In the past few years, Hawaiʻi has put more effort into solving its housing crisis than at any other time in recent memory.

We already know the main reasons local people struggle to afford homes: complicated rules, expensive land, limited financing and — most especially — years of not investing enough in public infrastructure.

This lack of investment means developers pay for upgrades, then pass those costs to renters and buyers. But understanding the problem is one thing. Actually fixing it is another.

Numbers illustrate how stalled infrastructure investment impacts housing. In Iwilei-Kapālama, 27,500 new homes require $667 million in upfront infrastructure investment. Maui’s Kaʻahumanu Avenue initiative needs $7 million for water infrastructure for 2,200 units. Līhuʻe Town Core could add 775 homes but needs $8 million for last-mile water and wastewater connections. Ane Keohokalole Highway Corridor has 4,200 units pending, needing $462 million investment.

Hawaiʻi’s housing shortage is fundamentally an infrastructure shortage.

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Failure to invest in infrastructure slows housing development. When the state does not pay for essentials like water, sewer and electrical systems, developers either abandon projects, build outside urban areas or pass these costs to buyers and renters. As a result, housing prices rise because infrastructure costs are not shared broadly.

To be fair, Gov. Josh Green’s administration and the Legislature have taken significant steps in the right direction.

The governor’s emergency proclamation provided school impact-fee relief on about 1,600 affordable units, saving roughly $3,800 per apartment. The state secured the $6.6 million for infrastructure from the U.S. Department of Housing and Urban Development.

In 2024, Act 034 expanded the Hawaiʻi Housing Finance and Development Corp.’s bond authority to finance regional, housing-enabling infrastructure, and Act 30 clarified counties’ ability to use the general excise tax surcharge for county-appropriated housing infrastructure costs.

In 2025, Act 252 expanded the Hawaiʻi Community Development Authority’s bonding authority to finance infrastructure development outside of HCDA’s community development districts. Over $70 million has already gone into infrastructure upgrades in Kapolei and Iwilei-Kapālama’s TOD areas.

Other Places Crack The Code

Despite these efforts, Hawaiʻi’s infrastructure needs outpace current investment. Relying on individual developers or occasional state funding results in unequal, underfunded outcomes. Sustainable solutions require more reliable funding sources.

The good news is that other states and countries have cracked the funding code, showing us ways to make infrastructure investment the prerequisite for affordable housing production, not an afterthought.

Washington state’s Connecting Housing to Infrastructure Program pays for the unglamorous, beneath-the-ground work and even reimburses charges that would otherwise derail a project’s budget. Since 2021, it has invested $88 million in infrastructure, supporting over 7,800 affordable housing units statewide. Their approach is simple: new housing depends on sufficient infrastructure.

Ireland’s lesson is about predictability. The “Housing for All” plan ties over $4.7 billion a year in housing investment directly to the $194 billion National Development Plan, so homes and infrastructure move together. That government now reports over 54,000 homes completed or commenced since launch, showing what stable infrastructure funding can achieve when conditions change.

Predictable, multiyear investment and clear connections between infrastructure upgrades and housing outcomes give builders the confidence that public utilities will be ready in pace with new housing supply.

Of course, our state’s needs are always greater than our general fund, and we can issue a limited number of project-by-project general obligation bonds. So we need to get more creative about how we pay for necessary upgrades.

In 2023, the Office of Planning and Sustainable Development produced an infrastructure financing study that identified several promising approaches, which are already implemented elsewhere. Most prominently, value-capture tools like tax increment financing allow government to dedicate new tax revenue growth from a specified area to pay for infrastructure in that very area. In plain language, money generated from new development stays in the district to repay public investment in water, sewer, transportation and similar essentials.

Recouping The Costs

What would this look like in practice? In Iwilei, tax increment financing could help transform a $667 million infrastructure gap into a built-out pipeline for up to 27,500 new homes by capturing a portion of rising property, general excise and other taxes from the area as new homes, hotels and businesses are completed. Rather than relying on a piecemeal approach, it would let the government issue bonds to fund essential infrastructure upfront, then use the predictable flow of new tax revenues as those homes are built to repay the bonds over decades.

I should also point out that tax increment financing does not create new taxes; rather, it captures the revenue generated by new growth in the area the government invested in. It’s also a way to make sure luxury developments are subsidizing the middle- and lower-income housing that we lack.

For example, Portland dedicates 45% of tax increment financing revenue to affordable housing. Similarly, Houston directs one-third of its TIF revenue to low-income housing.

A state infrastructure bank, capitalized by dedicated revenues to finance infrastructure with loans, is another proven solution. New Jersey’s Infrastructure Bank has financed billions in low-interest loans to local governments, and California’s iBank runs the Infrastructure State Revolving Fund for public infrastructure including water, sewer and other housing-enabling projects.

The path forward requires treating housing-enabling infrastructure the way other successful places do: as a fundamental public responsibility that demands consistent, predictable investment.

In expensive urban projects, private companies are often hesitant to take on all the upfront risk because profit margins are small, infrastructure needs are big and building costs are already high. Banks like these provide low-interest loans so more projects can move forward. This means more affordable homes, not just luxury ones, can get built.

There are still hurdles. The Legislature would need to create and capitalize the infrastructure bank. We would need to amend our constitution to allow tax increment financing. And, while we’ve had the ability to create community facilities districts, another method of funding infrastructure, we have yet to use them to their greatest advantage. None of this is simple to execute.

Nevertheless, the path forward requires treating housing-enabling infrastructure the way other successful places do: as a fundamental public responsibility that demands consistent, predictable investment. This means establishing effective financing vehicles, training our agencies to use them, and learning from other places that have worked through similar crises. It also means targeting investments in locations where infrastructure dollars will have the most impact: dense urban zones, transit corridors and places where existing systems can support more homes with targeted upgrades.

This lengthy to-do list doesn’t take away from what’s already been accomplished. The administration and Legislature have made major new investments, and counties are updating their plans and permits.

Still, when we look at leaders elsewhere, it’s clear that steady, dedicated funding for infrastructure, tied directly to housing production, is what turns good intentions into real homes.