Honolulu voters will be asked in November to decide whether to change the rules governing the city’s Affordable Housing Fund.

Proposed Charter Amendment No. 5 would loosen restrictions on the fund to make it easier for developers to build low-income rental housing.

The question is whether to allow the money to be used to subsidize rental housing projects that are affordable to people earning 60 percent or less of household median income — equal to $42,240 for an individual or $60,300 for a family of four — and remain so for at least 60 years.

Right now, the city’s Affordable Housing Fund can only be used to subsidize homes that are affordable for people earning no more than 50 percent of area median income, equal to $35,200 for an individual or $50,250 for a family of four.

Democratic Unity breakfast Mayor Kirk Caldwell. 14 aug 2016

The proposed charter amendment addresses Mayor Kirk Caldwell’s strategy to increase the number of affordable rentals.

Cory Lum/Civil Beat

The money can be used to subsidize both for-sale and rental housing, and the units must remain affordable in perpetuity.

Some housing advocates say the change is necessary. Others are worried about potential unintended consequences.

The perpetuity requirement is something that Mayor Kirk Caldwell’s administration has been wanting to change since the mayor rolled out his islandwide housing strategy two years ago.

Harrison Rue, who is in charge of managing development around rail, said Friday that while “perpetuity is a good and lofty goal, investors are put off by that.”

“If it’s ‘in perpetuity’ but nothing gets built it’s no good. We’re just trying to streamline things and make things as easy as possible for everybody. The goal is more housing.” — Catherine Graham, Faith Action for Community Equity

Requiring that housing remain affordable forever “generally conflicts with the requirements of the other funding sources,” such as loans from banks, he said.

State land can also only be leased for fixed periods of time, Rue said. The perpetuity requirement means the city Affordable Housing Fund can’t be used to subsidize low-income rentals in Kakaako, a state redevelopment district, if the developer is also planning to lease state land.

State and federal funding sources for low-income projects also allow homes to be built for people earning up to 60 percent of area median income, and increasing the income eligibility for the city fund would allow the money to be used in conjunction with other funding sources, Rue said.

The rules have limited how the city fund can be used, and low-income rental housing developers like Kevin Carney of EAH Housing haven’t been able to access the money to fund projects.

Carney said that he helped advocate for the fund originally, but it hasn’t worked out the way he thought it would.

“It’s been an obstacle in opening up the fund,” he said.

Now Carney believes that loosening the rules will help produce more units. “We’re encouraging everyone we know to vote yes,” he said.

But Betty Lou Larson, an advocate at Catholic Charities Hawaii, questioned what will happen to housing projects after 60 years are up.

“A case in point is the recent rental increase for the Malulani Hale senior project whose affordability period ceased in April 2016,” she wrote in public testimony on the proposal. “Will this ‘cliff’ in rents occur with City funded projects in 60 years when the affordability period ends?”

“All the more progressive housing models in the U.S. call for mixed communities — rental housing, ownership housing, condos, senior living housing — and this takes that away.” — George Massengale, Hawaii Habitat For Humanity

She also argued that the affordability limit shouldn’t increase to 60 percent of area median income because there are many homeless people on Oahu who could benefit from the fund.

“Creation of more affordable rental housing is the key to end homelessness and allow future generations to remain on Oahu in decent housing,” Larson wrote.

Chuck Wathen, another affordable housing advocate and developer who founded the Hawaii Housing Alliance, is also “totally opposed” to using public funds to subsidize housing that doesn’t remain affordable to low-income people in perpetuity.

“We’ve seen over the history that … projects have come out of deed restrictions and have gone to market,” he said, citing the fight to maintain the affordability of Kukui Gardens. “We know that will happen. We know it will happen.”

George Massengale of the local Hawaii Habitat for Humanity doesn’t have a problem with amending the “in perpetuity” requirement.

But he’s concerned about limiting the fund to only subsidize rental housing rather than homes that can be bought outright.

Hawaii Elections Guide 2016

“All the more progressive housing models in the U.S. call for mixed communities — rental housing, ownership housing, condos, senior living housing — and this takes that away,” Massengale said, noting that home ownership can be a way for people to build wealth over time.

The Caldwell administration has prioritized low-income rental housing after a study found that low-income renters have the greatest need for housing in Honolulu.

Massengale also thinks the amendment would be better if it required a range of housing to be built for people earning less than 30 percent of area median income and up to 60 percent of area median income. Still, he said his concerns are not enough for him to oppose the amendment.

“I’m not going to stand in the way of housing,” he said. “We reluctantly — we will support this. I’m not enthusiastic about it.”

Catherine Graham of the group Faith Action for Community Equity is more steadfast in her support.

“If it’s ‘in perpetuity’ but nothing gets built it’s no good,” she said of the fund. “We’re just trying to streamline things and make things as easy as possible for everybody. The goal is more housing.”

Click here to learn more about proposed amendments to Honolulu’s Charter.

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