State Sen. Stanley Chang’s dream of adopting a Singapore-like model for affordable housing projects in Hawaii appears to be faltering. It’s not really a surprise.
The ALOHA Homes concept (Affordable Locally Owned Homes for All) envisions a state agency developing and selling high-density, high-rise condominium projects with 99-year leases on state land. The condos would be sold at cost and proceeds would finance more projects, resulting in a major expansion of new affordable homes.
The Hawaii Housing Finance and Development Corp., which carries out leasehold condo development for the state, expressed opposition to Senate Bill 3261, the latest ALOHA proposal before the Legislature.
ALOHA Homes is modeled after projects in Singapore, where more than 5 million citizens have been affordably housed in high-quality units, with homelessness dramatically reduced.
However, Hawaii is not Singapore — a government with much more, and its citizens with much less, control over land-use decisions. A study of ALOHA Homes by the Hawaii Budget and Policy Center bears out this and other problems.
For one, the value of a condo on leasehold land would invariable diminish as the lease neared its expiration date, making it more difficult for the seller to sell and the potential buyer to qualify for financing. Singapore solves this problem by simply buying out the owner as the lease expires — something no doubt beyond the state’s means.
Extending the lease on state lands formerly owned by the Kingdom of Hawaii — so-called ceded lands — risks alienating property that is supposed to be held in trust to benefit Native Hawaiians.
Also, building costs are much higher here than elsewhere (including Singapore, which relies on cheap immigrant labor). Then there’s the prohibitive cost of infrastructure — sewers, waters and roads — that require public funding.
Still, the report does suggest options worth considering. Using the ALOHA model on non-ceded lands could work, albeit on a less ambitious scale. Providing renewable leases to Hawaii residents who are owner-occupants would provide them with something of lasting value they could pass to the next generation. Projects could be financed with taxable mortgage revenue bonds, secured by mortgage payments and a deed of trust to the building. It also may be possible to convey some of the ceded land to the Department of Hawaiian Home Lands, allowing that agency to provide homes for Native Hawaiians.
Chang’s vision may not pan out. But it shouldn’t discourage outside-the-box thinking about how to create more affordable housing. After all, in one of the most expensive real estate markets in the country, outside-the-box ideas may be the only options we have.
