Caldwell likely to sign affordable housing bill

A new citywide affordable housing policy won final approval Wednesday from the Honolulu City Council.

Mayor Kirk Caldwell said after the meeting that, assuming Bill 58 (2017) passes a standard routine review by city lawyers, he will sign the bill even though the final draft excludes an option for developers and property owners to pay cash instead of providing actual housing units to fulfill their affordable housing requirements.

The vote was 8-0. Councilman Ikaika Anderson did not attend the meeting.

The issue of inclusionary zoning — how much, if at all, developers should be required to set aside for affordable units — has been debated in Hawaii for several decades.

Housing advocates say set-asides are necessary for there to be units available for those in lower income brackets. They want more units to be set aside for longer periods to those making the least money.

Developers and property owners want as few or no requirements imposed. They say affordable housing requirements hurt their financial ability to put up any kind of housing, either canceling out projects altogether or requiring them to charge more for market- priced homes.

In recent years, affordable housing requirements are negotiated among the developer, Department of Planning and Permitting and the Council. Developers typically have been required to set aside 30 percent of a project’s units for affordable housing, and to make them available to those making 140 percent of Oahu area median income or less for a minimum of 10 years.

The bill passed Wednesday allows developers to set aside fewer units in exchange for making them available to those earning no more than 120 percent and often lower, and for as long as 30 years. And in a change to the bill made near the end of Tuesday’s Council Zoning and Planning Committee meeting, developers no longer will be able to offer cash in lieu of actual units as they have done in the past.

Zoning Chairwoman Kymberly Pine said the goal was to try to reach those making 80 percent AMI — currently between $60,000 and $80,000 annually.

The bill that passed Wednesday “recognizes the difficulty of building with restrictions and respects this difficulty by providing multiple options to meet the affordability requirements, and should interest rates change, would offer a tiered approach to affordability levels, as well as affordability periods, to match those interest rate changes that could happen after the bill passes,” Pine said.

Caldwell’s original bill “was a one-size-fits-all approach” that she and her staff learned would be problematic on Oahu because of the variations in different neighborhoods.

The bill passed Wednesday “recognizes the difficulty of building in Hawaii by providing these range of options to meet the housing requirement based on what would work for an individual project,” she said.

A representative for Hawaii LECET, the Laborers- Employers Cooperation and Education Trust, was the only person who opposed the bill Wednesday. Joy Kimura, of Hawaii LECET, said while her organization supported the intent of the bill, it wanted the Council to defer the measure “because there are components in this bill that we consider (will) discourage development” and therefore be hurtful to the construction industry.

Kevin Carney, vice president of EAH Housing, which both develops and manages affordable housing units, voiced support for the bill. Carney said his company has for two decades made numerous recommendations on how to create more affordable housing. “This is by no means perfect, but it is a huge step forward and we strongly urge you to pass it,” he said.

George Massengale, a representative for Hawaii Habitat for Humanity, applauded the removal of the in-lieu fee option.

At Tuesday’s Zoning and Housing Committee meeting, a who’s who of the development community testified against the bill or urged that it be deferred. None were at Wednesday’s meeting.

Land Use Research Foundation executive director David Arakawa, in written testimony, outlined several issues developers have with the bill. Arakawa urged the Council to reinstate the in-lieu option and allow funds collected to go to the Hawaii Housing Finance and Development Corp. since it has a proven track record of using its funding for developing affordable units.

Caldwell applauded the Council for passing the bill. “There’s been a lot of input from the development community and the affordable housing community and I think it’s a fair bill,” he said.

The administration had supported allowing an in-lieu fee option. “I do not want to stop people from building houses, so the bill I introduced had a lot of flexibility,” Caldwell said. If a developer is not in a position to put up affordable housing, “you could do a fee in-lieu and that money could be used by someone who does know how to do affordable housing.”

He added: “It’s not a perfect bill, but it’s still a bill that I would sign into law.”

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.