A new rental housing development, PenseMetro, broke ground Thursday as one of the earliest users of the city’s new affordable-housing incentives.
The $8 million Makiki development includes 29 units that will have an in-unit washer and dryer and soundproofing to keep out noise from the street. Don Huang of development company Micro House said the project was possible only because of the city’s affordable-housing incentives known as Bill 7, which passed in 2019, and Bill 1, which passed in May.
Micro House partnered on the project with development firm A.D.W. Hawaii LLC.
“There’s a lot of waivers in there that added up to about maybe $700,000 or $800,000 and the tax credit,” Huang said.
Bill 7 is a five-year affordable-housing pilot program that began in 2019 and offers incentives such as a 10-year property tax waiver and wastewater connections for affordable-housing developments. The incentives were useful because the cost of building increased due to the COVID-19 pandemic driving up the cost of materials.
The PenseMetro project hopes to rent to people making 80% of the annual median income or below, but may have to rent to people at 100% AMI due to the increased cost. In Hawaii the area median income for one person is $71,100 and for a family of four is $101,600, according to the Hawaii Community Development Authority.
Bill 7 also exempts eligible projects from parking requirements. PenseMetro will have eight parking stalls. Two will have “hui cars” that residents could sign up to use for a fee.
The PenseMetro project hopes to take advantage of Bill 1, which is a continuation of Bill 7 and gives financial grants to eligible projects once they are completed.
For developments renting to households above 60% of the average median income, the incentive in the building permit would be $11.25 per square foot of living space but would not exceed $9,000.
For developments renting to households below 60% of the average median income, the incentive in the building permit would be $15 per square feet of living space but would not exceed $15,000.
Bill 1 allocates $10 million to fulfill the grants.
Projects that participate in Bills 1 and 7 must keep renting the units at an affordable rate for 15 years.
Mayor Rick Blangiardi praised the project at the PenseMetro groundbreaking.
“I’m very excited about what you’re going to do here and for the people whose lives are going to benefit ultimately when they come to live here,” he said.
“We understand the need. We want to make as much of this happen as possible.”
Ryan Tanaka, principal and chief financial officer at KAI Hawaii engineering firm, has been working with the city to increase the amount of affordable housing. He has been helping the Department of Planning and Permitting track the number of projects applying to participate in Bills 7 and 1.
In addition to PenseMetro, one other project already has started construction, and there are 14 projects that have submitted an application to the DPP. At least nine other projects plan to submit applications.
“The demand is there,” Tanaka said.
“(The lack of) affordable housing is one of the greatest threats to our community … so there is a tremendous need.”
