Hawai'i's tech companies need reasonable land costs and rents. Without that, they will go elsewhere. Hoku Scientific, for example, went to Idaho for land to build its PV factory. There's also a huge disconnect between wages and the high costs of housing in Hawai'i, and for that reason it's hard to get tech workers to come to Hawai'i, and stay here.

Tourism is tanking in Hawai'i, and winds of change are blowing in from everywhere. From time immemorial, such winds of change have included land reform, a reordering of land ownership that comes about when too few people control too much land. Is it time for that now?

HOW WE GOT HERE

Hawai'i's land problem didn't start overnight — it's been building for a long time. Just like fossil fuel and the excesses on Wall Street, we've known about this for decades, but we've tolerated it as it got worse. Now, the difference between fee and leasehold is like that between life and death.

The turning point was in the 1970s. Some big landowners found new meaning in the term "fiduciary duty" to justify higher prices and rents. They opposed leasehold conversion. They went to war and to the courts against their tenants. They raised prices and rents by every means possible. They owned the land, they had the power, and they ultimately had their way.

The Japanese investments of the '70s and '80s gave the big landowners even more ammunition. The Japanese paid top dollar, and comparables went to dizzying heights Some say that appraisers regularly depending on work from the big landowners take on a bias. To brokers, higher prices mean higher commissions. To county governments, higher assessments mean more property taxes. So valuations soared.

Do we have a plan to deal with land costs and rents that are too high? No. Self-interest rules — charge what the market will bear. Renegotiation is a euphemism. And while land costs and rents go higher, salaries stay low, leaving our workforce in a quandary and our startups in a pickle. No matter how you look at it, this is not a sustainable model.

This year the unions and the Democratic Party mounted stiff opposition to a Constitutional Convention, even when a ConCon would have been an ideal forum for this discussion. They won that vote, and now it'll be another 10 years before this opportunity comes again. Why is it that nobody wants to talk about land reform?

IT'S NOT TEMPORARY

Will inflated land costs and rents soften in a free market? Maybe, but this is not a free market. Much of our land, a limited commodity in an island state, is held in the hands of too few entities, who want land costs and rents to stay high. This concentration has been our burden, all the way from Hawai'i Pono to Land and Power, and has had an increasingly adverse effect on our people, our community and our economy.

This problem will not go away by itself. Without some fundamental changes, government is not positioned or motivated to bring land costs and rents down to stimulus levels. We need to reboot the system if we want to provide affordable housing for our workforce and affordable space for our tech industry. Otherwise, the rich will simply get richer.

The winds of change were blowing in the 19th century, and that's when Kamehameha III did his land reform. The Great Mahele was planned in 1830 and accomplished in 1848. It was designed to break up the feudal ahupua'a landholding system, but it was not all that successful — it left most of the land in the hands of big landowners, a Hawai'i phenomenon that has continued to the present day. Now, we need to finish the job.

So, who today will call for change? Not the big landowners, not the real estate industry, and not the administration. The "who," then, is us.

A NEW MAHELE

If we want to repair the damage of this downturn, if we want to move beyond a three-job service economy to a full-career tech economy, we need to be less self-interested and join forces to implement long-term solutions for the community as a whole. This includes land reform.

Here are some ideas for a Great Mahele of 2009:

• Break up large holdings. How about another look at the city's leasehold conversion ordinance? And how about expanding the state's leasehold conversion statute? Can't we find a way to break up large holdings by changes in the property tax, income tax or other disposition incentives?

• Change fiduciary duty. Let's reform the fiduciary duty of trustees to include a countervailing duty for consideration of the effects of their transactions on the community. Perhaps we can also incentivize landowners to lease "x" percent of their holdings to tech startups on flexible terms at reduced rents.

• Valuation changes. What about basing brokerage commission on tax assessed value instead of sales price to de-incentivize price increases? Why don't we ask appraisers to consider existing use rather than only "highest and best" use? Shouldn't we require big landowners to disclose rents they now keep secret to avoid lower valuations?

• Lease provisions. How about implying options to purchase at the expiration of extended lease terms? Why not limit reopenings and step-ups to intervals of not less than 10 years and limit increases to "x" percent at any such reopening? What about setting aside reopening provisions that require the rent to be at least as much as in the prior period? Let's look at rent control laws, like those in New York.

What is happening in Hawai'i impoverishes our workforce and stands in the way of a new and competitive economy. You can say any solution is likely to be unpopular with big landowners, but it is they who have the land and the power, and it is they who are best suited, and thus most obligated, to improve life in these islands pursuant to the venerable notion of noblesse oblige. From them, we should expect nothing less.

Jay Fidell is a business lawyer practicing in Honolulu. He has followed tech and tech policy closely and is a founder of ThinkTech Hawaii. Check out his blog at www.HonoluluAdvertiser.com/Blogs.