Require builders to build housing, not just pay a fee

Mayor Kirk Caldwell and other rail supporters have long pitched the city’s ongoing transit project as a golden opportunity for a much-needed boost in Oahu’s affordable housing inventory. But unless the land-use law compels developers to actually build below-market priced units, we could see very few affordable units dotting the rail line.

That’s because the city is offering developers seeking height and density exemptions for housing construction alongside the proposed line the option of paying in-lieu fees.

Such fees are common among scores of cities on the mainland with affordable housing requirements. But Honolulu’s far-flung location makes it an uncommon place. Land suitable for any sort of housing is in short supply, steadily pushing prices higher and lifting home ownership out of reach for many households.

During 2016, the median sale price for single-family houses on Oahu was $735,000. The condo median price was up 8.3 percent to a new high of $390,000, topping the $360,000 median price of 2015.

Earlier this month, the Honolulu Planning Commission approved a proposal that pinpoints interim affordable housing requirements for residential building projects near planned rail stations seeking height and density exemptions.

The measure would serve as a stopgap until the City Council adopts transit-oriented development, or TOD zoning regulations, which are now under review.

Last fall, the city fumbled the debut of the interim process, in part, because no specified terms were in place when a condo-hotel project near the Hawaii Convention Center secured the first interim permit.

INTERIM TOD-related affordable housing regulations represent a step forward, but continuing to offer the in-lieu option could be a big step back. The proposal, which needs City Council backing, gives variance-seeking rail-side developers the option of skipping affordable units by paying the city $45 per square foot of the total residential floor area.

The city Department of Planning and Permitting has defended the in-lieu option, saying, for example, it would be appropriate in cases in which people in affordable housing could be priced-out by rising maintenance fees in higher-end condominium projects.

Not much punch in that argument. Is there no way around such fees amid an islandwide housing crunch?

About two years ago, when the city released its now-stalled “Housing Oahu: Islandwide Housing Strategy,” the report warned that Oahu would soon need thousands upon thousands of additional housing units to address growing demand, with three-quarters of the projected demand tied to households earning less than 80 percent of area median income. Insisting that affordable units surface along the rail line would help put a dent in the crisis.

In the case of the luxury housing project near the convention center, the developer is now on the hook for at least 20 rental units within 1 mile of the proposed Ala Moana rail station or payment of in-lieu cash equal to 20 rental units (up to $3 million) into a city housing development fund. Affordable housing is not the winner here as actual construction for people in low- and moderate-income brackets will be delayed.

Given the quick pace of TOD-related development plans, the city should insist on inclusion of affordable housing units in rail-side construction.

Within the next few months, the city is slated to unveil an islandwide affordable housing requirement plan. As it stands now, Oahu’s affordable housing requirements come into play only through requests for zoning changes.

A few years ago, Caldwell began talking up the idea of an ordinance that would require every green-lighted large housing project — regardless of zoning status — to build a certain number of low-income rentals or moderately priced for-sale homes, or pay an in-lieu fee. On the mainland, similar affordable housing laws are now surviving lawsuit push-back from developers arguing that the federal constitution protects against “taking” of private property.

Last year, the League of California Cities and California State Association of Counties estimated that about 170 local governments have enacted versions of the law to deal with the state’s shortage of affordable housing, considered an acute problem in Silicon Valley and around the Bay Area. Oahu needs to move on this problem, too.

In Honolulu’s case, an in-lieu fee should be accepted rarely and only as a last resort, given the urgent need for living units. Regardless, an all-inclusive affordable housing requirement would serve as a long-overdue step in the right direction.