The vision is a promising one, but one dares not hope too high, for fear of jinxing things. But a little optimism could go a long way for a proposed Pawaa hybrid project to include low-income rental apartments in conjunction with a juvenile shelter/service center.
There’s much to like: This project would sit on underutilized state land in urban Honolulu, 1.5 acres bordered by Piikoi, Alder and Elm streets now occupied by a rundown former juvenile detention center that provides two small youth programs. It would be a cooperative effort — not a separation of silos — between the Judiciary and the Hawaii Housing Finance and Development Corp. (HHFDC), a state agency that helps finance affordable housing.
HHFDC is seeking bids from interested developers to build a tower of about 180 rental apartments, to remain affordable for 65 years to residents earning up to 60 percent of Honolulu’s area median income. Currently, that’s $43,980 yearly for an individual, $50,220 for a couple and $62,760 for a family of four. Those units would be atop about 34,000 square feet of proposed new facilities for low-risk youth offenders that the Judiciary would run.
Here’s an opportunity for a private developer to play a relatively small but still significant part in Oahu’s housing solution.
Statewide, it’s projected that Hawaii will need 22,500 rental housing units over the next 10 years, a daunting task that will require much cross-governmental coordination as well as public-private partnerships.
On this Pawaa project, HHFDC would help with $1.7 million for design work, $15 million for building of the juvenile facility and would lease the site to the developer for 75 years at $1 a year. In turn, the new juvenile facility would be leased back for $1 a year to the Judiciary, while the developer finances and operates the residential tower. It would be a creative solution that meets multiple needs.
The 65-year rental affordability term, though, must be an ironclad contract between HHFDC and the developer. The state must dissuade and stand firm against manuevers that take units out of affordability. A cautionary tale is unfolding in Lahaina, Maui, where some 300 residents of the Front Street Apartments are facing eviction due to a conversion of 142 low-income rental units into market-price ones.
When built nearly 20 years ago, Front Street Apartments was proposed to remain affordable for 50 years. Aided by HHFDC, the project received over $1.5 million and many benefits, such as fast-track approval by the Maui County Council that included partial site rezoning from residential to apartment, a 25 percent reduction in required parking stalls, and paying virtually no land and building taxes since its 2001 opening.
Now, however, those low-income units are being converted to market price under a 2012 change in the IRS tax code that essentially allows low-income properties to do so after 15 years in service, after a complex effort that ostensibly tries to retain affordable rates.
Hawaii can ill afford to invest time, money and efforts in our uphill battles on housing and homelessness, only to see progress — and affordable units — disappear decades before their full and promised use.
The state estimates this Pawaa project at $88 million — and in addition to providing the millions in public funds outlined above, HHFDC expects developers to apply for more aid such as affordable-housing tax credits.
What’s also enabled the project to reach this stage after years of talk is a state law, passed last year, that broadens HHFDC’s ability to partner with other state agencies to produce mixed-use projects. That’s encouraging news indeed. Let’s dare to hope that smart, aggressive use of such tools will bring on more projects to fill Hawaii’s affordable housing gap, sooner rather than later.