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How can HHFDC make the most of the $300 million that Senate Bill 2372 would add to the Rental Housing Revolving Fund (RHRF) for affordable-rental projects?
Requests for RHRF financing from affordable housing developers this year have been overwhelming, totaling $356 million. Applicants must meet certain criteria and go through a rigorous analysis before projects will be recommended to the HHFDC board for approval. Because state lawmakers continue to make significant infusions into the RHRF fund, Hawaii is one of the few states that offers such a generous level of subsidy.
To make the most of the $300 million, our finance branch must ensure that projects awarded with these “gap-financing” funds are shovel ready; make the most efficient use of the funds on a per-unit basis; and achieve the primary objective of truly adding to the inventory of affordable housing units.
What are the benefits and/or pitfalls of HHFDC buying equity in new developments to reduce the price for eligible lower-income buyers?
The pilot Dwelling Unit Revolving Fund equity program being proposed represents an out-of-the-box way to address the high demand for for-sale units among Hawaii’s residents earning 80%-140% area median income. For a family of four, that translates to about $84,560-$169,120 annually. Buying a home is one of the biggest decisions a person makes in his or her lifetime. This pilot program couldn’t come at a better time, given the supply chain issues and rising construction costs that developers are currently experiencing. The program will also benefit home buyers, given that today’s rising interest rates have reduced their purchasing power.
The funds would be placed in a revolving account so additional households could be assisted in the future. The state would earn a return on its equity through the shared appreciation in equity required under this program.
What are HHFDC’s near- and long-term goals for adding affordable housing inventory?
HHFDC’s overall goal is to keep the pipeline of affordable housing going. Last fiscal year, we facilitated the production of 1,500 units and we plan to add about 7,500 more units over the next five years.
Our short-term goal is to increase housing inventory by expediting the delivery of homes on state lands. To do this we are actively seeking development proposals to generate roughly 1,500-2,000 housing units over the next several years in Kakaako, Kapolei and Kahului. In November 2021, we issued a request for proposals for a prime parcel in Kakaako that will generate not only affordable housing, but also a vertical public school.
In terms of HHFDC’s financing efforts, the Low-Income Housing Tax Credit program is the only program of scale that can generate a significant volume of affordable rentals. But this is limited to households earning no more than 60% AMI, or $72,000 a year for a family of four.
A long-term goal is to explore ways in which we can apply the RHRF program to provide more options for Hawaii’s moderate-income households. We need to address the out-migration of Hawaii’s workforce and future tax base. House Bill 2513 does this by providing gap financing for projects aimed at households earning 60%-100% AMI. These are teachers, accountants, office managers and firefighters who may not make quite enough to afford a market rate rental or to purchase a home.
Another long-term goal involves identifying underutilized state lands that may be deemed suitable for affordable housing development. Once identified, we would position these lands for housing development.
What would help developers assemble the financing to take on an affordable housing project in Hawaii?
The demand for housing financing far exceeds the supply of available resources, so our financing staff has to make tough decisions. Developers should have a team that has experience with Low-Income Housing Tax Credit financing and development in Hawaii.
HHFDC projects are evaluated using criteria aimed at efficient use of the housing tax credits and other financing resources that we provide, such as RHRF and the Dwelling Unit Revolving Fund. Developers must have site control, cost estimates and secured their entitlements or 201H development assistance from the county.
What has been the most satisfying project you’ve worked on?
I became executive director about two years ago, and it typically takes two to four years for a developer to go from receiving an award to completion. But several milestone HHFDC-assisted projects were completed during that time.
EAH Housing’s 84-unit Ola Ka ‘Ilima Artspace Lofts complex, in the heart of Kakaako, is the only Hawaii project that gives preference to community artists and was designed with such features as high ceilings and durable surfaces. The complex provides 84 low-income workforce units for artists and their families, as well as a home for the Pa‘i Arts Gallery and Performing Arts Center.
Bonus question
Should HHFDC have a role in supporting the development of affordable housing in the New Aloha Stadium Entertainment District?
As a sister agency to HCDA (Hawaii Community Development Authority) and one of the attached agencies to a state department, HHFDC wants to respect the designated lead agency of the NASED project. We’re happy to provide support and consultation to whichever agency is chosen to lead the redevelopment of the stadium district. HHFDC’s financing and development programs will be available to developers selected by the lead agency.
BIO FILE
Current position: Executive director, Hawaii Housing Finance and Development Corp. (HHFDC)
Previous positions: Executive director, state Office of Community Services; senior special assistant to Gov. David Ige; community relations director, Office of Hawaiian Affairs; director of government relations, Hawaiian Electric Co.
Personal background: Master’s degree in public administration, bachelor’s degree in business administration, University of Hawaii at Manoa; Kamehameha Schools graduate.
Community involvement: Board of directors, Native Hawaiian Chamber of Commerce; Kamehameha Schools alumni association board.
One more thing: When I’m not working, I enjoy watching my daughter play shortstop for Colorado State University and supporting my husband as he plays in the Manoa Makule softball and coaches softball at Punahou.
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