Ala Moana TOD leaves affordable housing wanting

Eight high-rise towers — including four with hotels — in the works as part of transit-oriented development (TOD) near the envisioned rail line hub in Ala Moana will bring the area a lot more tourism-oriented lodging than affordable housing.

Stretching from the Hawaii Convention Center to Ala Moana Center, the Kapiolani building sites will likely grow the Waikiki tourism footprint, with the city’s multibillion-dollar, 20-mile rail line eventually shuttling visitors to destin- ations ranging from Chinatown to Kapolei.

Developers are snapping up the opportunity to build luxury condo and hotel structures near the proposed Ala Moana Center station, and the city is looking forward to a lucrative revenue flow. This sort of arrangement would be acceptable — or expected, at least — if we did not have a crushing need for affordable housing.

Earlier this month, in his State of the City address, Mayor Kirk Caldwell said Oahu needs some 24,000 affordable housing units to meet current demand, but the marketplace is adding only 2,000 to 3,000 units to the supply annually, with most priced in the luxury bracket.

The mayor wants to commit the city to facilitating approval of 800 affordable units every year over the next four years. If that pace were to continue, it would take three decades to put in place the needed inventory. That’s unacceptable, if not offensive, amid looming trajectories of housing demand and homelessness.

Caldwell and others who have long touted the ongoing transit project as a prime opportunity to reduce Oahu’s affordable housing backlog, need to push much harder to make it happen. The mayor’s proposed “inclusionary housing” strategy, which will go before the City Council next month, serves as a too-timid step in the right direction.

The strategy would require developers building near rail stations to reserve 20 percent of for-sale units in TOD areas for customers who earn up to 120 percent area median income (AMI), $120,630 for a family of four; and $84,540 for the single buyer. Also, it would tag 15 percent of rental units for tenants earning up to 80 percent AMI, which translates to $80,450 for a family of four; and for a single person, $56,350.

The latter targets the right group, as three-quarters of the demand for affordable housing is for households earning less than 80 percent AMI. But with more than three-quarters of the new housing inventory slated for market rates, the slice of the pie going to our ravenous affordable housing contingent is far too small.

If the city would serve up a larger slice near the Ala Moana terminus — projected to be the largest boarding station along the line — locals would line up for a housing lottery ticket. Consider: Last fall, when the developer of a condo called Kapiolani Residence, situated mauka of the Ala Moana Hotel, solicited buyers for 292 affordable units in the tower, 900 Hawaii residents submitted applications for a lottery.

Among the towers in the TOD lineup, Kapiolani Residence is the only one with construction underway. Still on the drawing board: a property recently purchased by Avalon Group at 1400 Kapiolani Blvd., makai of Walmart; Hawaii Ocean Plaza hotel and condo just Ewa of the Avalon site; a hotel and condo next to Walgreens fronting Kapiolani; a condo mauka of Walgreens; a condo called Hawaii City Plaza on Sheridan Street, Ewa of Walmart; a condo on the makai side of Kapiolani fronting Kona Iki Street; and a hotel and condo called Manaolana Place at the corner of Kapiolani and Atkinson Drive.

Currently, Oahu’s affordable housing requirements come into play only when developers want to build higher and with tighter density than allowed under zoning rules. In exchange for rail-side exemption, they are on the hook for affordable housing, which may be built on-site, off-site, or they may opt for an in-lieu payment or land dedication.

The city should ditch the in-lieu option. In the case of Manaolana Place, the developer is electing to build at least 20 rental units within 1 mile of the proposed rail station or pay a cash equivalent (up to $3 million) into a city housing development fund. Affordable housing is not much of a winner as actual construction for people in that bracket will likely be delayed.

More than any other rail station, the Ala Moana site is expected to bump up property values and tax revenues. Development rules must balance residential housing concerns with those tied to maintaining a thriving tourism area. Our residents should not be left with scraps scattered among thousands of housing units reserved for tourists and extended-stay visitors. City leaders must seize the opportunity TOD presents to secure more viable housing opportunities for struggling households.