What kind of city are we creating here? Or, more accurately, recreating? A lot of the construction in the works are new buildings in old city sections, increasing density in the urban core.
At the moment, New Honolulu is edging dangerously close to becoming a place where only the rich can afford decent living conditions, with the workforce increasingly struggling to keep a roof over its head.
It should not be too much to expect as Honolulu grows — especially along the rail line but anywhere targeted for development — that it be built as a city where current residents can afford to rent or buy homes. That is a mission for both government and the private sector must play a part.
It’s already clear to any visitor who scans housing prices or looks at homeless encampments on the margins of parks and beneath highways, it is not such a city now.
Officials and housing advocates put Oahu’s housing shortage in the range of 20,000-24,000 units, and at the current pace the gap will never be closed.
At most, 3,000 units are being built annually, and most of those don’t erase the deficit. Three-fourths of the demand is for people earning 80 percent of the area median income (AMI) and who can afford a price point far below what most new homes cost.
Seeing that Honolulu serves the needs of its own residents first is the job of the mayor and City Council, and a set of bills now unveiled represent an important step in the right direction.
It’s also an initiative that requires buy-in from private developers, and so the legislation would expand incentives to lower the cost of delivering the homes.
The bills have not yet been slated for public hearings — the bills underwent two years of revision and discussion with stakeholders — but a strong voice from the public will be crucial crucial once they do hit the Council hopper.
Among the central points, new regulations will change city’s affordable-housing policy by requiring developers to make units available to those earning less than the target market under current rules. Also, the units would need to remain affordable for a longer period — 30 years.
This is critical to keeping up the inventory of affordable units, a stock that can be decimated when rents are driven up by market forces. And homes purchased at affordable rates can be flipped at a higher price, which means they are out of reach again to the workforce buyers who represent the largest sector of buyers.
In return, the number of units developers would have to build will be lowered, offsetting the developers’ burden, as long as the units are aimed at those earning 120 percent of AMI or less. Ultimately, this should result in a higher count of needed units.
Some other elements:
>> New incentives for homebuilders would include waivers from various city fees, charges and even park requirements. There would be property tax breaks while homes for purchase are being built. Those breaks would be given to developers of rental properties, for as long as rents remain at affordable levels.
>> In transit-oriented development (TOD) areas, there would be more options for fulfilling requirements. For example, if rentals are priced for those earning 80 percent of AMI or less, they can be built within the TOD zone or elsewhere.
As this is the socioeconomic group most in need of housing, it makes sense that the city loosen the rules to incentivize construction.
>> There would be cash-in-lieu-of-building options, although it’s higher than for units outside the TOD zone — $45 per square foot of finished floor area — and some Council members rightly are expressing misgivings about cash options.
The emphasis does need to be on delivering finished units to the market, not rack up a rental subsidy fund that could sit there for years. The units are needed, urgently.
Developers already have pushed back against many of these new rules. They assert that lower returns on the affordable units will have to be recouped through higher cost for the market-priced homes.
In an effort to sweeten the pot for developers, the city administration has proposed phasing in the regulations in areas that offer less profit potential. And the city is looking at providing public land for projects — such as at the Aiea Sugar Mill site and at Aala Park — to help an affordable project pencil out.
That’s a rational policy plan. Government also needs to flatten the bureaucratic obstacles to securing public financing for these projects, to reduce the up-front risk.
But even with all the bending-over-backwards incentives in this proposal, the essential, seemingly missing element is cooperation from developers.
Homebuilders must realize, above all, that Honolulu is their city, too, and they have to step up. Nobody should want a colony of crystal towers rising where so many people live in the shadows — and on the streets.
