Affordable housing is divided in two groups by tenure for sale or for rent.
Not including for sale units, the affordable housing rental stock includes units owned by the Public Housing Authority, units developed with financing by the Department of Housing and Urban Development, the Hawaii Housing Finance and Development Corporation’s low-income housing tax credits properties, USDA properties and inclusionary zoning properties administered by the counties including the state 201H developments.
Over the last 20 to 30 years, we have lost over 3,000 of these units when affordability restrictions have lapsed. Currently, there are only an estimated 17,000 of these units remaining. Over the next 15 years, approximately 4,500 units will lose their restrictions and another 10,000 units over the next 30 years.
These losses are significant and impact our communities in many ways.
Excluded from the numbers above are privately owned apartments that also serve this population. These apartments were developed years ago, have smaller units and affordable rents. In other communities, these units are referred to as naturally occurring affordable housing (NOAH).
Recently, many NOAH units, especially in desirable locations, have been converted to condominiums. It is estimated that over 15,000 units have been converted to condominiums in Hawaii.
One factor contributing to the loss of these units are the short deed restrictions that were used to develop these properties. As these restrictions expire, many property owners seek higher rents or sell the developments outright. Affordable housing should have long-term deed restrictions and there is no financial reason not to restrict them in perpetuity.
Many cities and states have active affordable housing preservation programs to save inventory but Hawaii and the counties do not. Such a program is urgently needed whether or not officials really want to discuss the loss of these units.
The only time the public becomes aware of the looming loss is via media coverage of particular properties. Recent examples include the Front Street property on Maui and Kukui Gardens in Honolulu.
And only when the media draws attention to the problem does the state and Legislature attempt to solve the problem with additional money. It would be more practical to analyze the current inventory of properties, develop a program to preserve as many units as possible and budget for the cost proactively.
No one at the state has an accurate list of the unit expiration dates and loss projections.
Many times, when the deed restrictions expire, the state is forced to come up with additional money and utilize scarce federal tax credit funds to save the properties. This takes away from building more new units.
No one at the state has an accurate list of the unit expiration dates and loss projections. This should be a priority for HHFDC, and the information should be made public.
Having developed and owned affordable housing, I don’t need to get paid two and three times on the same property every time the deed restrictions expire, and my grandchildren don’t need to inherit a windfall profit.
