Mayor Kirk Caldwell’s two-bill affordable-housing plan won preliminary approvals Thursday from the City Council Zoning and Planning Committee, but not before the panel heard an earful of concerns from Oahu developers who argued that more incentives and less regulation will create more homes.
Bill 58 Opens in a new tab overhauls the city’s current affordable-housing policy by requiring developers to make units available to those making less money, and to keep those units affordable for a longer period of time than now required, in exchange for building fewer affordable units than current rules require.
Bill 59 Opens in a new tab offers a series of breaks for developers, including waivers from various city fees, charges and even park requirements, as well as property tax breaks during construction and, for rental projects, for the duration of the affordable phase.
Daniel Cody, chief investment officer for local developer MW Group, likened the proposed changes to imposing additional regulations and taxes on farmers during a famine. Instead, the farmers should be offered incentives, he said. “That’s the approach that I believe the city should be taking on this issue.”
Cody said density limits should be waived for those developing affordable housing and that the definition of “affordable” continue to include those making up to 140 percent of area media income (AMI), typically schoolteachers and construction workers.
Council Zoning Chairwoman Kymberly Pine said discussion on the bills is just beginning and that her committee will look at all the suggestions. The bills now go to the full Council on July 12 for the second of three needed approvals.
Current rules require larger developers seeking a zone change to set aside 30 percent of their units to those prospective homebuyers or renters making 140 percent of
Honolulu’s AMI or less, for a minimum of 10 years.
Caldwell’s regulation bill allows developers to set aside fewer affordable units, provided they be aimed at those making 120 percent or less of AMI, and increases to
30 years the time units need to be designated as affordable.
Stanford Carr, who has built affordable housing in Kakaako with the help of tax credits and other incentives, told committee members to “decouple” the incentives bill from the regulations bill.
Carr said he supports Bill 58, and particularly the idea of allowing developers to set aside a smaller percentage of affordables if they opt to build rentals instead of sales units.
But he urged the Council to remove the 30-year requirement for those affordable rental projects not receiving other federal or state assistance. “If a private owner wants to build affordable rentals, do not restrict them to 30 years,” he said, adding that there already enough disincentives for people to develop affordable rentals.
Keith Kurahashi of R.M. Towill Corp. urged Council members to back off moving to a 30-year affordability requirement. After 10 years, he said, it’s likely that an owner-
occupant will have built up enough equity and received more income to “move up” and away from the
affordable unit.
“If, however, under a 10-year term of affordability and the owner decides to move, the home would be sold at a level similar to surrounding affordable homes and will probably service someone at the affordable income level,” Kurahashi said.
Scott Settle, president of the Hawaii chapter of the National Association of Industrial and Office Properties, said the general concept of “inclusionary housing,” requiring lower-priced units that are financed by higher-end units, does not work.
“You’re not going to get additional units with this, by itself,” Settle said, urging Council members to focus on more incentives. “Much as we all want it and we want to force somebody to do it by waving the wand or pounding the hammer, it will not get built,” he said.
Caldwell, making a rare Council committee appearance, testified first and said he anticipated the blowback on the 30-year requirement. He said he would keep an open mind on the issue, and he urged Council members to do the same.
As for separating the two bills, Caldwell disagreed with developers as well. “I think they absolutely have to go hand in hand because I think if we just pass … the regulations, I don’t think we’d see the kind of action we want to see,” he said.
