Sen. Stanley Chang’s effort to adopt a Singapore model of developing affordable housing is possible, but experts say it won’t be easy.
Chang hosted a conference Wednesday to explore a housing plan he introduced last legislative session that sought to create thousands of housing units with a median price of $300,000.
Experts in real estate, financing and construction talked about the struggles they would face implementing that plan, and many drew the same conclusion: Chang’s vision would be a heavy lift for the building industry and require collaboration among the state and county bureaucracies.
The need for more housing is urgent. A 2015 report by the state Department of Business, Economic Development and Tourism found that Hawaii needs 65,000 housing units by 2025.
“We’re running out of time,” David Fruedenberger, senior principal of Goodwin Consulting Group, said. “The longer we wait, it may be impossible to catch up.”
Chang’s housing proposal, Senate Bill 1, fell short of approval by the Legislature last session, but Chang said he plans to push for it again. SB 1 called for high-density affordable housing developments along the planned rail line on state- and county-owned properties.
He also plans to introduce proposals that would create a state savings program to finance home down payments and incentivize construction on state-owned lands, among other measures.
Chang said the state needs to change its mindset.
“It’s not even about bulldozers on the ground, about political concerns, it’s a mindset issue we need to solve in Hawaii,” he said.
A delegation of state lawmakers and experts, on a recent tour to Singapore, found that development runs smoothly there because a single layer of government can coordinate projects. In Hawaii, the division between the counties and the state, as well as the silo-like nature of government departments, could make collaboration on projects difficult.
“We have a department of planning and permitting. It’s regulatory,” Deepak Neupane, development chief of the Hawaii Housing Finance and Development Corp., said. “Its DNA is more in regulation than in development.”
Neupane said that cities such as Boston have agencies to coordinate new developments.
But getting government agencies to collaborate with each other, as well as with the businesses responsible for building housing, is imperative, said Michael Young.
Young, vice president of Albert C. Kobayashi Inc., said construction costs may prohibit the building industry in Hawaii from hitting the $300,000 median target price. The price of materials and shipping and additional site work to make sure projects don’t disturb archeological and environmental resources all add to costs, Young said.
But the building industry can help by simplifying design, he said.
“It doesn’t mean it’ll be pretty. It doesn’t mean it’ll be fun. But to keep cost low, you need to build as efficient as possible,” he said.
Michael Vachio of JL Capital agreed, and suggested developers look at reducing parking spaces and other amenities such as pools or built-in theaters.
The panelists said using modular housing units could help to reduce costs.
Water and sewer experts from the city of Honolulu agreed that Oahu has the capacity for more housing units, depending on where they’re built.
For example, housing planned for the site of the new Aloha Stadium could tax the city’s sewer system because Halawa is at the end of a sewer line, Jack Pobuk, program coordinator for the city’s Department of Environmental Services, said.
The city is currently working on its Honouliuli Basin, a sewer line that begins in the Honouliuli Wastewater Treatment Plant in Ewa and runs to Halawa, Poak said.
Rodney Chong, a vice president at Hawaiian Electric Co., said HECO may need to build substations in areas where it didn’t anticipate increased population.
And besides the construction, infrastructure and bureaucracy, Hawaii residents may still struggle to finance homes, even if units are $300,000.
Evan Tom, a Coldwell Banker Pacific Properties real estate agent, said that a homeowner making a $15,000 downpayment would likely have monthly payments of about $1,900.
Manny August, an American Savings Bank loan officer, joked that many of his clients are also borrowing from “the bank of mom and dad.”
But Tom said some of his clients who don’t have that financial support end up facing the harsh reality of house hunting.
“It becomes an adjustment of what their expectations are of what they can afford,” Tom said. “They think they can afford this and get this type of house, but when you run the numbers, they can’t.”
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