Developers want to build homes that the largest group possible can afford, Christine Camp said. These units would sell like hotcakes, the developer ultimately finishes the project with little or no risk and gets the money out. Buyers get their homes, financiers get their return.

The rhetorical question from the president and CEO of Avalon Group: Why is that not happening? The answer: financing.

Unlike single-family home subdivisions, high-rise projects such as Avalon’s Sky Ala Moana, among the towers proposed near the terminus for the city’s rail project, require years to complete before revenue even begins to roll in, Camp said.

“Most developers, once they see what the structure and the risk is for building those types of homes, they end up forced to price them at a certain point because you can’t get financing,” she added. Long waits mean the bankers want the higher rate of return that the cream on top will give them.

Avalon’s proposal for Sky would employ purely private financing. Its long-term, lower-cost units can’t be flipped readily; that’s enabled by the higher return to be captured from condo-hotel units in the mix.

Now married with a 10-year-old son, Camp started Avalon in 1999. But right out of high school she worked as what she called a “girl Friday” at a small development firm, advancing through posts at Castle & Cooke Inc. and Alexander & Baldwin. Her degree in business administration came from Hawaii Pacific University, but her education overwhelmingly came on the job.

Camp, 52, fully acknowledges the drastic need for homes that those earning below the area median income (AMI) can afford. She was raised by a single mother who emigrated from Korea along with five children. Six years later, at age 16, Camp wanted more freedom to enjoy socializing at Kalani High School, where she had the grades and the credits to graduate early.

Her rebellious spirit led her to become a teenage runaway. Until she graduated, it was a struggle to scrape together money for a tiny rental. Camp said she empathizes with the homeless because she was homeless.

“I share that because I want people to know: I get it,” she said. “I slept in a park for a week … school lunch was the best thing then,” she added — and now she can laugh about that.

Question: How do you see the construction cycle and project costs shaping up for starting Sky Ala Moana in 2020?

Answer: We are working with a very experienced contractor — Albert C. Kobayashi Inc., which has experienced the ups and downs of a market cycle, and is diligent in planning for the unexpected. AC Kobayashi has built: Hokua; One Ala Moana; the Ritz Carlton Residences, Waikiki Beach; and Park Lane Ala Moana. These are very relevant recent projects that are similar to the quality expectations of our project.

Our local team has been tracking the impacts to costs relevant to the Chinese tariffs, and that will be addressed with Plan B and Plan C, meaning we already have other sources that are being procured from other countries that will help buffer the cost impacts.

On the flip side of the trade war that seems to be emerging with China is that their currency is devaluing against the dollar. That seems to help our case for offsetting the cost of tariffs on those supplies that may still be procured through China.

Q: Why do you see the 30-year buyback condition for the affordable units as risky?

A: When people buy a home, whether it is affordable or market, we are really buying security for the future, to sacrifice saving for a down payment and to commit to a long-term mortgage.

Their ability to reap the benefits of home ownership so that they may move up to a larger home or cash in for a retirement nest egg is limited if there is a 30-year restriction. We would be the first to agree to the 30 years for a for-sale project.

But, if every developer pushed that concept away, then we wouldn’t be able to validate the risk or non-risk of the 30-year restriction. … I felt that it would be up to me to take the first step to either sink or swim toward providing a balance between affordable homes vs. market risk. …

Q: What is most challenging about financing partnerships with government agencies?

A: The challenge of affordable rental projects that receive government tax credits for its equity and government grants to fill the gap, is that larger projects would take years to gather the available funds.

Those funds are limited and allocated in smaller chunks. So unless the project can be properly sized (such as greenfield projects where you can build one small building at a time), we have to keep coming to the table each year and competing for the funds.

For a project like Sky Ala Moana, where we are a mixed-used project, it is infeasible to have the 10 percent to 20 percent of the units limit the funding and timing for the balance of the market units.

That is why we decided not to pursue a rental project within the market housing. While it can be done, in a state with only 1.3 million people, the tax credit availability would be too difficult to source at one time.

Q: Do you think developers could share some costs in building the stations where their projects are located on the rail route?

A: This is the same thinking that got us to where developers are forced to build luxury housing to pay for the risks. Paying for costs that are not related to the project means that the project’s buyers will have to bear the costs. It would be unfair for the new homebuyers to have to pay for the burdens of the entire city.

The developments such as Sky Ala Moana would increase the tax base that will, in essence, pay for the city’s operation. For example, our current property is assessed about $300,000 a year in taxes.

With the height and new development value, that will go up to $4 million to $5 million. That type of cash on a yearly basis only helps with the balance of the city’s operations.

Q: Do you see possibilities for “tiny home” units as a solution for the housing shortage?

A: I think it will certainly help. Housing production at all levels is what we need right now, but I believe what we should be focused on is providing housing solutions to house the chronically homeless. We should be looking for single-room-occupancy types of construction that provides mental health, medical and other social services.

The homeless are visible and they are becoming an economic liability for a tourism-driven economy like ours. We need to find a way to house them.

Sending them to permanent housing may work for a short while, but properties run by nonprofits or quasi- governmental/medical agencies to assist this specific population of the homeless should be a priority.

I have firsthand knowledge as a property manager. Avalon manages between 600 and 900 units at any given time, many of which are below- median rents in areas like Waipahu, Liliha and Kalihi.

We have been at the forefront to work with nonprofit agencies to house the homeless in the rental units that we manage and the results have been mixed at best.

With less patient landlords, the tenants will likely be evicted a lot sooner, making them vulnerable to being back on the streets within months. …

The agencies are wonderful in cleaning up after the mess … but I believe the dollars could be better spent if we built more shelters and single- room occupancy units. The truly houseless … could be helped through down-payment assistance.

Q: Avalon also has been in the news for its recent Kapolei Business Park activity. How much growth potential do you see for the industrial sector in the Second City?

A: The growth is limited to the land that is available. We have our last 65 acres to develop (from 178 acres) and once that is gone, there will be fewer opportunities for ownership.

That is one of the reasons why we have had such success with our industrial park.

Everyone saw ownership vs. leasing land as a significant opportunity to control the destiny of their businesses.