Allowing developers to sell 'affordable' units at market rates a mistake, qualified 'affordable buyer' writes.
Reading time: 5 minutes.
I read with interest Robert Brown’s story about another conversion of affordable housing to “market.” I am a so-called “qualified affordable buyer” living at Plantation Town Apartments since July 2008. In early 2010 the remaining unsold affordable units here were converted to market. At our first annual meeting of the AOAO, I was elected President. Since so many units were still available for sale, the developer had enough voting power to elect three (of nine) directors representing him on the AOAO board.
The process to make a conversion to market requires action by both the City Council and the HHFDC. After the conversion at PTA I carefully gathered as much information as I could track down. I looked at the minutes of the relevant City Council and HHFDC meetings. I obtained from the HHFDC all their records pertaining to the decision. I reviewed the testimony from the City Department of Planning and Permitting wherein they recommended to the Council that the conversion NOT be approved. Then I had myself added to the May 2010 HHFDC agenda. At that meeting the HHFDC board listened to my story and then claimed they had been operating under the impression that the AOAO knew what was going on. However, the minutes of the HHFDC meeting when the conversion was approved actually make it CLEAR that the board knew the affordable owners were not aware. Even worse, when a HHFDC director suggested at the same meeting to issue a press release about the proposed conversion, the board quickly killed that idea because publicity of that sort could “hamper marketing efforts.” I have audio and written proof to confirm all of this. Before I left the HHFDC, I urged them to make it their new policy to directly inform existing residents whenever similar conversions were to be considered. Earlier this month the HHFDC approved a conversion to market for 25% of the units at Nohona II in Kapolei. I do not know if the owners of the previously sold “affordable” units were directly notified of the pending conversion. I hope they were.
During the entire process, which took from June 2009 until January 2010, the owners of the affordable units at PTA were never notified directly that the conversion was even contemplated. Even though three of the AOAO directors represent the developer, and even though several AOAO board meetings were held while it was happening, the AOAO was never directly notified of the conversion process. Not by the HHFDC. Not by the City Council. Not even by any of the developer’s three representatives who serve as directors of the AOAO. We affordable buyers finally found out about the conversion via the media in January 2010, i.e. when the conversion was complete. To this day, the developer, Michael Kimura, has never directly communicated with the AOAO about this matter, and to this day the developer’s representatives on the board of directors assert that they had no fiduciary duty of loyalty to the AOAO requiring them to disclose the conversion. At the 2010 annual meeting after the conversion I offered a motion to remove the three directors representing the developer. With the developer still casting votes for all the unsold units, my motion failed to pass. I resigned from the board.
I understand that the housing market is changed. What has not changed, however, is the huge need for affordable housing. These conversions are presented as a stark choice between “affordables that qualified buyers can’t get a mortgage for ” and “sell the unsold units at market rate without restrictions.” Completely missing is any discussion of options that would not permanently remove units from the stock of affordable housing. For example, the developer could be authorized (as he was here at PTA from the start) to rent unsold units to qualified tenants until qualified buyers are able to obtain financing. The HHFDC also has authority to make loans to lenders (under HRS 201H-102), to offer downpayment loans to qualified buyers (under 201H-161), or to implement a rent-to-own program (under 201H-181). The record of the conversion process at PTA does not show consideration of any of these options. I don’t know if any of those options were explicitly considered at Nohona II.
I don’t expect the market to recover quickly to the point that people who qualify for affordable housing will be offered credit at terms they can meet. Nor do I expect there to ever be enough affordable housing in Hawaii. These conversions to market are the worst possible outcome, especially when other options that would preserve affordable housing go un-tested. Now, however, after a precedent has been set by PTA and observed by Nohona II, it appears conversion to market is the default affordable (sic) housing policy.
About the author: Doug White is a Waipahu resident and former Marine. After his military service, Mr. White graduated from UH Manoa with a B.A. and M.A. in Political Science. He was a staff worker for 10 sessions at the Hawaii Legislature and worked with scientists conducting ocean research at RCUH. Presently he is employed as a machinist. Born in Wisconsin in 1970, White has lived in Hawaii since 1989. He writes the blog Poinography.
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