Easing the housing crunch for low-income citizens

A decades-long debate over the best way to make more homes available to the neediest families continues at the Hono­lulu City Council on Wednesday.

Three resolutions aimed at creating more affordable housing units for those most in need are on the Council’s agenda. The Caldwell administration, meanwhile, has just begun a months-long re-evaluation of the existing city policy that requires Oahu land developers who want rezoning approvals to designate no less than 30 percent of their units as "affordable" and available only to households in federally designated low- and moderate-income categories.

As housing demand increases, so too have the arguments over how best to ease the crunch.

On one side are those who want to change existing rules that require land developers to set aside affordable housing in a way to benefit those at the lowest income levels the most.

But others, including the developers themselves, warn that the practice of mandating how much affordable housing must be built drives up the cost of market homes and hampers the ability of developers to produce any homes at all.

The two resolutions propose significant changes to the city’s existing affordable-housing policy. Introduced by Councilman Ron Menor, the resolutions do not call for the overall 30 percent requirement to change, but propose altering the mix so more units are available to those in the lowest income brackets.

For instance, Menor’s Resolution 13-168 would exclude families making 120-140 percent of median from eligibility for affordable homes, thus making more units available to those making less than 120 percent. It would also require that a larger share of those units — 15 percent, up from 10 percent — then be made available to those making 80 percent of median or less.

Menor and others have argued that setting aside units for those at 140 percent of median is not helping families in need because such units are priced at or near market-rate units.

Resolution 13-202, Menor’s other initiative, would require maintaining 30 percent of units designated as affordable as rentals, whereas the current guidelines do not require any rentals. It also would increase the amount of time affordable-housing values and rents must remain designated as affordable.

The developer-funded Land Use Research Foundation opposes both of Menor’s resolutions. David Ara­kawa, the group’s executive director, pointed to a 2013 study by the University of Hawaii’s Economic Research Organization that says requiring a percentage of units be set aside as affordable has had unintended consequences including discouraging potential developers from producing any homes at all, thus reducing overall supply of housing stock and increasing prices.

The UHERO report is only one of several studies in recent years that examined Hawaii’s housing crunch in recent years, and none has supported increasing affordable-housing requirements, Ara­kawa said.

The LURF wants city officials to work with developers, nonprofits and other stakeholders on a workable policy that includes incentives for those who build affordable units, Ara­kawa said.

Menor, however, pointed to a separate study by UH labor economics professor Lawrence Boyd that suggests mandating affordable housing from developers has lowered the overall cost of units while increasing the inventory of affordable units.

Boyd, in testimony before the Council Planning and Zoning Committee earlier this month, further argued that making changes to the policy as suggested by Menor would help the situation.

City Planning Director George Atta and city Housing Director Jun Yang both urged Council members to hold off on moving out Menor’s resolutions. Atta said that after meeting with various stakeholders, a new draft housing policy will likely be released in the next three to four months.

In written responses to questions from the Hono­lulu Star-Advertiser, Atta said neither he nor the administration is ready to take positions on Menor’s proposals. More than 14,000 affordable-housing units have been developed on Oahu over the past 40 years, so to say current policies are not working would be false, he said.

However, Atta said, "current requirements and policies are insufficient to address the problem."

The points raised by Menor’s resolutions already are being looked at as part of overall affordable-housing policy review, Atta said.

Besides requiring developers to set aside units, the city can also consider "private-public partnerships and various financing tools that can change the pro forma of housing projets to enable them to pencil out economically," Atta said. "Grants and various tax policies should be part of the mix. Long-term leases and the use of government lands should be considered. Some changes to zoning and building codes may also help."

Menor said he would agree to defer his two resolutions if the administration can come up with a revised affordable-housing policy before developers of the planned 11,750-unit Hoo­pili project in Ewa apply for rezoning.

Resolution 14-28, introduced by Council Zoning Chairman Ikaika Anderson, calls on the administration to put into place a slew of policy changes recommended by a series of reports from affordable-housing advisory committees and the city auditor.

Atta and Yang said they also want Anderson’s resolution held for now.