HCDA weighs ways to boost affordable housing units

The state agency regulating development in Kakaako has floated ideas on how it can improve production of below-market housing in the area that is a hotbed of rising luxury condominium towers.

A three-member committee of the Hawaii Community Development Authority board issued a report Wednesday suggesting numerous new ways the agency can help produce more affordable housing in Kakaako and elsewhere.

One major recommendation is to tweak an existing HCDArule requiring developers to make 20 percent of units in large new residential projects available at below-market prices.

Currently, these so-called "reserved housing"units must be affordable to households earning from 100 percent to 140 percent of Honolulu’s annual median income, which based on HCDAcalculations equates to $57,820 for a single person or $82,600 for a family of four at the median income, and $80,948 for a single person or $115,640 for a family of four at the 140 percent level.

The recommended tweak would reduce the qualifying income level to 80 percent to 120 percent of the median income, which ranges from $46,256 for a single person to $66,080 for a family of four at the 80 percent level and from $69,384 to $99,120 for the same family sizes at 120 percent.

The committee also recommended that the requirement to produce reserved housing be triggered for some commercial projects and any residential project with 10 or more units. Currently, the requirement is triggered on any residential project on land parcels of 20,000 square feet or bigger.

Making such changes will involve consideration by HCDA’s full board and require amending the agency’s administrative rules through a process that entails public hearings.

It is anticipated that rule changes could take a year or so to happen.

Anthony Ching, HCDAexecutive director, noted that while changes cannot happen quickly, they potentially can address a critical lack of affordable housing in Hawaii.

"These motions will be taken up deliberately and over time … and can be real solutions to our housing crisis,"he said.

The committee was formed in August and is chaired by Brian Tamamoto, an executive vice president at a subsidiary of major Hawaii development firm Kobayashi Group. The two other members are Rodney Funakoshi, planning program administrator with the state Office of Planning, and Luis Salaveria, deputy director of the state Budget and Finance Department.

Not all the committee’s recommendations involved changing HCDArules and could possibly facilitate more affordable housing sooner.

For instance, the committee suggested that the state Employee Retirement System, which invests retiree fund money in various securities, invest in low-income rental housing projects.

Another idea is to employ tax increment financing to pay for affordable-housing development. Tax increment financing involves allocating future expected gains in county property tax revenue that would be created by new condo towers or other real estate development.

The committee also suggested that the City and County of Honolulu might reduce parking space requirements for affordable housing in Kakaako near transit stations as a way to reduce home prices given that it costs an average of around $40,000 to include a parking stall in a building.

Afew changes were suggested that govern how long affordable housing remains affordable and reserved for households meeting income limits under HCDArules.

Currently, HCDArequires that below-market rentals be reserved as such for at least 15 years. The committee recommended lengthening the minimum to 30 years.

For reserved housing condos, HCDA currently may buy back units if an initial purchaser seeks to sell within two to five years. The committee recommended changing that to 15 years. The buy-back provision allows HCDAto resell units to other residents meeting income requirements.

The committee also suggested that incomes of renters and buyers in below-market HCDAprojects be checked every year to see if they still qualify. If they don’t, renters would have to move out, and condo owners would have to pay HCDAthe difference between their purchase price and the original market price whenever they sell the unit.

HCDA’s board is scheduled to decide at a meeting Nov. 25 whether to accept the committee’s recommendations and move forward with trying to implement them.