A two-bedroom home that costs $1 million can be defined as “affordable,” according to a recent article (“‘Affordable’ Housing?” Star-Advertiser, Feb. 21). That’s possible because of the “out of whack” formulas used by state and county agencies.

Government has been woefully deficient in creating enough truly affordable housing, as the housing shortage has continued to worsen for decades. Inexplicably, state and county agencies have raised the ceiling price for what they consider to be “affordable.”

For example, they adopted the misleading methodology of the federal government to determine “affordable” housing. As a result, they set Honolulu’s median household income at $101,600. That is far above the true figure published by the Hawaii Department of Business, Economic Development and Tourism, which is $82,906.

In other words, government is using a figure that is 20% above the true median household income to determine affordable housing.

But it’s worse than that. Government agencies can consider housing priced for families earning 140% of the inflated area median income to be affordable. In Honolulu a family of four earning $176,260 would qualify (the figure would be different for households of different sizes). That’s why a two-bedroom home priced at $1 million can be considered to be “affordable.”

Government shouldn’t be producing housing for families earning 140% of the area median income because there’s already lots of that kind of housing on the market. Instead, the role of government is to produce housing for families that cannot afford what the market produces.

The National Low Income Housing Coalition estimates that Hawaii faces a shortage of more than 40,000 homes for families earning incomes of 50% or below of the area median income. That’s where government should be focusing its efforts.

Fortunately, new ideas are being developed, such as state Sen. Stanley Chang’s ALOHA Homes model that would build dense housing on state and county lands in order to reduce costs. It envisions modest housing integrated with grocery stores, restaurants, shops, child care, health clinics, fitness centers and other urban amenities.

ALOHA Homes would design walkable neighborhoods that minimize the need for personal vehicles, promoting environmental sustainability. These projects would be located in areas that are already urbanized to prevent urban sprawl into agricultural lands.

Government agencies will build enough truly affordable housing only if they revamp their concept of affordability. They should adopt what most Hawaii residents consider to be affordable, which is rent of $1,500 a month for a two-bedroom apartment, according to a survey by Pacific Resource Partnership.

Housing priced at this level or below should be the target of all government agencies involved in developing affordable housing. This is where the real need is, especially for Hawaii’s working families.

Ellen Carson, a retired attorney, volunteers for the Institute for Human Services and Faith Action for Community Equity; Amy Wake is the senior pastor at Trinity United Methodist Church; John Kawamoto is a former legislative analyst.