Grassroot Institute reviews legislative session, citing wins on permitting, tax hikes

State lawmakers passed legislation aimed at accelerating Maui’s wildfire recovery and approving a 60-day “shot clock” for counties to review building permits, a chronic cause of delaying construction projects in Hawaiʻi.

Those were a couple of takeaways from a May 16 Grassroot Institute of Hawaii legislative wrap-up event titled “What went down at the Capitol in 2025?” The institute’s overview was through the lens of the nonprofit policy research organization’s mission to educate people about the principles of individual liberty, economic freedom and limited, accountable government. These values align with the political philosophy of Libertarianism, which espouses individual freedom, limited government and free markets, among other things.

One piece of legislation highlighted during the event and of particular interest to Lahaina wildfire survivors is Senate Bill 1296, introduced by West Maui Sen. Angus McKelvey and now pending action, as passed with amendments, by Gov. Josh Green.

The amended version not only facilitates recovery efforts on Maui by waiving special management area permits, but it now broadens the scope of the legislation to include “other disaster-affected areas by exempting the reconstruction of any lawfully constructed structure destroyed in a disaster” and that, as proclaimed by the governor, constituted a state of emergency or disaster under federal law.

The legislation codifies action already taken by Green, through an emergency proclamation, to exempt 103 commercial and 533 residential structures from SMA permit requirements in Lahaina. Without the SMA permit requirement, applicants can directly seek building permits from Maui County, reducing the time of processing permits by about a year.

Structures will still be required to stay within the footprint of pre-fire structures being replaced.

Also, properties directly on the shoreline would still be required to go through the SMA permit process in the bill now under consideration by the governor. This was a sticking point for members of the Grassroot Institute, which unsuccessfully advocated for shoreline properties owners to be included in the waiver. The institute pointed out that cultural sites such as the Lahaina Jodo Mission and iconic Front Street restaurants would still need to go through the lengthy SMA permitting process.

In written testimony on the bill, Ted Kefalas, the Grassroot Institute’s director of strategic campaigns, said the bill should be amended to ensure “all Lahaina residents have a chance to rebuild without going through an arduous and confusing land use approval process.”

“Without a streamlined SMA process, Lahaina’s businesses will face an uphill battle to return to their community, since obtaining an SMA use permit from Maui County could take years,” he said.

Kefalas noted that, over the past decade, since Jan. 1, 2015, the Maui Planning Commission has issued only 41 SMA use permits.

“At the rate of four per year, it would take the county decades to approve all the permits needed for Lahaina’s businesses to rebuild,” he said. “If businesses cannot return to Lahaina in a timely manner, there will be fewer entrepreneurial and job opportunities for residents, and the town could lose many of its residents, and certainly its historic charm and character.”

In written testimony, Lahaina Strong also supported the bill to streamline permitting processes to get residents back into their homes. However, the group said: “This exemption must remain focused on residential recovery — not an open door for outside development interests. Lahaina’s future should be guided by the needs of the community first, ensuring that those who lived here before the fire can return before speculative or large-scale redevelopment changes the character of the town.”

The Grassroot speakers held out hope that state or county officials could help shoreline property owners rebuild their homes in Lahaina.

The SMA exemption for wildfire survivors has the support of Mayor Richard Bissen. In news release in February, he called it a “crucial step to help survivors, including both residential and commercial property owners, move forward faster and rebuild their future.”

“By streamlining the process, property owners within the SMA impact zone will be able to rebuild within their structure’s pre-fire footprint,” Bissen said at the time.

McKelvey said the bill has the support of the County and is a compromise, in streamlining the permitting process while still preserving the environment and cultural sensitivities. “It’s a meaningful, huge start,” he said. “We need to control our own destiny in Lahaina.”

“My only disappointment is that it’s a year late,” he said.

The bill is important because it puts into law what the governor has been able to implement through emergency proclamations, McKelvey. By having the exemption in a statute, it’s “part of a concrete set of laws that have continuity.”

Regarding the dispute over whether shoreline properties should have been included in the exemption, McKelvey acknowledged that is a “very divisive” issue, but the consensus was to provide immediate relief to the majority of Lahaina wildfire survivors whose properties are not on the shoreline.

He said he hopes the “county will work closely with everybody to implement a solution.”

Another significant piece of legislation featured in the institute’s wrap-up session was Senate Bill 66, now Senate Bill 66 Conference Draft 1, the so-called permitting “shot clock” bill. The measure is aimed at addressing Hawaiʻi’s housing shortage by expediting permit processing times for single- and multi-family housing projects. Under the bill, the “shot clock,” familiar with basketball fans, would start for housing projects after a permit application is deemed complete by a relevant agency.

Malia Hill, the institute’s policy director, said the Grassroot Institute advocated for a meaningful “shot clock” bill.

“A ‘shot clock’ bill is meaningless if you’re allowed to just hit time out over and over again, remove any consequences of missing the deadline,” she said. “Then, what you have is just symbolism. It’s useless in terms of actually speeding up permitting. And, sadly, that’s what happened to the ‘shot clock’ bill.”

In the course of its journey through the legislative process, the bill was “watered down until it was meaningless,” Hill said, as lawmakers wrestled with concerns from some state agencies and preservation advocates about ensuring adequate review for historic properties and compliance relevant building codes.

Then, when the measure made its way to conference committee, some legislators were interested in making it effective, she said. And, with help of the Grassroot Institute, a compromise measure was passed by the Legislature.

Under the bill sent to the governor, an application for an expedited permit is not considered complete until there’s a professional determination that the project seeking a permit does not have the potential to affect historic properties, archaeological resources or burial sites. Or, the project has been submitted for review, in accordance with State Historic Preservation law, by the State Historic Preservation Division of the Department of Land and Natural Resources.

While this amendment was viewed as a “pause” by the Grassroot Institute, it was seen by others as crucial to protect Hawaiʻi’s cultural and historic resources.

Also, after 60 business days have lapsed since the application was considered complete, the applicant can then — after meeting certain expedited permit requirements — get a building permit approved by the county and construction can begin.

This would reduce permitting times, which, according to the bill’s introduction, can be three times longer in Hawaiʻi than in other states.

The bill shifts responsibility for code compliance from the counties to licensed design professionals — structural, civil, electrical or mechanical engineers and architects — who approve construction plans. They are required to certify that the plans and specifications comply with applicable codes.

Each county may adopt rules to put the new law into effect and charge any necessary fees.

If signed into law by the governor, the measure would go into effect on July 1, 2026, and sunset on June 30, 2031.

Passage of other bills that would impact the speed of building permit processing included Senate Bill 15 and House Bill 830.

Senate Bill 15 amends the definition of “historic property” in state law, requiring that it be, both, at least 50 years old and meets the criteria for inclusion in the Hawaiʻi Register of Historic Places. The bill excludes proposed projects on existing residential property and proposed projects that are in nominally sensitive areas from the State’s Historic Preservation Program review, under certain circumstances.

Beginning July 1, 2026, House Bill 830 would authorize the State Historic Preservation Division to contract its review of proposed state projects and projects affecting historic properties to third-party consultants under certain circumstances. The measure establishes requirements for qualified third-party consultants providing review services. It also requires the project proponent to pay the reasonable fee requirements of the third-party consultant.

The Department of Land and Natural Resources would be required to publish a draft of its proposed rules and later present them to the Board of Land and Natural Resources. The measure sunsets on June 30, 2030.

The institute was successful in this past legislative session in opposing most proposed tax increases, including House Bill 202 (unemployment tax rate hike); House Bill 476 (capital gains tax increase); House Bill 760 / Senate Bill 633 (carbon tax); House Bill 1235 / Senate Bill 313 (wealth asset tax); and House Bill 1410 / Senate Bill 469 (conveyance tax hike).

According to the institute, the only major tax hike passed this year was Senate Bill 1396. It increases the state transient accommodations tax from 10.25% to 11% and extends it to cruise ships.

The TAT, also called the “hotel room tax,” pays for a wide variety of public services and infrastructure. Historically, it has provided critical funding to the counties for visitor-impacted county services such as road maintenance, emergency services and parks management and upkeep.

For bills submitted to the governor after April 14, Gov. Green has until July 9 to sign or veto a bill. If not, it becomes law without his signature. If the governor intends to veto a bill, he has until June 24 to inform the Legislature of his intention to do so. The Legislature would need to convene a special session to override the veto.

When asked about the possibility of a special session, Kefalas said the institute is expecting a special session either this summer or fall because lawmakers may want to address federal spending cuts.

“The state legislators feel that there is a need to at least get together and make sure that they can cover any costs,” he said, adding that lawmakers have set aside a few hundred million dollars in a rainy day fund for that purpose.