When the Kauai real-estate market started to tank in the summer of 2015, it became clear that the state’s financial situation was beyond repair.
But the real estate bubble was far bigger than the bubble in mainland America.
Kauai’s property-tax revenue has plummeted to less than 5 percent of what it was in 2007, and the county has been struggling to pay for a $100 million upgrade of its aging downtown airport, a project that was supposed to create thousands of new jobs.
Now, just days before the state closes the island’s tourist season, officials are facing another blow to their ability to fund the $2.3 billion project.
The airport has been plagued by delays, construction snafus, and lawsuits, and it’s unclear how long it will take for the state to approve it.
The island has a $3.4 billion budget shortfall.
“If we’re going to do the project, it needs to happen in a timely manner, and if it doesn’t, we’ll have a very, very hard time meeting the financial obligations,” Kauai Mayor Loni Hancock told reporters last week.
“We’ve got a really good, very solid foundation that’s been built on.”
But this summer’s economic slump and the state shutdown may not be enough to overcome the structural problems that are holding Kauai back from getting back on its feet.
That’s because the state doesn’t have a clear plan for how to deal with the looming threat of a potential collapse.
The state doesn.
The Kauai Economic Development Authority, or KEDA, has a long-standing plan for the island.
It’s called the “Kauai Growth Strategy.”
This plan calls for building the economy of Kauai to the point where it can support the growing population.
KEDT’s strategy was developed in response to a wave of property taxes that hit the island in the late 2000s, when the island had one of the highest property-value taxes in the world.
“There are many different economic scenarios that we’re trying to consider, from a local level to the national level,” KEDEA Chief Financial Officer Andrew Neely told Ars.
“And what we’re focused on is how to keep the economy moving forward in the long term, to grow the economy, and to generate revenues for our tax base.”
But many of the problems that plagued the county before Kauai shut down in the fall of 2015 are still plaguing the island today.
The county’s financial troubles aren’t unique.
A recent report from the Kauaʻi Economic Development Council, a nonprofit economic development organization, found that more than half of all counties in the U.S. are facing problems in the housing market, and many of those problems are rooted in outdated zoning laws and the financial incentives that state lawmakers give to developers.
The report also found that, while property tax revenue is growing, the number of new homes built each year is declining.
The lack of housing for Kauaians isn’t unique either.
According to a 2016 report from LandlordLink, a housing research firm, about 10 percent of all U.T.L. properties are empty or in foreclosure.
The majority of these properties are in Honolulu, which has a population of more than 3 million.
“It’s the biggest economic driver of the island, and I think it’s a huge problem,” said Brian Wiesner, executive director of the Hawaii Association of Realtors.
“A lot of the development that we see happening in Honolulu has very little to do with Kauai, it’s about Hawaii, and that’s not something that we can ignore.”
Wiesmer said that the situation in Kaua’i is more than just a financial issue.
“You can’t just ignore the problem of the housing,” he said.
“But you have to recognize that the way we do business is going to continue to be threatened if the economic model is going backwards.”
A lack of transparency in the process The real estate industry is not shy about talking about the difficulties it’s facing in Hawaiʻis market.
When KEDD proposed the plan in 2015, the plan outlined a “three-step approach” to addressing the issue.
First, the Kauaii Economic Development Agency would create a framework for the development of the Kauaui real-value tax base.
Second, it would establish a program to support the economic development of Kaua`i.
And finally, the agency would set the economic conditions necessary for Kauauan development.
The plan also called for a “transitional system” for development that would allow for the “development of low- to moderate-income housing in areas of economic need.”
The plan, however, never came to fruition.
“I think a lot of people who have worked on Kauai were disappointed that we never went forward with this proposal,” Wiesners said.
A lack “of transparency” in the program’s implementation,