The Political Economy of Urban Land Reform in Hawaii

Abstract

In the mid 1960s there were about 22 000 single-family leasehold homes in Honolulu. Dissatisfaction with leasehold led to reform legislation in 1967, allowing lessees to buy leased land. By 1991 less than 5000 lessees remained. This paper examines why landowners elected to lease rather than sell land and attributes the rise of leasehold to legal constraints on land sales by large estates, duties of estate trustees and the federal tax code. Ideological forces initiated land reform in 1967, but rent-seeking forces captured the process in the mid 1970s. It is concluded that Hawaii's experiment with leasehold was a failure due to the difficulties associated with specifying and enforcing long-term contracts in residential land.