The Honolulu Planning Commission has approved an amendment to the city’s land-use law that spells out how much affordable housing developers must provide if they want to be eligible for a special temporary permit that provides height and density advantages for building near planned rail stations.

The proposal would allow developers the option of providing money to the city instead of actually building the units, causing some housing advocates to fear that few affordable units will be constructed near rail stations.

The median price of a home in Honolulu reached $760,000 last year, and the lack of affordable housing has fueled the state’s homelessness crisis. The high cost of living has forced some residents to leave the state, and studies have pegged the number of needed units in the tens of thousands.

Policymakers, including Mayor Kirk Caldwell, have repeatedly touted the city’s multi-billion-dollar rail project as a catalyst for redevelopment that could help ease the city’s affordable housing shortage.

Convention Center Kapiolani Boulevard Waikiki Century Center2. 19 nov 2016
The corner of Kapiolani Boulevard and Atkinson Drive in Ala Moana will be redeveloped into a luxury condo-hotel that won’t contain any affordable housing. Developers are eying many other lots to redevelop in Ala Moana and the city says it wants to ensure that some housing is built. Cory Lum/Civil Beat

The amendment approved Wednesday adds more specificity to “interim planned development-transit permits,” which developers can apply for to build projects near rail stations while zone changes for most of those neighborhoods are still pending. They allow developers to take advantage of flexible zoning rules in return for providing community benefits like affordable housing.

Developers who are building rental projects should ensure at least 15 percent of units are affordable to people earning no more than 80 percent of area median income, which is equal to $56,350 for an individual or $80,450 for a family of four. The units must stay affordable for at least 30 years.

Developers who are building for-sale projects have the option of ensuring 20 percent of the units within the building are affordable to people earning no more than 120 percent of area median income for 30 years, or building the equivalent of 25 percent of the project as an affordable housing complex nearby.

The amendment also gives developers the option to pay the city $45 per square foot of the total residential area and not build any affordable housing.

These are the proposed guidelines for developers who want to build near planned rail stations before zoning rules are officially changed. 

Benjamin Sadoski, a representative for Unite Here Local 5, a union for hotel and other service workers, testified that the bill was a step in the right direction but still needed work. It goes next to the City Council.

He called for removal of the option for developers to buy their way out of building affordable housing and said the commission should also consider mandating a timeline for building affordable units.

“We hope to see this strengthened a little bit,” he said.

Money Instead Of Building Units

Like Sadoski, Planning Commission Chairman Dean Hazama was skeptical of the in-lieu fee option. Before the hearing, he said he supported getting rid of it because it “kind of defeats the purpose” of encouraging redevelopment around rail.

Hazama was leading the commission in July when it voted to require developers of projects in Ala Moana to build affordable housing and not have the option of giving money to the city instead.

“We cannot tell everyone we want to build and need to build the housing and allow for a fee, an opt-out,” Hazama said during the hearing.

Mayor Caldwell Oath of Office speaks after taking oath at McCoy Pavillion, Ala Moana. 3 jan 2017
Honolulu Mayor Kirk Caldwell said Tuesday that affordable housing is a top priority for his administration, which supports giving developers the option to pay a fee instead of building affordable units near rail. Cory Lum/Civil Beat

Still, Hazama decided to vote in favor of the amendment after hearing testimony from Harrison Rue, who is in charge of managing development around rail, about how the fee was calculated.

Rue said most cities with affordable housing requirements give developers the option to pay a fee instead. He described the studies the city commissioned to come up with the $45 per square foot figure.

He said homeowners who live in units within luxury developments can be priced out by rising maintenance fees over time.

Rue said the Department of Planning and Permitting has talked to six developers who are interested in obtaining interim permits to build in Ala Moana and plan to create affordable housing. A seventh permit is currently being processed and involves affordable housing.

Harrison Rue 

“We want the fee calculated to be where local developers will choose to build rather than take the fee option,” said Rue, adding the city desires to “do whatever we can to address the affordable housing issue.”

Hazama suggested to his fellow commissioners that they add a comment on the in-lieu fee to the amendment, but no one voiced support.

Commissioner Theresa McMurdo said she trusts the city staff’s determination that the $45 figure is high enough.

Hazama said after the hearing that he decided to defer to the Department of Planning and Permitting and noted that the City Council will have the final say.

“I think the end goal for the department and commission is a pretty strong message to say we want the units built,” Hazama said.

Lack of Clear Guidelines With Luxury High-Rise

Elizabeth Krueger, a land use planner for the city, said the bill includes “lessons learned” from the first two projects to take advantage of the interim permit, which highlighted the need to spell out requirements for affordable housing and open space.

The City Council approved a new luxury condo-hotel across from the state Convention Center called Manaolana Place in October despite criticism from housing advocates that it took advantage of density and height exemptions without having to provide any affordable housing.

Councilman Trevor Ozawa criticized the Caldwell administration for lack of clear guidelines about how many affordable units should be required or what is the appropriate formula for determining what a developer should pay instead of building new units.

Ultimately, the Council approved a resolution green-lighting the project that gave the developer the options of building 20 rental housing units near Ala Moana’s planned rail station; partnering with the city or state public housing agencies to build the same number of units in the same area; or giving the city money to build 20 rental housing units — but not more than $3 million.

Many housing advocates still felt that the city got a bad deal. Even Hazama called the Council’s decision “unfortunate.”

“We’re hoping the money (the developer) contributed will actually be used for housing in that area,” he said.

The debate is far from over. Rue said the administration plans to introduce a bill to the Council within the next two months outlining its island-wide affordable housing requirement.

Caldwell’s administration has been talking about imposing such a requirement since 2014. But concerns from developers and the time needed to conduct additional studies have delayed its rollout.

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