Hawaii is a pricey place to live, and most daunting for many of us are costs tied to housing.
Last month, single-family homes on Oahu sold for a median $750,000 and condos, $395,000 — nearly 5 percent and 14 percent higher, respectively, than figures from a year ago. That’s the sort of sticker-shock that prompts residents to consider moving to the mainland. According to the U.S. Census Bureau’s latest population estimates, 10,000 more people left Hawaii than moved in from the mainland over the last year.
Gov. David Ige is right to ask state lawmakers to step up spending to tackle the state’s housing challenges, especially those confronting residents seeking affordable housing. In his proposed two-year state budget, which will go before legislators next month, Ige is asking for $123.4 million to promote new housing starts.
In May, when the Legislature passed a state budget for 2017 it earmarked nearly $100 million to make a dent in our severe shortage of affordable housing.
This time around, Ige is proposing that $50 million go into the Dwelling Unit Revolving Fund, which is for developers of for-purchase affordable housing, and $50 million for the Rental Housing Revolving Fund, which is for developers of affordable housing for rent. The 2017 budget tagged $25 million and $36.6 million, respectively, for those funds.
A state study released two years ago estimated that more than 11,000 rental units are needed on Oahu by low- and moderate-income households by 2020. It’s unclear how close we are to meeting that demand, but it’s a safe bet that city, state and federal regulatory tangles have bogged down the pace of construction. Developers and government should be working better in tandem to align processes so that affordable housing is easier to produce.
Developer Stanford Carr, for example, says he can build low-income rental projects such as Kakaako’s Halekauwila Place by pairing them with more market-priced structures, such as the neighboring Keauhou Place tower, which is now under construction. While asset checks, credit checks and other demands tied to a builder’s application to secure federal and state financing are rigorous, Carr said: “What we’re trying to do is come up with different tools … to incentivize and make it easier for developers like myself to build more” affordable housing.
He added, in the long-run, “It’s going to take public-private partnerships. … It’s going to take long-term ground leases with state lands or city lands to enable us to build in the urban core. And it’s still not easy.”
Honolulu voters unraveled one tangle last month by approving changes to the city’s Affordable Housing Fund, allowing it to be used to develop rental housing for those earning 60 percent or less of the median household income. Previously, income limits for residents of Affordable Housing Fund-assisted dwellings were less than 50 percent of the median.
Passage of City Charter amendment No. 5 also changed the length of time that rental housing must remain affordable from “in perpetuity” to “60 years.” The perpetuity clause had blocked developers from leveraging their financing with federal and state tax credits and funds from the state’s Rental Housing Revolving Fund, which ask for the affordability to be up to 60 years only.
As home prices climb higher in the islands, more people are being priced out of the housing market. The need for a much larger inventory of reasonably priced residences is becoming increasingly urgent, reflected, in part, by the state’s ongoing problems related to homelessness.
Now is the time for the governor, lawmakers and others to work together to snip bureaucratic red-tape impeding the progress of viable affordable housing projects. Enact a blueprint for the future in which housing costs remain within reach for Hawaii’s low-income and moderate-income residents.
