The Honolulu Planning Commission has backed a proposal for interim affordable housing requirements for projects that seek zoning exemptions within transit-oriented development areas as a precursor to adoption of zoning regulations along the rail line.

Under the city’s Interim Planned Development-Transit permit, developers can seek zoning variances — including additional height and density allowances — in exchange for providing community benefits, such as affordable housing and open space. The permit is used on an interim basis until transit- oriented development, or TOD, zoning is adopted. Once adopted, developers would adhere to a separate set of zoning regulations, which are currently under City Council review.

The city Department of Planning and Permitting’s proposal calls for developers to keep 20 percent of all units for sale at up to 120 percent of area median income for a minimum of 30 years. If developers choose to provide the required number of affordable units off-site, 25 percent would remain at up to 120 percent of area median income for the same amount of time. Off-site units would need to be within the same TOD area. Additionally, at least 50 percent of those affordable units would have to be offered at 100 percent of area median income or lower.

For rental projects, developers would need to provide 15 percent of units at up to 80 percent of area median income for at least 30 years. DPP also proposed an in-lieu fee of $45 per square foot of the total residential floor area for developers who choose not to build the affordable units. The fee would be paid to the city and updated annually based on the Consumer Price Index with 2014 as the base year.

The Planning Commission voted Wednesday to recommend approval, and the proposal will proceed to the Council for further review.

Harrison Rue, TOD administrator, said the city determined the numbers after conducting “two very thorough, extensive studies” and talking to housing advocates and developers. He said DPP plans to unveil an overall affordable housing requirement for projects islandwide within the next two months.

DPP proposed to add the standards after the process to determine community benefits came under scrutiny last year during the Council’s review of Mana‘olana Partners’ condominium-hotel project, the first and only development to obtain an interim permit so far.

There were no specific standards for community benefits calculations at that time, so officials negotiated that the 400-foot tower would need to have at least 20 rental housing units that meet affordable housing requirements or contribute the monetary equivalent up to $3 million to the city’s Housing Development Special Fund. The project, with 109 residential units and 125 hotel rooms across from the Hawai‘i Convention Center, was granted bonuses that allow for the tower to be built higher, at a greater density and with less parking than existing zoning allows.

Housing advocates had contended that the developer should provide more affordable units. Some Council members also called for a more formal community benefits policy.

“What we discovered particularly with the Mana‘o- lana project was that without really, really solid numbers for affordable housing, we were all … trying to locate what’s the right number, what’s the best amount,” said city planner Elizabeth Krueger. “So now as soon as somebody walks through the door, we can say, ‘Well, if you’re not planning (specified affordable housing standards) … then recalibrate your project.’”

At Wednesday’s meeting Dean Hazama, planning commission chairman, questioned whether the in-lieu fee would generate sufficient funding for the city to build affordable housing. But he said he voted to approve the proposal after hearing the department’s reasoning on when an in-lieu fee would be appropriate. For example, residents offered affordable units in higher-end condominium projects would still need to pay maintenance fees, he said.

“I view the (in-lieu) fee as a disincentive for the developers. It has to be on the higher end where it would be better for the developers to just build the units,” Hazama said after the meeting.

In written testimony, Unite Here Local 5, representing more than 11,000 hotel, health care and food service workers, said the proposal was “a step in the right direction,” but called for an affordable housing mandate on all residential projects in TOD areas, not just those seeking zoning variances, and for no in-lieu fee option.

Bob Nakata of Faith Action for Community Equity and the Housing Now Coalition said the proposed standards are “generally acceptable” but expressed concern that the in-lieu fee might slow down the construction of affordable units. He said he hopes the percentage of required affordable units will increase but acknowledged that it would be challenging to get all stakeholders in agreement.

“It needs more discussion with the players at the table, and I think we’re moving in this direction. But it’s very disappointing that it’s taking so long,” Nakata said. “The efforts are in the direction of private-public partnership, mixed-use (and) mixed income. But it’s a tricky thing to put together.”