investments, with clear connections between infrastructure upgrades and housing projects, instill confidence in builders, assuring them that public utilities will keep pace with the demand for new housing.
Acknowledging that local needs exceed the available general fund, and bearing in mind the limits regarding the issuance of general obligation bonds on a project basis, creativity in financing is essential.
In 2023, the Office of Planning and Sustainable Development produced an infrastructure financing study delineating several promising approaches already being implemented in other areas.
Foremost among these are value-capture tools such as tax increment financing (TIF), which allows governments to direct new tax revenues generated from a specified area back into funding infrastructure within that same area.
In practical terms, this strategy could transform Iwilei’s $667 million infrastructure gap into a viable path for up to 27,500 new homes, capturing rising property values and tax revenues generated by new developments in the vicinity.
Unlike traditional tax measures, tax increment financing does not create new taxes; instead, it captures revenue generated by growth resulting from these public investments.
Moreover, it ensures that luxury developments contribute to the affordability of much-needed middle- and lower-income housing.
For illustration, Portland allocates 45% of its tax increment financing revenue specifically for affordable housing initiatives, while Houston dedicates one-third of its TIF revenue to low-income housing projects.
Another well-regarded solution is the establishment of a state infrastructure bank, supported by dedicated revenue streams to finance infrastructure projects through low-interest loans.
New Jersey’s Infrastructure Bank has successfully financed billions of dollars in low-interest loans for local governments, while California’s iBank runs the Infrastructure State Revolving Fund, which supports crucial public infrastructure projects like water and sewer systems.
Moving forward, Hawaiʻi must reconsider how it approaches housing-enabling infrastructure, viewing it in the same light as other successful regions: as a vital public responsibility that requires ongoing, reliable investment.
In dense urban projects, private developers often hesitate to bear the entirety of upfront risks, especially when profit margins are slim and construction costs rise.
An infrastructure bank can mitigate these risks by providing affordable financing options that facilitate a greater number of projects.
The challenge remains, however, as hurdles such as legislative approval for the infrastructure bank and constitutional amendments for tax increment financing stand in the way.
While there is potential in establishing community facilities districts, Hawaiʻi has yet to fully capitalize on this method of funding infrastructure.
Despite these challenges, a clear path forward exists, necessitating consistent investment in housing-enabling infrastructure, akin to practices adopted in successful regions nationwide.
This means establishing effective financing vehicles, educating agencies on their usage, and drawing lessons from areas that have navigated similar crises.
Investments should be targeted in places where infrastructure improvements yield the most significant benefits, including dense urban zones, transit corridors, and areas where existing systems can be enhanced to support additional housing.
While the road ahead is complex, the accomplishments already secured should not be overlooked.
The efforts of the administration and Legislature have ushered in significant new investments, while local counties work diligently on updating their planning and permitting processes.
However, a closer look at the successful practices employed by other leaders reinforces the notion that steady, dedicated funding for infrastructure is pivotal to translating ambitions into tangible housing solutions.
image source from：civilbeat
