Mayor Kirk Caldwell’s affordable housing proposal has generated mixed reviews from the development community and housing advocates. While some in the development community maintained that parts of the policy were too strict, advocates contended that certain thresholds need to be changed to provide more options to lower-income residents.

Caldwell pitched the proposal at his State of the City address in February, saying that if the city does not revamp its affordable housing policies, Oahu will become a “gated community, only affordable to an exclusive few.” He said his “inclusionary housing” strategy could add up to 800 affordable units in each of the next four years.

At a City Council special Zoning and Housing Committee meeting Thursday, Harrison Rue, city transit-oriented development administrator, said the proposal, which would set affordable housing requirements for projects islandwide, is the result of several studies, research and discussions with interested parties. He said the administration plans to introduce a bill to the Council on the plan within the next couple of weeks.

“I would not call this developer friendly,” Rue said of the proposal. “It’s developer usable.”

The proposal would give incentives to housing developers, such as waivers from paying sewer hookup, building permit and plan review fees, in exchange for reserving more affordable units for those earning less and keeping them affordable for a longer period of time. The plan would apply to developers seeking building permits or land-use approvals for 10 or more housing units and would be phased in over one to three years depending on the area.

Under the plan, developers building near rail stations would need to reserve 15 percent of rental units for those earning up to 80 percent of the area median income, or AMI, and provide 20 percent of for-sale units to those making up to 120 percent of AMI. If developers choose to build the affordable units off-site, the same requirement would apply for rentals, but for for-sale units, 25 percent must be reserved for those making up to 120 percent of AMI.

For housing projects not near rail stations, the proposal would require 5 percent of rental units to be provided to those earning up to 80 percent of AMI, and 10 percent of for-sale units to those making up to 120 percent of AMI. For off-site construction, the rental requirement would be the same, but 15 percent of for-sale units would need to be offered to those earning up to 120 percent of AMI.

On Oahu, 120 percent of AMI for a family of four is about $120,600. Current guidelines require that at least 30 percent of new housing units be reserved for those earning up to 140 percent of AMI.

Units would need to remain affordable for at least 30 years, instead of 10 years under current regulations. Developers choosing not to build affordable units would pay an in-lieu fee to the city, which would cost $45 per square foot for projects near rail stations and $27 for all other housing projects.

At Thursday’s meeting, Rue said the in-lieu fee is not meant to cover the total cost of building housing units, but rather the difference between the amount someone can afford to pay and the price of the unit. He said the $45 was chosen as the “middle of the middle” after comparing similar fees in other cities.

But the Rev. Bob Nakata of Faith Action for Community Equity said Thursday that he does not like the in-lieu fee option and questioned how the city would use the funds. He added that although the requirement for housing to remain affordable for 30 years is a good number, the thresholds need to be lowered to 60 percent of AMI and below to aid lower-income residents.

“Some of us think it’s (in-lieu fee) an easy way out for the developer,” Nakata said. “The middle class now is facing huge housing problems, which only the poor had faced up until now. It’s time for this discussion to really move.”

Gavin Thornton, co-executive director of the nonprofit Hawaii Appleseed Center for Law and Economic Justice, said recent studies show that inclusionary policies in areas with high housing costs and a strong housing market can be effective in adding affordable units. But he said the majority of the demand is for those earning 80 percent of AMI and below and that “the devil is in the details.”

But David Arakawa, executive director of the Land Use Research Foundation of Hawaii, which advocates for the development community, questioned if the proposed minimum 30 years would be sustainable and that it could stunt the affordable housing market. He said lowering the AMI threshold to those earning less leaves out many middle-income residents.

“We think that this new policy is a step in the right direction,” Arakawa said. “I think the intent is good to concentrate on a lower area of income, but you’re cutting out these people who make 120 percent to 140 percent (of AMI). They don’t qualify for these affordable housing projects. Where are they going to go?”

Chris Deuchar, founding partner of developer Form Partners, added, “I think all of the development community agrees something needs to be done, and we want to help facilitate that. (But) I think it’s important … to look at this crisis almost as a famine. If people are starving and they need food, I don’t think it’s a good idea to make it tougher for the farmer to grow food.”

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