The pandemic’s upending of Hawaii’s economy is intensifying the glaring light on our long-standing affordable rental housing crisis.
In September, when the state launched its Rent Relief and Housing Assistance Program, underwritten by federal CARES Act funds, an avalanche of applications quickly outstripped processing capacity. And last month, due to overwhelming demand, the city’s Rental and Utility Relief Program portal closed just four hours into its launch — after receiving 8,000 applications.
Clearly, every bit of housing help is urgently needed — from making rent, to making actual rentals at affordable rates.
In a follow-up to his election-campaign pledge to incentivize private landowners to build affordable units, Mayor Rick Blangiardi last week signed off on Bill 1, which allocates up to $10 million in city-funded grants for developers who build rental units targeted at residents making less than the area median income (AMI). The measure holds potential to make a small-but-much-needed dent in a large problem.
While the ordinance’s backers foresee it encouraging the construction of some 1,100 housing units within three years, Oahu will need upwards of 20,000 more housing units to meet demand by the decade’s end. Two-thirds of the homes needed are for households earning less than 100% of AMI.
The new law arrives on the heels of an ordinance enacted last year, which offers developers other carrots — higher density, relaxed height and setback rules, no parking requirement and a 10-year waiver on property taxes — in exchange for capping rents at government-set affordable rates for 15 years. But with COVID-19 uncertainties leaving would-be takers hesitant to move forward, the city is now sweetening the pot with the grants offer, tailored for aging low-rise walkup remodels in urban areas such as McCully, Makiki, Kalihi and Waikiki.
Under the new law, units rented to households making between 60% and 100% of AMI can fetch up to $9,000 for the developer. Those rented to households earning below 60% of AMI can garner up to $15,000. (In Hawaii, the current AMI for one person is $71,100, and $101,600 for a family of four.)
Given the risks to small-scale developers, along with rising costs tied to Hawaii construction — in some cases, prices for building materials are now hitting 20-year highs — the city’s financial incentive seems a sensible investment. However, other elements in the overall effort need further scrutiny.
For starters, the depth of Oahu’s housing problem warrants locking in affordable rents for at least the length of a generation — 30 years makes much more sense than a 15-year period.
Also, rather than eventually making these units eligible for open-ended market rates, Honolulu should consider following the rent-control lead of other high-cost U.S. metros that strive for designated long-term affordability, by disallowing rent rates that outpace Consumer Price Index inflation.
In addition, the Blangiardi administration must proceed firmly on a computerized overhaul of the Department of Planning and Permitting’s building permit process as a means to speeding up construction timelines and enhancing transparency by allowing people to track permit status online.
Due to the city’s pinched budget, there’s little hope that by acting alone it could soon make a large dent in reducing the affordable housing shortage. However, that outlook could change under President Joe Biden’s proposed $2.3 trillion American Jobs Plan. Among its goals: building 1.5 million new affordable homes.
Alongside implementation of Bill 1’s small-scale reach, the Blangiardi administration should draft a large-scale, sustainable affordable housing strategy for residents — from houseless to middle class — who are spending too much of their paychecks on housing, with too little left for other important costs of living.
