About $253 million in city-approved bond appropriations earmarked for the acquisition, development and construction of affordable housing and related projects around Oahu will lapse by June 30, Honolulu officials said.

Effectively, the loss will affect general obligation bonds — typically repaid by taxpayers — connected to housing appropriations in the city’s current Capital Improvement Program budget. Adopted in 2021, the appropriations are active for two years, from July 1, 2021, to June 30, 2023.

To that end, losing these funds will affect both Mayor Rick Blangiardi’s administration and the City Council in their respective commitments to increase the island’s affordable housing stock to reduce homelessness.

However, city officials cautioned some of these funds may already be programmed for projects, though details of such expenditures were not immediately known or provided by the city.

“We will lapse CIP affordable housing appropriations; the exact amount (is) unknown at this time,” Managing Director Michael Formby told the Honolulu Star-Advertiser via email. “We have projects in due diligence and whether we can encumber funds by June 30, 2023, subject to appropriations and their budget provisos, remains to be seen.”

According to the CIP budget as adopted in 2021, the original housing appropriations were additions made by a prior City Council. They cover the following project titles and descriptions:

>> $18 million for the Community Revitalization Initiative: Funds for the acquisition, easement, development, and/or renovation of facilities for urban rest stops, navigation centers, workforce/affordable housing, and other community-focused projects.

>> $20 million to Acquire Homeless Service Facilities: To acquire land, plan, design, construct, and provide funds for miscellaneous costs for homeless facilities providing housing, hygiene and other related services.

>>$170 million for Affordable Housing: To acquire land, plan, design, construct and provide funds for other miscellaneous costs for the development of low-income affordable housing and any necessary and related infrastructure improvements.

>> $35 million for Affordable Housing with a Preference for Transit Oriented Development, or TOD, Areas: Acquire land, plan, design, construct, and provide funds for other miscellaneous costs for the development of low-income affordable housing, and any necessary and related infrastructure improvements, with preference to housing in neighborhood transit-oriented development plan areas.

>> $10 million for Affordable Housing within the Koolauloa Region: Acquire land, plan, design, construct, and provide funds for other miscellaneous costs for the development of low-income affordable housing and any necessary and related infrastructure improvements within the Koolauloa region.

“These monies are general obligation bonds. I have been working with the Mayor’s Office of Housing, Department of Land Management, and others in the City Administration to encumber these funds,” Council Chair Tommy Waters told the Star-Advertiser via email. “As we know, land acquisition and property development is often a long process. I’ve encouraged our city agencies to think creatively about ways the city can incentivize and produce more affordable housing.”

Waters stressed that the lapsing of any funds the Council appropriates for affordable housing is “incredibly concerning.”

“We’re in a housing crisis, and the budget is one of the primary ways the council articulates its priorities,” he said.

In addition to addressing affordable housing through bond funding, Waters said what the Council is now doing through its Permitted Interaction Group related to real property tax relief measures may prove beneficial toward more housing here.

“We will continue to fight for affordable housing monies to ensure that it remains a priority, and I encourage community members to participate both in budget discussions as well around our discussion on long-term tax relief to ensure our local families are not priced out of our island home,” Waters said.

According to Formby, “there are many factors that play a role in the administration’s decision and ability to encumber FY22 CIP affordable housing appropriations.”

Formby said those include the existence of unused bond proceeds from prior year bond issues and other nonbond revenue available to the administration; the administration’s fiduciary obligation to the taxpayers and the administration’s policy position on acquiring and developing affordable housing; and prioritization of affordable housing projects, including projects in progress prior to the 2022 fiscal year.

“The Blangiardi administration’s fiduciary obligation is to the taxpayers and it is our policy to not issue new bonds when there are unused bond proceeds and/or other sources of revenue available at no cost or less cost than issuing new bonds,” said Formby. “To do otherwise would be to incur unnecessary City debt and debt service at the expense of the taxpayers, potentially negatively affecting the City’s bond rating.”

Formby said the amount of unused bond proceeds was in excess of $170 million in affordable housing appropriations at the start of Blangiardi’s administration in January 2021.

And in fiscal year 2022, Formby said the city “had more than enough bond financing capacity through appropriations and other sources of revenue” including state and local Federal Recovery Funds, Charter Affordable Housing Funds and U.S. Department of Housing and Urban Development-funded Affordable Housing acquisitions.

In other instances, state laws and budget provisions for certain CIP appropriations can restrict how properties can be used, leased, or operated, he said.

“Two examples would be the Iwilei Resource Center, which used both Affordable Housing and Community Revitalization funds, and a TOD project the city is currently working on in Iwilei,” Formby said. “For the latter, details of which cannot be released at this time, we have been in due diligence for over a year and a decision was made not to use (fiscal year 2022) appropriations but rather request (fiscal year 2024) appropriations with broader proviso language that would enable the city to fully develop an activated TOD project consistent with TOD plans and our administration’s vision for Iwilei. We have been working closely with Council on the latter and expect to close this project before the end of (current year 2023).”

Formby touted the city’s advance of nearly $276.9 million in affordable housing projects to date.

Matt Weyer, who chairs the Committee on Housing, Sustainability and Health, said he hopes more affordable housing projects will materialize.

“I think we should be maximizing all of the funding that we can in terms of housing and homelessness,” Weyer said, adding he did not want to offer “criticism” over the lapsed bonds in the CIP budget. “I think you’re dealing with state folks, you’re dealing with city folks and you’re dealing with the crisis that crosses all jurisdictions.”

Weyer said in his own Council District 2, which covers West Oahu and the North Shore, more affordable housing projects are being proposed. That includes the Royal Kunia Box Car project, which envisions affordable housing as well as a child care center on the 2-acre site of a former box car racing track.

“They’re beginning the community outreach right now to possibly put kupuna housing there, which I think is needed,” Weyer said.