A plan aimed at providing incentives to owners of smaller apartment-zoned properties who build low-rise rental buildings was unveiled jointly Wednesday by Mayor Kirk Caldwell, City Councilwoman Kymberly Pine and home developer Marshall Hung.
The three hope the combination of increased density, tax breaks, fee waivers, and exemptions from requirements like elevators and parking will lure those property owners to provide more affordable rental units amid a housing shortage on Oahu.
In exchange for the incentives, a property owner would be required to rent, for the life of the building, at least 80 percent of the units only to those making no more than 100 percent of area median income. The U.S. Department of Housing and Urban Development defines 100 percent AMI for a family of four on Oahu as an income of no more than $116,600 in 2018 dollars.
That would mean rents of $1,000 to $2,000 for units with between one and three bedrooms.
Only relatives of the property owner could live in the remaining 20 percent.
The five-year pilot program could be extended permanently if successful, Caldwell said.
Experts believe an estimated 25,000 total housing units are needed to meet islandwide demand.
The goal of the initiative is to get building costs to no more than “the magic number” of $225 a square foot, the mayor said.
“The big demand is in the rental housing component,” he said. “How do we help local folks who finance and build a product that’s designed and built for local folks?”
A side benefit to the proposal is a hoped-for shift in large detached units, also known as monster houses, away from residential-zoned areas where they’ve wreaked havoc with the infrastructure and character of neighborhoods, Caldwell said.
“There are homes being built in our residentially zoned districts that are really apartments, ” he said. “And they’re building them because there is a demand to build them.”
The program only would be available on properties 20,000 square feet or smaller in apartment-zoned neighborhoods or business-mixed-use-zoned neighborhoods.
“There is a housing crisis here on the island of Oahu and how government has handled that has been making huge investments into affordable housing,” Pine said. “But as we’re discovering, that’s just not enough. So we need partners in the private sector, and so without taxpayer costs, by giving density and less setbacks to private developers who want to build these type of units, we’ll be getting more affordable housing into the market a lot faster while also benefiting the economy here on Oahu.”
Caldwell credited construction and development leaders — and affordable and workforce housing developer Hung in particular — for helping devise the plan.
Hung brought with him the rendering of a six-story walk-up on a 5,000-square-foot lot. “We’re also positive that the architects out there, the engineers out there, the landowners will do their own renderings and their own buildings,” Hung said.
Of about 6,000 eligible lots on Oahu, about half could take advantage of the program, Hung said.
Low-rise apartment rental buildings were popular in the 1960s and 1970s but not more recently.
For a time, the emphasis was on larger-scale projects, Hung said. “Time has caught up with us. We’re running out of the large parcels for the large developments. Also, our income demographics have changed tremendously so that our lower wage workers have grown while the cost of living has gone higher. We’ve not kept up with the cost of living. So we have this low-wage community that needs to be addressed.”
He estimated the owners of roughly 3,000 lots, many with older wooden buildings ripe for being razed, would be eligible for the program.
Developer Derek Lock said that “over time, the building code and the zoning code did not keep up with the land values and the construction costs. So this bill would allow, through the incentives, through the increasing of height and density and the lessening of setbacks … these buildings to be built again.”
City officials are hoping the program will generate 10 to 12 projects annually that would add 500 additional units each year.
Among the more significant incentives:
>> Provides a 10-year real property tax exemption on the subject property, and waivers on the sewer hookup charge as well as on fees for plan review, permitting and park dedication.
>> Allows a floor-area ratio (density) of 4.0, or four times the size of a lot. So a 5,000-square-foot lot could hold a building with up to 20,000 square feet of living area.
>> Allows a building to be built up to six stories high without an elevator unless there are services open to the public on higher floors.
>> Allows a maximum building area of 80 percent of a lot.
>> Eliminates all requirements for off-street parking, provided a single loading zone stall is available.
>> Reduces the required setbacks to 10 feet for the front yard of a building, and 5 feet for the side and rear yards.
>> Requires the Department of Planning and Permitting to process an application within 90 days.
The proposal was sent to the Honolulu Planning Commission this week. The panel will review the proposal, hear testimony from the public and then send its recommendation to the City Council.
