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State board skips its own hearing

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Several dozen people attended a public hearing held Tuesday on proposed changes to rules for producing affordable housing in Kakaako, but the state board contemplating the overhaul wasn’t there to listen.

About 70 people have submitted written testimony to the Hawaii Community Development Authority board on the subject, and 10 people testified in person Tuesday to express a mix of concerns, objections and support.

The HCDA board hired an attorney to listen to the testimony and summarize it for board members later.

What’s at stake are proposed changes in the HCDA’s affordable-housing rules. Currently, any project on more than 20,000 square feet of land must set aside 20 percent of the homes built to be sold or rented at below-market prices so they are affordable to moderate-­income residents.

A couple of developers were miffed that the board wasn’t present to hear what people said and potentially ask questions of those who showed up to testify.

“It’s not good practice,” developer Stanford Carr said after what was billed as a “presentation” hearing for the board.

Ryan Harada, a principal with development firm Downtown Capital, said he was disappointed that the board chose to have a hearings officer receive the testimony. “How do you move to decision making when you’re not here to listen to testifiers?” he said.

Deepak Neupane, HCDA’s director of planning and development, said the privately contracted hearings officer, Curtis Tabata of Honolulu law firm Matsu­bara-Kotake, will present a written report to board members that conveys the public testimony to them before a second public hearing May 3, during which the board will be present and could make a decision. The public can also testify at the May 3 hearing.

Neupane said a similar process was used recently to consider changes to HCDA park rules.

On Tuesday, half the people who testified in person criticized some proposed changes. Two people said prices of affordable homes in Kakaako need to be lower. And a representative of the city Department of Planning and Permitting endorsed the proposed overhaul.

Generally, the biggest change being considered would make developers produce affordable homes at lower prices and maintain such prices for longer.

For instance, prices on average for such homes if sold would have to be affordable to someone earning 120 percent of the median income, which translates to about $430,000 for a single person, $495,000 for a couple or $610,000 for a family of four. The current rule ties the price to an income level of 140 percent, which translates to sale prices at about $505,000 for a single person, $580,000 for a couple or $720,000 for a family of four.

George Massengale of Habitat for Humanity said the requirement should be lower, and noted that a family of four earning Honolulu’s median income makes $100,000 a year. “We would like to see the high end lowered,” he testified.

Bill Wilson, chairman of Hawaiian Dredging Construction Co., said he’s concerned that the proposed rule changes would “effectively stop” future development in Kakaako.

Carr opposed a change aimed at making affordable rental housing last twice as long by keeping affordable prices in place for 30 years instead of 15 years. He said that wouldn’t be smart given that no affordable rentals have been produced by developers in Kakaako other than units built with government subsidies outside of HCDA requirements.

“It’s just adding another disincentive” for developers of affordable rentals, he said.

Another change proposed for rentals would reduce maximum rents. The existing requirement is for rents to be affordable to tenants earning up to 140 percent of the median income, which HCDA recommends lowering to 120 percent on average. The difference on monthly rent would roughly be $2,100 instead of $2,500 for a studio and $2,700 instead of $3,200 for a two-bedroom unit.

Under the proposed changes, the trigger for producing this affordable housing, which HCDA calls “reserved” housing, would be any project building 10 or more homes.

In addition to the 20 percent requirement, HCDA has another program intended to produce moderate-priced homes referred to as “workforce housing.” Proposed changes to this program also elicited developer objections.

HCDA’s workforce housing program allows developers to make projects twice as dense if at least 75 percent of the homes meet the reserved housing affordability guidelines and are built with no government financing.

The proposed changes would reduce allowable prices to match the proposed reduction for reserved housing units. In addition, several restrictions already placed on buyers of reserved housing would also apply to buyers of workforce housing under the proposed changes.

Currently, reserved housing buyers must give HCDA the first option to buy the unit if they sell within two to five years, depending on the project. Under the recommended changes, HCDA would have the first option to buy a reserved or workforce unit regardless of when an owner decides to sell.

By repurchasing units, HCDA intends to make them available to other buyers meeting income limits. A repurchase price would be set by applying annual percentage increases for the median price of all Oahu condo sales, as reported by the Honolulu Board of Realtors, to the original market price for the reserved or workforce home.

On top of the price cap, HCDA proposes to take a larger cut of appreciation on workforce housing resales, which it could use to help produce more affordable housing.

Richard Bowles, an information technology professional who recently bought a condo in the workforce housing tower 801 South St. Building B, said it was challenging for him and his wife, a state employee, to afford a home in town. He urged HCDA to leave its workforce housing rules as they are. “If it ain’t broke, don’t fix it,” he said.

Lisa Eveleth, a representative of a company that owns a 4-acre parcel in Kakaako occupied by a warehouse and retail complex called Coral Commercial Center, said the proposed changes to workforce housing rules would limit options available to redevelop the property and stop workforce housing production.

Written testimony was submitted by 70 people as of Friday, but Neupane said it would not be made public until HCDA board members receive it.

Any rule changes approved by HCDA’s board would be subject to approval by Gov. David Ige. One caveat to any changes passed is that they will apply to projects not already permitted or covered by a master plan, which means towers under the Our Kakaako and Ward Village master plans won’t be subject to any new rules as long as the master plans are in effect.

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