With so much need for affordable housing, Hawaii should definitively not expend public resources without producing additional homes for locals who need them. That’s why Gov. Josh Green must veto Senate Bill 1170.
SB 1170 purports to incentivize affordable housing development by upping the rewards granted under the state’s “201H” affordable housing program (named for its chapter under state law). However, housing developments qualifying for state 201H incentives already benefit from valuable exemptions from height and density limits, as well as waived general excise taxes and county development fees — all of which translates to money in the bank. Such incentives, which reduce costs and improve returns on investment, are designed to encourage development of projects comprised of at least 50% or 60% affordable units.
Under SB 1170, developers would also receive “credits” for the affordable units built. The pitfall is that these credits could be used as a substitute for additional affordable housing units — up to half of all the affordable units required by Honolulu laws, in the bill’s final version — and counties would be required to accept the trade-off.
In particularly compelling opposition, Dawn Takeuchi Apuna, director of the city’s Department of Planning and Permitting (DPP), testified: “We oppose this bill because it creates credit value that developers can sell or use themselves to fulfill affordable housing requirements imposed by the counties.
“It amounts to ‘double dipping’: Developers of 201H projects receive fee waivers and exemptions, as well as the monetary value of credits.”
Takeuchi Apuna holds that SB 1170 would benefit developers while undermining county affordable housing efforts — and she’s right.
Developers could apply SB 1170’s created credits to exempt themselves from current county regulations that require a certain number of affordable housing units in market-priced housing projects, separate from 201H developments. The credits could also be sold to other developers, so that these secondary parties could evade building otherwise county-required affordable units.
Give away more and receive less in return? That kind of government largess would be a lose-lose for the public.
The Hawaii chapter of NAIOP, a national commercial real estate trade association which includes developers making the primary push on this bill, claims that additional giveaways under 201H are justified because higher interest rates and other development costs boosted by inflation have made the state’s 201H affordable housing program “nearly unusable” by developers.
But that testimony is directly contradicted by the Hawaii Housing Finance and Development Corp. (HHFDC). On Friday, the state agency said that it “is processing 201H applications this year when interest rates are higher than they have been in a number of years. In fact, the number of 201H applications that we’ve processed is actually consistent, if not higher, than in recent years.”
If signed into law, SB 1170 would take effect immediately and hold until June 30, 2031. Unfortunately, HHFDC should have — but failed — to take a strong stand against the bill during the legislative session.
Tellingly, though, other agencies did. DPP was joined in opposing SB 1170 by the city Office of Housing and Hawaii County’s Office of Housing and Community Development.
The state Office of Planning and Sustainable Development also testified that the bill won’t serve its stated purpose of producing more affordable homes. And while HHFDC did not oppose the bill, it did defer to counties on its value.
Given Honolulu and Hawaii counties’ position, and the negative impact this would have on county affordable housing efforts, Gov. Josh Green must take SB 1170 off the table with a veto.
