Residents and others weigh in on housing rules for Kakaako

The public response is growing over a state agency’s plan to amend affordable housing rules in Kakaako, and the agency’s board faces a difficult decision later this month judging from opposing views presented.

On Wednesday, board members of the Hawaii Community Development Authority, the agency regulating development in Kakaako, heard testimony in favor of and against the effort aimed at increasing Kakaako’s future supply of affordable housing, making it less costly and keeping it affordable for longer.

The meeting was the second public hearing on the issue, but was the first with HCDA’s board present. At an initial hearing in March, the board had a private attorney listen to live testimony for conveyance to them later.

Since then, more testimony has been submitted and two more hearings are scheduled for May 17 and 31.

More than 100 people to date have submitted mostly written comments, and 11 people spoke to the board Wednesday.

Comments include support from Kakaako residents, the city and affordable housing advocates. There also are objections from landowners and developers. And two state lawmakers — Rep. Takashi Ohno and Sen. Stanley Chang — oppose the proposed changes they said could or would reduce production of affordable homes.

“The proposed amendments are complex and technical in nature, but will have the combined effect of reducing the production of housing for the middle class,” Chang said in written testimony. “HCDA should not burden those attempting to build more workforce housing by imposing more restrictions, but should instead focus on positive incentives for affordable and workforce housing.”

Local economist Paul Brewbaker also believes that forcing developers to build homes for residents with moderate incomes is counterproductive compared with free market forces.

“To my mind Kakaako is a failed social engineering experiment,” he told the board, disclosing that some developers recently retained him to produce an economic impact analysis on the proposed rule changes. “By tightening down the restrictions even more, I can’t believe it’s going to make it any better.”

On the flip side, Harrison Rue, a city official helping overhaul city affordable housing regulations, said affordable housing requirements in other markets have been successful and he endorsed HCDA’s plan.

Rue suggested that one part of the plan to lower the maximum price of affordable units should go a little lower, echoing the sentiment of others.

Current HCDA rules require any project on more than 20,000 square feet of land to set aside 20 percent of the homes built so they are affordable for rent or purchase by residents who earn up to 140 percent of Hono­lulu’s annual median income, which equates to about $86,000 for one person.

The proposal would reduce that so that average rent or purchase prices have to be affordable to residents earning no more than 120 percent of the median income, which would allow some units to be priced for residents earning up to 140 percent.

At the 120 percent level, a home could be sold for about $430,000 to a single person, $495,000 to a couple or $610,000 for a family of four. The 140 percent level 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.

Kakaako resident and former state Rep. Galen Fox told the board he supports the change to 120 percent.

“This is only 20 percent of the whole project,” he said. “These guys (developers) can make all the money they want off the other 80 percent. Of course they’re going to cry and scream about having to build 20 percent of the units at prices that are difficult or more difficult to make a profit off. But that’s the bargain of coming into Kakaako.”

Others said that without affordable housing requirements, developers would opt to build more luxury housing and leave the middle class out of new residential projects that are largely high-rise towers in the area bounded by Ala Moana Boulevard and King, Piikoi and Punchbowl streets.

Some small landowners complained that one proposed change will hurt their prospects to redevelop. This change would apply the 20 percent affordable housing requirement and other new restrictions to projects with 10 or more homes.

Eunice Chung, who owns a small property at 975 Kapiolani Blvd., said this would devalue her property while larger landowners such as Howard Hughes Corp. and Kamehameha Schools aren’t affected by any changes because they have master ­plans for 90 acres grandfathered under older rules.

“I feel this is discriminatory to me and other property owners,” she told the board.

Other areas of proposed rule changes that are being contested include keeping affordable prices on rentals in place for 30 years instead of 15 years. Another change would put limits on equity gains for buyers of “workforce housing” units where developers are allowed to build at twice the normal density if at least 75 percent of the homes meet the affordability guidelines and are built with no government financing.