Is Hawaii really going to do this thing, this affordable housing, state-intervention thing? All of the state’s top elected leaders, from the governor on down, seem to be on board with the general plan, which by itself is good news.
Clearly, though, where the particulars are concerned, the conversation has just started. The House and the Senate, as of last week, were pushing concepts that are far apart, the former favoring a plan that’s more relaxed about the degree of affordability, and the latter wanting most of the government help focused on housing units at a lower price point.
The blueprint from the state Capitol Democratic leadership is a proposal to leverage public lands and financing to support an inventory of leasehold units on state-owned land.
The language as originally drafted by House leadership still exists as House Bill 2542, which on Friday still had not been scheduled for a hearing.
Both House and the newly revised Senate versions essentially authorize the Hawaii Housing Finance and Development Corp. (HHFDC) to grant leases issued for terms of 99 years to homebuyers, which essentially covers the cost of land for the housing. The measures also would authorize $200 million in bonds that would finance the infrastructure needed for the leasehold homes.
The idea, and it’s a bold one, is that with these incentives, developers would be able to deliver homes for a much lower price. The difference between the original House draft and its companion, Senate Bill 3104, lies in what the state wants developers to deliver.
HB 2542 would require that half the units built and leased on state-owned lands be reserved as affordable, which it defines as affordable to buyers earning 140% of the area median income (AMI) or below.
This is an enormous public asset to sacrifice — land and infrastructure — if it means reaping only half of the homes as “affordable.”
And then capping it at 140% AMI? For a family of four, a house priced at $868,000 would still qualify. How this is seen as affordable is hard to grasp. The Senate version would lower the cap of the home pricing, and eliminate the allowance for market-priced homes to be built.
This ought to prompt negotiation and compromise at a midpoint that makes more sense.
Legislators presented their rationale for all of this to the Honolulu Star-Advertiser during an editorial board meeting held recently with lawmakers and Gov. David Ige.
State Rep. Sylvia Luke, who chairs the House Finance Committee, cited a new report indicating that the state will need 50,000 total housing units within five years. But if the target was reduced to include only the homes between 60 and 140% of AMI, it translates to 17,000 homes that must be built. That, she said, seemed a more attainable goal.
Luke also insisted at the meeting that the bill would not specifically set the top bar at 140% AMI.
“Initially it was going to be a law, but that 140 will be removed, and what will be in the bill is what HHFDC determines is affordable in that neighborhood,” she said.
But despite her assertion, the language turned up in the bill, after all: “‘Affordable housing’ means housing that is affordable to households having incomes at or below one hundred forty per cent of the area median income as determined by the United States Department of Housing and Urban Development.” You can’t get more specific than that.
Luke did note that the leaders opposed constraining the bill too much, to ensure that developers are incentivized to build. And Senate President Ronald Kouchi said his concern is that many two-income middle-class families would tip past 100 or 120% AMI and would not qualify.
“Part of it is we don’t want to put it in concrete in the law as something that’s unreasonable,” Ige added. “We do expect that as we roll the product out, the competition will be amongst the developers, about who can get the prices the lowest, who can serve the biggest number of 100-120% (AMI), or 80 to 100, because that’s the part of the market we’re not serving today.”
Well, exactly. First of all, left to their own devices, developers have not served that part of the market, as witnessed by the projects proposed to date along the Honolulu rail system. That’s why the Senate revisions in SB 3104, as proposed by the housing chairman, Sen. Stanley Chang, deserve to move on for further discussion.
Chang wants to keep all the leasehold development affordable, not just half, which seems logical. Further, he wants to cap affordability at 80% AMI — but remove the income restrictions. That would avoid the marginal disqualification problem Kouchi raised.
If the lawmaking process works as ideally as it should, there should be middle ground on which the final enabling legislation could land. This is a precious opportunity to deliver affordable housing that Hawaii desperately needs, and lawmakers can’t afford to waste it. They must take their chance now — and do it right.
