The state, long searching for the means to solve its most pressing crisis — the shortage of affordable housing — has taken a step toward one solution, using the most valuable asset it owns.
Land. By eliminating that cost from condominium development, the public would benefit from an opportunity to buy a home — albeit a leasehold property — priced more closely within reach. Legislation is now advancing, thankfully, to make that a reality.
It is ironic that the state now finds itself in the position of holding on to its land holdings in pursuit of this policy goal, more than a half-century since the initial passage of the Land Reform Act. This law was aimed at breaking up large tracts of private leasehold land because owning that land in fee simple was seen as in the best interest of the public.
But this is 2019, and most Hawaii residents who are contemplating home ownership for the first time find themselves shut out of the housing market. The shortage of inventory, investor speculation and other factors have driven up the prices to the half-million-dollar range and beyond.
Leasehold offers another way in — and with the state maintaining ownership, the risk of a profit-
driven lease renewal for higher rents is not the overriding concern.
Two bills have been introduced this session:
>> House Bill 817 simply authorizes the state to enter into 99-year leases of residential condominium units located on state land.
The program would be overseen by the Hawaii Housing Finance and Development Corp. (HHFDC), with the units offered only to Hawaii residents. They must qualify under state law, which adds requirements including that they be
owner-occupants.
>> Senate Bill 1 is far more detailed, spelling out the particulars of what is dubbed the ALOHA program (that stands for ”affordable, locally owned homes for all”). It was championed by state Sen. Stanley Chang, who introduced the bill along with numerous co-sponsors; he bases his plan on a Singaporean model that is government-
run.
This is a bold move and one that could scale up enough to close the affordable-housing gap substantially, a prospect that has seemed dim despite the promises of transit-oriented development. The profit motivation of private developers and landowners would be mitigated; SB 1 also includes resale rules aimed at keeping the units within the affordable range.
The flip side: The same control that keeps a lid on the property cost also threatens the success of such projects with government inefficiencies. Hawaii is not Singapore; regulatory complications could bog things down.
So the object of passing this enabling legislation — which lawmakers should do this session —
should be to establish clear rules for partnerships with private builders and with nonprofit entities that can manage the projects once they’re delivered.
There are interest groups weighing in, including the Office of Hawaiian Affairs, which has raised some concerns about its interest in proceeds it is owed from much of the state-owned land for these projects.
Under the Admissions Act of 1959, Native Hawaiians comprise one of five beneficiaries for revenues from “ceded” lands — former Hawaiian kingdom and crown lands seized by the federal government and then ceded to the state, to be used for public purposes.
There should be complete transparency about how these lands are deployed, acknowledging the interests of OHA. However, there are four other purposes for ceded lands revenues that were identified: public education, development of farm and home ownership, public improvements and provision of lands for public use.
It seems clear that SB 1 lays out a route toward fulfillment of at least one of those goals. Advancing in that direction surely deserves support from Hawaii’s elected leadership.
