In a recent TV campaign ad, a jaunty Gov. Neil Abercrombie drives a taxi cab and flashes a grin as he passes Halekauwila Place, a new building in the state redevelopment district of Kakaako — “home for 200 working families,” one of his passengers gushes to the other.
The 204-unit rental housing project for low-income families is stylish, comfortable and mind-bogglingly affordable for Honolulu, the most expensive city for housing in the nation.
“Rental rates range from $956 – $1,400. Really,” reads a tongue-in-cheek description of the project on its promotional website.
The catch? Despite nearly 4,500 new housing units being built in Kakaako, Halekauwila Place is the only project that caters to low-income people.
In ads, press releases and election debates, Abercrombie has heralded the district’s growth as a success.
“After 35 years of neglect, this administration is transforming Kakaako into a vibrant community with affordable housing options that Hawaii needs,” the governor said in a recent press release.
But that depends on how you define “affordable.”
Less than 5 percent of new residential units in Kakaako are affordable for low-income Hawaii residents, according to data from the Hawaii Community Development Authority, the state agency in charge of zoning and planning in Kakaako.
The U.S. Department of Housing and Urban Development defines low-income residents as people earning 80 percent or less of area median income. In Honolulu, that’s $76,650 per year for a family of four or $53,700 per year for an individual.
A 2011 state housing study estimated that about 70 percent of Honolulu’s housing demand from 2012 to 2016 would come from low-income residents.
HCDA spokeswoman Lindsey Doi said the agency doesn’t have the financial tools to support many low-income housing projects.
“Obviously we love when we can do lower-income projects,” she said. “It’s just really hard for a private developer to make it work without subsidies.”
In the case of Halekauwila Place, HCDA donated $17 million to make it happen.
While there is little available for low-income people, about 49 percent of the housing units within Kakaako approved during Abercrombie’s administration are being sold or rented at below-market rates.
That’s because HCDA rules require developers to set aside a certain portion of units for people earning less than 140 percent of area median income, which is no more than $80,948 for an individual or $115,640 for a family of four.
“It starts to feel like it’s a playground for the elites when you don’t have this affordable housing being built.” — Jenny Lee, Hawaii Appleseed Center for Law and Economic Justice
Still, 50.6 percent of the recently approved housing units within Kakaako are selling at market price, including multi-million-dollar luxury condos that have driven up the median condo price in the area by nearly 75 percent since last year.
Critics say Kakaako’s construction boom is a missed opportunity to make headway toward solving Hawaii’s affordable housing crisis.
Jenny Lee, an advocate for low-income people from the Hawaii Appleseed Center for Law and Economic Justice, said fanfare over Kakaako’s growth — including hundreds of millions of taxpayer dollars invested in the neighborhood — had made many residents hopeful about its revitalization.
“But ultimately, it starts to feel like it’s a playground for the elites when you don’t have this affordable housing being built,” she said.
When Halekauwila Place began accepting applications in February, more than 700 applications poured in for 204 units. Dozens more arrive each week.
The building’s residents include hospitality workers who commute to Waikiki; small business people, like the owner of Wong’s Produce across the street; cab drivers; and state and county workers (unsurprising, considering the median state worker salary is about $36,350).
“When you see people break down in tears of joy because they got selected, you go ‘Wow,’” said developer Stanford Carr. “This is worth it.”
He wasn’t always so sure. Carr agreed to do the project back in 2007, but when the economy tanked he asked the state if any other developer would be willing to take it up.
Even though the economy has improved, he’s needed a lot of help to make it happen. He’s leasing the land from the state for $1 a year for 75 years.
In addition to receiving $17 million from HCDA, Carr received money from the Hawaii Housing Finance and Development Corporation as well as federal funding through the national low-income housing tax credit program and the U.S. Department of Housing and Urban Development.
But with a price tag of more than $70 million, he’s not making money.
“It’s more of a community service project,” he said. “That’s why no one does it.”
Carr is planning a second project aimed at low-income families on the corner of Piikoi and Kona on the border of HCDA’s district. The new project would provide 128 rental units that range from one to three bedrooms.
He said there’s a need to capitalize on today’s low interest rates to build affordable housing, because the rates will only rise.
“This administration is transforming Kakaako into a vibrant community with affordable housing options that Hawaii needs.” — Press release from Gov. Abercrombie
Doi from HCDA emphasized Halekauwila Place is not the only low-income housing project the agency has facilitated recently. A 50-unit residence known as Cloudbreak in West Oahu aims to serve homeless veterans, and another project in Ala Moana known as Rycroft Terrace has set aside units for residents earning as little as 30 percent of area median income, or less than $28,750 for a family of four.
Rycroft Terrace allows developer and landowner Kamehameha Schools to fulfill part of HCDA’s requirement to provide cheaper housing alongside its luxury developments. But critics point out that while the trust’s high-end condos are within Kakaako, the low-income housing is not.
Rep. Scott Saiki, who represents Kakaako in the state House and led the charge to reform HCDA earlier this year, said he’s not surprised that affordable housing represents such a tiny fraction of Kakaako’s growth.
“I’ve never had an expectation that the housing supply for the 80 percent and below group would be met in Kakaako because the land values there are too high for that sort of development,” he said.
Still, he said there’s been a mantra that Kakaako will provide housing for working-class people in Hawaii.
“We shouldn’t be developing Kakaako under the guise of providing more affordable housing if that’s not true,” he said.
Growth in Kakaako has been a prominent topic in the battle for the Democratic nomination between Abercrombie and state Sen. David Ige.
While both Abercrombie and Ige support concentrating growth in the urban core, Ige has criticized the lack of low-income housing in the area, and promised through his campaign manager to build more affordable housing units in Kakaako if he’s elected.
“What’s being presented in the governor’s campaign is really just ridiculous.” — Sharon Moriwaki, president of Kakaako United
Disenchantment with the direction Kakaako development is taking is driving some residents into Ige’s camp.
Kakaako resident Cara Kimura said she’s voting for the senator because she’s unhappy with HCDA. As a member of the community organization Kakaako Neighbors and Friends, she occasionally sends out emails inviting Kakaako residents to sign-waving events for Ige, although the organization has not endorsed a candidate.
Members of Kakaako United, an advocacy group made up of area residents, have also been flocking to Ige.
“What’s being presented in the governor’s campaign is really just ridiculous,” said Sharon Moriwaki, the group’s president. “(Affordable housing) is being touted and it really isn’t happening.”
Its not just Kakaako residents who are upset. Two former governors and former Abercrombie supporters, George Ariyoshi and Ben Cayetano, have said disillusionment with the governor’s policy in Kakaako helped drive them to oppose him this election and instead endorse Ige.
In a campaign ad for Ige, Cayetano describes how Abercrombie, whom Cayetano has known for 40 years, opposed HCDA in 2005 but changed his tune since he became governor.
“It’s the Wild Wild West out there,” Cayetano said of Kakaako.
Despite the criticism, Abercrombie’s campaign manager Shane Peters emphasized that the governor has made headway in addressing the dearth of housing for low-income Hawaii residents.
He pointed to the work of the Hawaii Housing and Finance Development Corporation. The agency has developed more than 1,700 rental housing units statewide since 2011, most of which serve people earning 60 percent or less of area median income.
Peters noted that Halekauwila Place adds nearly 20 percent more affordable units to Kakaako’s existing low-income housing stock.
“Gov. Abercrombie has a deep commitment to providing housing for Hawaii’s working people in a range of affordability,” Peters said.
Here is a list of housing projects HCDA has accomplished since it was established in 1976: