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In public policy, there is often a gap between intention and reality. Local efforts to deal with the housing crisis reflect this divide.
In effort to increase affordable housing supply, the City and County of Honolulu requires that developers set aside affordable units for low income residents.
The intention is solid. But these affordable units don’t always end up occupied by those who need them.
Consider new developments in Kakaako. As a university lecturer, I was surprised to learn that many of my students occupy the affordable rentals. These students are not working professionals or young couples saving to buy a home. Most will leave after graduation.
A few of my students live at Keauhou Lane. My lecturer salary would qualify me for an affordable unit at 80% of gross median income, but if I moved in with a working spouse, we would not qualify.
You might argue that any increase in supply is good. But no public official advocated building affordable dormitories for foreign students. This was not an intended effect of the policy.
Obviously, our affordable housing system is limited. Income measures do not account for foreign students whose parents pay rent. And there is little ability to differentiate between types of renters, whether they are long-term residents or students from out of state.
A focus on household income obscures other valid considerations when assigning housing. For instance, focusing on income doesn’t allow authorities to give preference to long-term residents. And efforts to reduce roadway traffic are slowed by an inability to distribute housing based on workplace location.
Simply, not all households of equal income should be treated equally by housing authorities.
Unless we’re careful, we may suffer from more unintended consequences as new, ambitious housing policies are introduced.
One novel idea for dealing with the housing crisis was advanced in the Legislature this session, though it died in committee.
With his ALOHA Homes Initiative. SB1,, Senator Stanley Chang intends to increase housing supply to match demand by building high-density condominiums on state land near public transit stations. The units will be offered for sale with 99-year leases, and owner-occupancy will be required.
Chang found inspiration for his plan abroad, studying “jurisdictions that have successfully solved similar problems in the past.” Thus, Chang visited Vienna and Singapore, two highly-regarded models for public housing.
Though both models are successful, their approaches vary. Vienna uses a highly subsidized rentership model. In contrast, Singapore offers mostly unsubsidized units for sale on 99-year leases.
In theory, either model could work in Hawaii. But Chang believes the Viennese model would be a hard sell.
“I don’t believe the Legislature and voters have the appetite to increase subsidies,” he said.
In addition, the Viennese rent control model only works because there is enough supply to meet demand. Insufficient supply has caused similar rent control models to fail in cities like San Francisco and New York.
“In California and New York, you have the lucky people with rent controlled units and the unlucky people who pay market rates,” Chang said.
Because of the weaknesses in the Viennese model, Chang believes the Singaporean model is best for Hawaii.
Offering units for sale helps to increase the supply because construction is not reliant on government subsidies.
One of the key provisions in Chang’s measure is removing any income limit or preference for first-time home buyers when selling the ALOHA Homes units. This would not affect existing stock of public housing.
Chang believes that income restrictions are inappropriate when dealing with public goods.
“Everyone needs a house, no matter how much or how little you make,” he said. “The department of education doesn’t ask your income when you send a child to public schools. There’s no income restriction for public parks or public transportation. Public services are for the public.”
And public services should not have an expiration date. Hence, the 99-year leases ensure security and stability for occupants, so they won’t have to move until they die.
In Singapore, most people own their public housing units. And when allocating housing, the government prioritizes families. This allows Singaporeans to invest in their community for the long-term.
I visited Singapore last summer and noted the cleanliness of public housing. Not all public developments were luxurious, but they’re certainly preferable to those in Hawaii.
Because of the high rate of ownership, Singaporeans take pride in their communities and volunteer to beautify their residences. In Hawaii, tenants change frequently, disrupting any sense of community. Because renters have little stake in the property, many public housing projects lapse into disrepair.
In addition, renting creates a permanent reliance on government assistance. Rent for affordable units is not low enough that renters can save for a down payment on property. Instead, they remain in a twilight zone where they can live comfortably, but only as long as they remain in public housing.
Some version of the ALOHA Homes Initiative should help the state transition from a culture of renting toward a culture of ownership. However, this transition will require more resources for first-time homeowners.
The City and County of Honolulu Affordable Housing Strategy notes that while “most renters aspire to purchasing their own homes, few have the resources necessary to secure a mortgage.” These renters don’t have funds necessary for a down payment, and few have sufficient creditworthiness.
In the short-term, increasing the supply of rental units is necessary to supply for housing needs. For this reason, the strategy prioritizes the creation of rentals rather than units for purchase.
In the long-term, policy makers have to address the underlying economic conditions. They need to improve the ability of renters to purchase units. Otherwise, even ambitious plans like Chang’s will come up short.
If Honolulu is going to mimic Singapore, we need to do more than increase the role of government in housing provision. We must also change the way we allocate affordable units and encourage home ownership.
We should prioritize those who have a long-term commitment to Honolulu — people who intend to raise a family here. These people pay taxes over a lifetime and join community organizations that enrich our city.
Policies favoring ownership over renting can help achieve this goal. Chang’s ALOHA Homes Initiative is a step in the right direction, but it will not succeed unless would-be homebuyers receive assistance.
Any housing solution will require a nuanced approach from housing authorities. We already suffer from a simplistic, income-based approach to allocating existing housing. As new policies advance, let’s be sure they don’t fall into the gap that separates intention from reality.
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