Earlier this year the Legislature appropriated $200 million to help finance new affordable rental housing. Now a state-led panel advises that an additional $1 billion should follow over the next decade to further address Hawaii's shortage of affordable apartments.
A "special action team" presented Gov. David Ige with a more than 80-page report that was supposed to explain how 22,500 affordable rentals could be built in the state by 2026.
The report, ordered by the Legislature in 2016, didn't provide an answer for meeting that goal, but it does suggest ways to significantly increase affordable rental production above historically low levels.
"This is really a way forward," Ige said. "There's no quick fix. There's no magic bullet. This clearly is a challenge that will take many years to accomplish — I guess the specific plan is a decade to make a dent in this challenge."
The Legislature allocated $100,000 for the panel led by the state Office of Planning to produce the report. Other panel members included representatives of the Hawaii Public Housing Authority, Hawaii Community Development Authority, state House and Senate housing committees, counties, nonprofit developer Keith Kato, for-profit developer Stanford Carr and affordable-housing advocate Bob Nakata.
"Simply put, affordable rental housing is unprofitable, so the market won't address the need by itself," stated the bill that created the action team.
One of the report's major recommendations is to contribute $100 million annually for the next 10 years to a state rental housing fund that helps private developers finance affordable apartment construction.
"The assurance of consistent funding would increase developer interest in affordable rental projects," the report said.
The Hawaii Housing Finance and Development Corp., a state agency that administers the fund, has been able to provide close to $100 million in rental housing fund awards in each of the last two years, and developers have already applied to tap $182 million of the $200 million allocated by the Legislature this year.
Craig Hirai, HHFDC executive director and a member of the action team, said such momentum needs to be continued.
"You have to sustain the effort over a period of years," he said.
Hirai noted that since 2014, HHFDC has handed out rental housing fund awards for 2,100 units of which 400 have been delivered. Such projects can take several years to plan, finance and build. And more than just rental housing fund money is needed. Typically, rental housing funds pay for one-third of a project's cost. HHFDC also offers tax credits, bonds and tax exemptions to developers.
To just cover the one-third piece of funding for 22,500 affordable rentals would take $2.8 billion in rental housing fund money based on an HHFDC average of $125,000 per unit.
The report also encourages the Legislature to contribute $10 million annually for 10 years to an HHFDC fund that makes loans to developers, and to lift a $38 million cap for how much in state property conveyance taxes automatically goes into the rental housing fund.
Other recommendations in the report include researching the possibility of reducing or eliminating school impact fees imposed on affordable housing by the state Department of Education, evaluating the formula for calculating transportation impact fees and reducing parking requirements.
A big part of the report is dedicated to identifying state, county and private land deemed suitable for affordable rental development. The report suggests that underutilized public properties could be transferred to HHFDC, which can seek private development partners to produce affordable rental homes.
One recent example of this is an old juvenile shelter and service facility in Pawaa where HHFDC selected a developer to build 180 affordable rentals and new facilities for the Judiciary in one tower.
However, the list of most suitable properties was mainly based on proximity to infrastructure and zoning for urban use. The list doesn't consider a property's current use and whether it is a good redevelopment opportunity or compatible with housing.
For instance, the list includes public schools, libraries, fire stations, parks and cemeteries. Specific sites include the governor's mansion, the headquarters of the Office of Hawaiian Affairs, Ala Moana Center, Ward Village, Aloha Tower Marketplace, big-box stores in Iwilei, a city bus depot in Pearl City, the Maui War Memorial Sports Complex and Hilo Medical Center.
Some places previously identified for affordable housing also are listed, including Aloha Stadium, several Hawaii Public Housing Authority properties and the University of Hawaii West Oahu.
The report notes past state reports on affordable housing over the last 50 years have identified obstacles that include a lack of affordable land, insufficient infrastructure, high development costs, government regulation, community opposition and environmental concerns. These obstacles remain, but authors of the new report are hopeful that more action will be taken.
"The special action team understands that the scarcity of safe, sanitary and affordable rental housing constitutes a crisis for nearly two-thirds of the state's residents," the report said. "This report urges state and county officials to act on issues that affect the affordability of housing."
