Honolulu Mayor Kirk Caldwell likely to sign Affordable Rentals Bill

A bill offering significant building bonuses and breaks from taxes and fees to entice owners of smaller Oahu apartment- zoned properties to develop affordable rentals is expected to be signed by Mayor Kirk Caldwell this week.

Bill 7, dubbed the Affordable Rentals Bill, is designed to jump-start development of apartment rental properties, a critical area of need on Oahu during the current housing shortage crisis.

The Honolulu City Council passed the bill 9-0 earlier this month, and Caldwell has until Friday to sign it, veto it or let it become law without his approval. Caldwell has long championed the idea of encouraging property owners to put up affordable rentals.

Among the incentives are greater density, taller heights, less setback, no required parking, complete waivers from building permit application and wastewater facilities charges, no park dedication fees and a 10-year tax waiver on property taxes.

The goal is to create projects with units that cost no more than $225 a square foot to develop, proponents said.

In exchange, the property owner would be required to charge rents on at least 80% of the units at prices deemed reasonable for those making up to 100% of median income as determined by federal housing guidelines. The dedication would be for perpetuity.

Councilman Brandon Elefante said that according to his calculations, a family making $93,300 annually, or 80% of area median income, would be able to rent a two- bedroom unit for $2,100 a month. The family making $116,600 each year, or 100% of AMI, would be charged no more than $2,625 a month for the same two-bedroom unit, he said.

To help speed up the process, the Department of Planning and Permitting must act on a building permit application for an affordable rental housing project within 90 days, or it will be deemed approved.

The project could not be used as a vacation rental, and leases must be for at least six months.

The bill sets up a five-year pilot program, but Caldwell said it could become permanent if successful.

Retired hotelier Mel Kaneshige, among the main proponents of the bill, told Council members the proposal applies only to properties of 20,000 square feet or less, so it is aimed directly at owners of smaller properties in apartment or business mixed-use districts, not big-time developers.

“It’s the hardest thing to build because it, many times, just doesn’t pencil,” Kaneshige said. Because of that, many of those lots have been sitting idle despite the demand for housing.

“The returns are fairly skinny, so we have to do what we can in order to encourage them to take the step of developing their family- owned parcels into rentals,” he said.

Developer Marshall Hung, another of the bill’s biggest advocates, said about 3,000 properties could take advantage of the program. Councilwoman Kymberly Pine, who worked on the bill for two years and shepherded it through the Council Zoning Committee, said government alone can’t solve Oahu’s housing crunch.

“The most important thing about this bill was getting the private sector to build affordable housing at the lowest levels without taxpayer money,” Pine said.

Pine said anti-“monster house” group HI Good Neighbor pointed out to her that city zoning laws now allow owners in apartment zones less density, or floor area ratio, than those in single-family residential zones. That’s partly to blame for the monster house phenomenon that’s plagued a number of older Oahu communities, because many of the large-scale houses are going toward illegal rentals, she said.

But does the city give up too much?

The width of stairwells was the subject of lively debate in the Zoning Committee.

Under the approved bill, buildings with 35 or fewer units and are less than 100 feet tall would be allowed to have one 48-inch-wide stairwell. Those with more units would be required to provide two 36-inch-wide stairwells. The only exception would be for those buildings with an elevator, in which case only one 36-inch-wide stairwell would be required.

Bill proponents unsuccessfully sought to require that when there are two stairwells, one be allowed to be as narrow as 30 inches.

First responders from the Honolulu Fire Department and Department of Emergency Services raised concerns about the stairwell widths, arguing that it could become dangerous during emergencies when people need to evacuate. They asked that at least one stairwell be 48 inches, regardless of the building’s height. DPP’s original recommendation also called for at least one 48-inch-wide stairwell.

Kaneshige said requiring all buildings to have a 48-inch stairwell would add too much to the per-unit cost. He noted that buildings constructed under the program would be safer because they would be required to have sprinklers, whereas the buildings they would be replacing likely do not.

Assistant Honolulu Fire Chief Socrates Bratakos said the International Building Code calls for 48-inch-wide stairwells except when there are automatic sprinkler systems. The sprinklers being required in the bill would be of a lesser grade, he said. The code says a 36-inch-wide stairway is allowed only when it is serving an occupant load of less than 50, he said.

“Reducing safety standards from what’s code is not something that we recommend,” he said. “The two 36-inchers was somewhat of a compromise.”