Perhaps when Act 141 became law in 2009, it made sense to provide an alternate means of financing state Department of Hawaiian Home Lands housing for Native Hawaiians. In the throes of the Great Recession, the money for such projects didn’t come easy, least of all from state coffers already tapped out.
But the time for such an end-run on affordable housing policies has run out. In the face of a fast-growing homeless population, counties and the state have made it Job One to increase the supply of desperately needed affordable housing.
Act 141, which enables DHHL to collect, use or sell affordable-housing credits from counties, confounds affordable-housing planning by each county and should be retired as soon as possible.
Actually, that end should have come last legislative session; unfortunately, lawmakers extended the law for four years, to 2019. And while it’s likely too late this session to correct that error, lawmakers should resolve to make the change next year.
Under the law, DHHL can claim affordable-housing credits from counties for existing houses, or units it plans to produce or, in some cases, residential lots it produces.
Then the state agency can transfer its credits to developers, both those that actually produce housing for its beneficiaries or for those that, in lieu of actual homes, pay cash to help finance Hawaiian homestead projects.
Even in 2009, county officials were concerned that the credits would become commodities that would end up discouraging the production of affordable homes for the general population.
Two counties — Honolulu and Kauai — moved to craft separate memoranda of agreement with DHHL, as the agency described it, “to smooth implementation of this program and to address concerns related to home rule.” When the program was ultimately extended, these side agreements were authorized in the new law.
This raises the question: If counties need to create a back door for a law, doesn’t that underscore a basic flaw in the law itself?
Here’s how George Atta, director of the city Department of Planning and Permitting, put it in his written testimony last legislative session:
“It undermines the ability of the counties to provide new affordable housing to all its residents within county-defined income need groups, on a time schedule commensurate with private-sector construction, and in geographic areas where the counties believe affordable housing is needed.
“The goal should not be to redirect the resources and/or opportunities from one branch of government at the expense of another,” Atta added. “We all need to work together in addressing the affordable housing shortage.”
Just one look at statistics about the affordable housing shortfall underscores the validity of Atta’s argument. The Hawai‘i Appleseed Center for Law and Economic Justice projected two years ago that the state would need 19,000 units by 2016 to meet the need for low-income families, observing that few were in the pipeline that would fill that need.
Certainly, there are many examples of these units — which are required by county regulations when land is rezoned — being siphoned away. Andrew Gomes, Honolulu Star-Advertiser business writer, noted a few examples in his report on Sunday.
Just to cite one: ATC Makena Holdings LLC was required by Maui ordinance to provide 40 workforce housing units as part of its plan for 148 luxury homes, but instead is turning in credits it acquired from another developer, Everett Dowling.
Dowling received 372 credits for building DHHL homes and distributed 326 to other developers, including ATC.
The counties thus are unable to project how many affordable units its land-use policies will yield, because these credits have become commodities. Because of Act 141, financing units for Native Hawaiians has meant that insufficient inventory of affordable housing is being developed for the broader population.
Yes, DHHL has an unacceptably long waiting list. The agency has not operated with optimal efficiency or consistency with the resources it has, as previous reports in the Star-Advertiser have documented.
DHHL may need more support. But it is simply bad public policy to reward the interests of one agency at the expense of others. The acute deficit of housing units for less-affluent Hawaii residents is a critical problem that plays out in the mounting homelessness problem seen on the streets, in parks and in hidden places throughout the state.
This housing-credit exchange program, established seven years ago, is not the way to solve it.
