Does Hawaii need housing that’s affordable for people earning what the bulk of people in Hawaii earn? Yes, and it’s a matter of growing urgency that this housing is by and large unavailable, concerning to the state and Hawaii’s employers.
Is dipping into the pot of state funds set aside to spur development of affordable homes for families with very low incomes the best way to get this housing built? No, and the reason for that is that this group of households is on the bottom rung of the resources ladder, may face a real risk of homelessness without state intervention, and market solutions short of direct public spending aren’t available.
The Legislature is considering a bill to allow use of monies from a state rental housing fund dedicated to developing low-income rental housing, now reserved for households earning 60% or less than a county’s annual median income, to develop apartments charging higher rents — rents affordable to those with incomes reaching as high as 140% of the median income, or $194,250 for a family of four.
House Bill 432 is bad policy, but it still has life at the Legislature; it’s been in conference committee since Monday, with another session scheduled today. It should not be advanced — and if it’s passed, Gov. Josh Green should veto it.
It’s not necessarily nefarious that the Hawaii Housing Finance and Development Corp. (HHFDC), which administers the rental housing fund, would support this change. The state must address our current housing crisis, with fair market rent for a 3-bedroom home in urban Honolulu above $3,700 monthly — and the federally determined median income for a 4-person family in Honolulu about $111,000. That’s very roughly double the earnings of an early career police officer or firefighter, retail or operations manager, and many other public workers.
It’s incumbent on the state, and counties, to create a planned framework of development so that these essential workers and their families can continue to work and thrive in Hawaii. But HB 432 is not that, and in its basic outline, could continue to push up the cost of rentals, shutting out low-income workers in greater numbers. Current “affordable” rules for a 3-bedroom rental serving 140% median income households show that it could be priced at up to $5,060 — much higher than fair market value. To subsidize development of such high-priced apartments is completely unacceptable.
Currently, the state rental fund prioritizes apartments for a single person earning up to $58,500 and a 4-person family earning $83,250. Working families with children at these income levels are those most likely to be under duress — yet the problem with supply continues, as developers often prioritize studio and one-bedroom apartments, as they are easier to afford.
In 2023, the latest year reported, the U.S. Census counted 50% of households (any number of people) in Honolulu County as earning incomes below $104,264, and almost 23% of households earning $49,999 or less. The need here, even more urgent, has not been filled, and therefore it’s not justified to raid state funds to subsidize housing for those who earn more.
Dean Minakami, HHFDC executive director, testified that HB 432 is needed to avoid separate legislation authorizing funding for higher-income rental projects. On the contrary: Legislation must be required, and it must be tied to an explicit spending and development plan that does not short-shrift low-income families.
There are other options — for example, HHFDC’s pilot Dwelling Unit Revolving Fund (DURF), a lending program that lowers barriers to homeownership for above-middle-income households with low-cost loans, while retaining state equity interest in a project. Let’s see the state and counties spell out affordable housing plans before weakening the utility of this rental fund.
