Honolulu officials have taken a welcome first step toward privatizing the municipal stock of affordable housing units. It’s a transition that should serve the interests of taxpayers as well as those in need of housing help, as long as the administration of Mayor Peter Carlisle maintains clear, two-way communications with the residents of the city’s subsidized housing projects.
The mayor last week unveiled the Hawaii Affordable Housing Project Initiative, filling in some of the blanks left when he initially proposed the effort in last year’s State of the City address.
At this point the administration is putting out calls for a private company to buy and manage the complexes, assuming management costs that have amounted to about $6.7 million each year. The brokerage firm CB Richard Ellis is aiming to strike a deal with a single buyer for all 12 properties, which ought to help maximize economies of scale in management.
The public administration of these properties dates back for years, but It’s been more than a decade since the city began to distance itself from the public-housing function, starting with the scandals surrounding the Ewa Villages development. That drove Honolulu officials to dismantle the city housing agency.
Further, it’s plain that city management of the properties can’t be sustained, with annual losses estimated at $3 million. Private firms have a greater incentive to run things efficiently because losses come off its own ledger, and they have a better record in the basics of property management: screening tenants, handling maintenance, retaining reliable tenants and evicting those who don’t pull their weight.
The city’s inventory is a needed asset that can’t be easily replaced in the private marketplace. It consists of 1,257 units in all, including 850 apartments that meet federal guidelines for low- and moderate-income renters, which means households with 80 percent or less of the median. There are 189 "gap group" apartments for families with incomes of 80-120 percent of median and 210 market-priced units.
That represents a range that needs to be maintained in any deal the city reaches with a buyer. The recession, from which Hawaii is still slowly recovering, has made a chronic shortage of affordable rentals even more acute.
What has given hope to housing advocates is the city’s demonstration of a willingness to engage the tenants in advance of the transition. Already Sam Moku, director of the Office of Community Services, has promised that no residents would be displaced, good news to tenants worried about disruptions.
Meetings have been held in every complex — a conversation that must continue as officials learn more particulars they can share with tenants. The first bids are expected to come in April, with a final proposal set to go before the City Council by summer. At that point officials may be better positioned to make some predictions about how much rents will go up. That’s seen as an inevitability whether the complexes are owned by the city or a private company, given that rents are now below federal affordability guidelines.
For now, the facts in evidence — including the condition that the buyer would have to lease the land for 65 years and keep units affordable for the lease term — should encourage families needing housing help. The city has committed to keep its hand in the low-income housing market, but as a landowner entitled to set some terms, not as a manager. It’s time that function is put in private hands.
