Last summer, developers of seven new luxury condo buildings at Ala Moana held a groundbreaking for their $300 million project. Amid calls for more affordable developments in Kakaako, these “ultra luxury” towers are rising quietly without the need for public hearings or any units set aside for moderate or low-income people.
That’s because Honolulu’s existing affordable housing requirement only kicks in when developers are asking for zone changes, and all of those lots already had the proper zoning, said Curtis Lum, spokesman for the Department of Planning and Permitting.
“They can do whatever they want,” Lum said.
That wouldn’t happen under Mayor Kirk Caldwell’s proposed islandwide housing strategy. It would require that every residential development with more than 10 units — ranging from high-end subdivisions in Kailua to new towers in Ala Moana — set aside a certain percentage of housing for low- or moderate-income people.
It’s a bold proposal that local housing advocates say is unheard-of in Honolulu’s recent history, and the mayor has been touting it at conferences, town halls, coffee meetings and fundraisers throughout the city.
The 20-page proposal is packed with policy changes, including previously announced initiatives such as transit-oriented development special districts to encourage growth around the planned rail line; a new office to manage housing initiatives and properties; and the Housing First program to help homeless residents.
Given the strategy’s complexity, here’s what you need to know:
The plan seeks to provide more low-income housing, but there are caveats.
A 2011 state housing study found that Honolulu needs more than 19,000 new units and 70 percent of that need comes from low-income people, which is defined as residents earning 80 percent of area median income or below. That’s equal to $53,700 for an individual or $76,650 for a family of four. Caldwell said he wants to target that group and provide housing to those who need it most.
In addition to broadening the scope of who has to provide affordable units, the plan proposes two key changes: requiring developers to build more rental housing and for-sale housing for people in lower income brackets; and requiring homes to remain affordable for 30-60 years rather than the current 10-year minimun. (In the state redevelopment district of Kakaako, affordable for-sale units only have to remain so for five years.)
But here’s the catch: In an effort to provide developers with flexibility, the plan allows them to pay a fee rather than build the low-cost units. Such in-lieu fees are common, but if the fee is set too low, developers may not have a strong enough incentive to actually construct low-income housing. The city doesn’t yet know what the fee might be.
It would bring Honolulu’s policy more in line with other major cities.
Even though Honolulu has some of the most expensive housing in the nation and the worst rate of homelessness, the city requires developers to provide relatively little low-income housing compared with many other cities.
In San Francisco, developments with 10 or more units must set aside 10 percent of their for-sale units for people earning less than 120 percent of area median income. For rental projects, developers must set aside 10 percent of their units for people earning 80 percent of AMI or less. Both have to remain affordable for 50 years. Developers can pay a fee to an affordable housing fund instead if they prefer.
That type of across-the-board affordable housing requirement is typical in numerous cities, including Boston, Sacramento and San Diego. The strategy also would adopt some trends that other cities have been following, such as encouraging micro-units of about 300 square feet.
It would allow more density in existing housing by opening up ohana units, also known as accessory dwelling units, to be rented by non-relatives.
Caldwell says that this could infuse up to 22,000 rental units into the housing stock, which would far exceed the 11,617 rental units needed by 2016, according to the state’s 2011 housing study. The City Council Zoning and Planning Committee is taking up the proposal Thursday.
So far, the plan has been met with mixed reviews. On one hand, many people already rent out their additional units to strangers — just check Craigslist and you’ll see advertisements for ohana units in St. Louis Heights, Kailua and other parts of town. (These units may belong to people whose properties have been grandfathered under old rules that didn’t have rental restrictions.)
On the other hand, ohana units can irritate neighbors when their streets and neighborhoods become crowded with more cars and people. At Caldwell’s first town hall meeting for his affordable housing strategy, residents voiced concerns about how this policy could change existing neighborhoods and whether it would fuel more vacation rentals.
Critics warn the stricter affordable housing requirements could backfire.
Developers have attended eight coffee meetings with Caldwell so far, with some calling into question the length of time units would have to remain affordable or contending that the requirements should only apply to projects with at least 20 or 30 units.
One criticism concerns the effectiveness of affordable housing requirements, also known as inclusionary zoning. An analysis by Carl Bonham, an economist at the University of Hawaii Economic Research Organization, concluded that such policies actually reduce housing supply and increase prices. Another study by the national Center for Housing Policy found that the results of inclusionary zoning varies by city.
Caldwell said he doesn’t want Honolulu to be like Maui County, where developers say stringent requirements have discouraged construction, and is talking to developers to learn more about what works for them. He’s considering offering incentives, such as waiving sewer hook-up fees, to offset the cost of providing low-income units.
Gladys Morrone, CEO of the Building Industry Association of Hawaii, called imposing affordable housing requirements at the building permit level “questionable from a legal standpoint.”
“We would hope that the Administration would have considered other means to address the housing needs for one segment of the community,” she said in an email. “Inclusionary zoning, through mandates and exactions, has not provided Honolulu with a healthy housing market which allows people a choice… Unless you provide incentives, like increased density or reduce other building or infrastructure costs to developers, you can’t expect inclusionary rules to produce their intended effect.”
The plan is still in draft form and could change drastically before it is passed.
Caldwell said Saturday that at this point, any aspect of the strategy could change.
“I’m not wedded to any proposal,” he said. “At the end of the day, I want to make a difference. If you just push something through, it doesn’t mean anything is going to happen so you need a buy-in from the private sector, you need a buy-in from the council too.”
With pressure from developers, the policy could become less aggressive. Caldwell is up for re-election in two years, and even though he has a lot of money in his campaign fund, he may not want to alienate his wealthy supporters.
Politics could change the game, too. Caldwell’s proposal for placing homeless people into houses through Housing First faced resistance from council members like Ann Kobayashi, who questioned whether the policy did enough to help homeless families.
City officials have estimated that it would take perhaps eight ordinances to implement the entire plan, so it will be a long process. In the meantime, click here to read the full plan and send feedback to firstname.lastname@example.org.