The New Aloha Stadium Entertainment District (NASED) is a ray of hope for thousands of residents to be able to live in affordable housing, to work and play in a new live-work-play community.
To make the most of this opportunity, we can learn from Vienna’s successful housing policy, as outlined in the website Upworthy.
Vienna subsidizes housing for 60% of its people, and almost 50% of its housing stock is housing co-operatives and city-owned flats. Hawaii also needs affordable housing for 60% of its residents. Like Vienna, Hawaii has affordable government apartments, and can build affordable co-operative housing again. Hawaii state law makes it possible to build these affordable housing solutions — and Gov. Josh Green wants housing to be built to last to a 100-year standard, as European buildings are.
“Vienna has kept housing costs remarkably low through its generous social housing system,” according to a Feb. 1 Business Insider article, while “in the U.S., rising rents and home prices have been the biggest drivers of inflation in recent years.”
Vienna, a city of 1.9 million, like any city or country that provides affordable housing for its residents, gives a preference to Vienna’s people — which makes sense since Vienna is using its own tax money to provide affordable housing. The same is true in U.S. cities and counties trying to ramp up their own affordable housing programs separate from what the federal government provides. Cities ranging in size from New York to Aspen, Colo., (pop. 7,000) provide much more affordable housing that is specifically for local workforce and long-time residents by using local funding sources such as sales, property or conveyance taxes. Hawaii could also seriously ramp up production of permanently affordable housing for local residents by relying less on federally funded programs and investing more in locally funded housing.
In Hawaii the value of the land under the structure is 50% to 70% the total cost of the housing (Lincoln Institute). This makes it possible to have affordable housing built on “free” public government land. The most important measure of affordability is, “How much below market is this housing?” If government puts money into housing, fundamentally the only way to make something below market is to purchase or have control of the land, since the price of private land is set at market rate.
Public lands are a vital resource. If it is leased for housing — never sold — with the stipulation that affordable housing on it remains affordable-in- perpetuity, that’s only fair. It’s a public resource to be used for the public good, not private profit.
That’s why it makes good sense that 70% of NASED’s housing is envisioned for workforce and 20% for affordable housing.
To retain the affordability of for-purchase housing built on public lands, limited equity cooperatives (LEC) are a vital part of the affordability equation. Co-ops are “limited equity” — meaning owner-occupants selling their units can only get a reasonable, limited amount of equity from the sale. Sellers cannot destroy the unit’s affordability for the next owners by making a big profit. What matters most for affordability is that the price is stabilized and someone can stay in the building even if their income increases.
Importantly, the government’s land lease should stipulate that for-purchase, LEC co-ops on public land remain co-operatives in perpetuity, and never be converted into condominiums. Many of the previous co-ops in Hawaii converted — enabling large profits.
And if LECs on public land require all co-op owners to live in their units and be owner-occupant-residents, profiting by renting affordable units on public land would be prevented.
Vienna’s solution can be Hawaii’s solution. Only then can Hawaii’s people truly say “Lucky we live Hawaii.”
Renee Ing has advocated for Hawaii affordable housing for decades.
