Developers and homebuilders would no longer be able to pay cash “in-lieu” fees under a new affordable-housing policy that’s scheduled for a final vote of the Honolulu City Council today.
The Council Zoning and Housing Committee on Tuesday approved its final version of Bill 58 (2017) after hearing from a string of both housing advocates and developers.
It’s a debate that’s raged for more than three decades. Housing advocates want the city to require developers to provide a larger percentage of affordable housing for longer periods of time to those families and individuals in the lowest income brackets.
Developers and landowners warn that demanding too many exactions makes it tougher for their projects to pencil out, sometimes nixing new housing developments altogether or requiring their market homebuyers to pay higher prices.
The housing advocates scored a major victory Tuesday when Zoning Chairwoman Kymberly Pine recommended that her committee remove from the bill any reference that would allow developers to pay in-lieu fees in place of actual units to fulfill their affordable-housing obligations.
Pine said she had wanted to insert language allowing developers to negotiate in-lieu fees with the Department of Planning and Permitting “based on district-by-district market needs,” but that idea ran into opposition.
The affordable-housing bill was initiated by Mayor Kirk Caldwell as part of the affordable-housing plan he rolled out in September 2014. His goal: Allow developers and property owners to provide fewer affordable units than they’re now required in exchange for pricing those units lower and keeping them at affordable rates longer than they currently do.
Today developers typically are required to make 30 percent of their units affordable for a minimum of 10 years, and to make them available to those making up to 140 percent of Oahu’s median income.
Under the draft up for final reading today:
>> Anyone seeking a building permit for at least 10 for-sale residential units would need to follow the new requirements. New all-rental projects would be exempted.
>> A developer putting up a for-sale project could set aside as little as 5 percent of its units as affordable rentals for those making 80 percent or less of area median income (AMI), for a minimum of 30 years. The developer also could offer up affordable sales units under three options: 5 percent of all units at 120 percent AMI or less, with half of those units at 100 percent AMI or less, for at least 30 years; 10 percent at 120 percent or less, with half of those units at 100 percent AMI or less, for at least 10 years; or 15 percent of all units at 120 percent AMI or less, with half of those units at 100 percent AMI or less, for a minimum of five years. A developer also could build off-site but would need to add 5 percent to each category.
>> A developer seeking density and/or height bonuses — in areas where that is allowed, such as transit-oriented development (TOD) zones — would have to provide a higher percentage of affordables. A developer could set aside 15 percent of all units for those making 80 percent of AMI or less, for a minimum of 30 years. The developer also could offer up affordable sales units under three options: 10 percent of all units at 120 percent AMI or less, with half of those units at 100 percent AMI or less, for at least 30 years; 20 percent at 120 percent AMI or less, with half of those at 100 percent AMI, for at least 10 years; or 30 percent at 120 percent AMI or less, with half of those at 100 percent AMI or less, for at least five years. A developer also could choose to build off-site but would need to add 5 percent to each category.
Gavin Thornton, co-executive director of the Hawai‘i Appleseed Center for Law and Justice, advocated removing in-lieu fees from the options. “When you throw an in-lieu fee in the mix, there’s a big risk that these folks are just going to be somewhere else,” he said.
“We think it’s important to have a reasonable number of truly affordable housing units as part of the mix,” he said. Research shows requiring a 30-year minimum affordability period does not negatively affect a project’s financial viability and is a policy that works elsewhere, he said.
Kathryn Inouye, chief operating officer for the Kobayashi Group, said the bill as written would not provide affordable housing to those most in need of it. She said she supports in-lieu fees but believes they should be “a percentage of gross sales price of all units in the market project. … This takes the politicization out of it, and it then becomes nonsusceptible to inflation; it moves with the market.”
Harrison Rue, the city’s community building and TOD administrator, said the Caldwell administration supported advancing the bill.
Pine said she did not see passage of the bill as the ultimate solution to solving the island’s affordable-housing crisis.
She said she expects several of her colleagues to introduce related measures, and that she will put forward a bill, likely next week, that will make it easier for people to build in apartment zones. There also are other bills in the works giving more incentives to developers, she said.
Last month the Council approved unanimously and Caldwell signed an affordable-housing “incentives” bill, Bill 59, which gives affordable-housing developers property tax exemptions and various fee waivers from the city.
