Denby Fawcett: Condo Towers In Kakaako Makai Won't Make A Dent In Hawaiian Housing Woes - Honolulu Civil Beat

About the Author

Denby Fawcett

Denby Fawcett is a longtime Hawaii television and newspaper journalist, who grew up in Honolulu. Her book, Secrets of Diamond Head: A History and Trail Guide is available on Amazon. Opinions are the author's own and do not necessarily reflect Civil Beat's views.

OHA says it will build more affordable units, but thatʻs not enough to offset the negative effect of high-rises on open oceanfront land.

One of Hawaiiʻs most pressing problems is the lack of affordable housing, and Native Hawaiians are the most aggrieved.

But contrary to what some might believe: the Office of Hawaiian Affairs will not be providing a bonanza of affordable housing options for Hawaiians and other residents if it gets lawmakers to repeal a decade-old land protection law to allow it to build three condo towers in Kakaako Makai.

The logic of the 2006 law OHA wants upended was to prevent such upward development on the seaward side of Ala Moana Boulevard to retain space for public recreational, educational, cultural and entertainment opportunities on one of the last remaining stretches of open oceanfront in urban Honolulu.

Kakaako Makai was to be protected as part of a larger plan to create a green belt of parks and open promenades to eventually stretch from the Ewa edge of Waikiki to Honolulu Harbor.

The intent of the law was to avoid planning mistakes of the past when landowners were allowed to build tall buildings on beachfront land, completely blocking views of the ocean and cutting off fresh air and sunlight from people on the shore.

In its effort to get lawmakers to repeal the protective law, OHA has emphasized that a key public benefit its proposed development named Hakuone will provide is “much needed housing for Native Hawaiians and local residents.”

Yet what kind of homes and for whom? Will many units really go to Native Hawaiians so badly hurting for housing?

OHA wants to build three high-rises on its land in Kakaako Makai, but opponents of the idea fear losing more oceanfront space to towers like those seen in the background of this photo. (David Croxford/Civil Beat/2023)

OHA is absolutely clear that most units it hopes to sell in the 350-foot towers would be for market price — meaning whatever the market will bear. That’s a lot of money in Kakaako mauka today, where many residences with unobstructed ocean views are in the luxury category.

The 20% Rule

OHA said it would be legally bound to ensure that at least 20% of the units built are affordable and building more market-rate units will subsidize its ability to build more affordable ones.

“It’s really hard to provide exact figures but know that OHA wants to build more than 20%,” the agency wrote in an email. “That’s another reason we want to increase height and density on our parcels, so we can offer more affordable units.”

“OHA cannot burn through its Native Hawaiian Trust Fund to pay for affordable units — that is not what fiduciaries of a trust that needs to last in perpetuity should do,” it said.

OHA said the fact that it is aiming to sell predominately market rate units does not necessarily mean it is looking to develop $5 million luxury pieds-a-terre like those on the mauka side of Ala Moana Boulevard.

“There are a number of price points available in market rate housing before you reach the luxury category and OHA would explore those price points.” OHA wrote in another email.

OHA by law cannot set aside any of the proposed condos in Hakuone for Native Hawaiians. The Department of Hawaiian Home Lands is the only state agency that can impose that kind of racial restriction.

“Any housing OHA builds could not be reserved strictly for Native Hawaiians as only DHHL has that authority,” the agency said. “We do believe, however, that affordable housing we build would benefit the community as a whole and part of that community would be Native Hawaiians.”

Another question is how would OHA prevent out-of-towners from dominating sales to buy second homes in Hakuone or speculators from purchasing residential units to flip for profit — as has happened in the high-rise towers on the other side of the street?

“This is a concern for OHA,” the agency said. “More discussion and analysis is needed to explore ways we can support our Native Hawaiians and local people in this regard.”

Legislative Debate

The controversial land use debate engaging legislators this session is an extension of an effort that began after the state gave OHA 30 acres of Kakaako Makai land in 2012 to settle a debt of $200 million in ceded land revenues.

OHA agreed to the settlement knowing the 2006 protective land law would prevent it from building condo towers on the property, yet it hoped to persuade legislators to change the law.

That has not happened. Now making its fourth try in 11 years to get the restrictions lifted, OHA said its appraisers have found the settlement with the state is worth only $91 million, not $200 million.

Never mind that the City and County of Honolulu puts the current tax assessed value of OHA’s Kakaako Makai land at more than $300 million.

Rendering of planned Kakaako Makai development OHA
An architectural rendering of OHA’s planned Kakaako Makai development. (Courtesy of OHA)

The Senate Water and Land and Hawaiian Affairs committees on Thursday gave OHA first-round approval to advance a bill to lift the residential building restrictions to allow it build three residential high-rises up to 350 feet tall. The measure, which also would give OHA the right to sell its Kakaako land, must pass more legislative hurdles if it is to win full approval.

OHA, in its plea to the Senate committees, says it is discriminatory to prevent the agency from developing its own land just like landowners on the mauka side of Kakaako have been able to do — constructing dozens of residential high-rises that have yielded millions of dollars in profits.

But the law bans all landowers in Kakaako Makai, not just Hawaiians, from putting up residential towers.

Board Chairwoman Carmen Hulu Lindsey said the increase in revenues that would result from allowing the agency to fully develop its land as well as other commercial and cultural developments allowed under current zoning would greatly boost its mission of creating programs and grants for the betterment of Native Hawaiian lives.

So back to the 20% affordable housing OHA would be required to build if gets the go-ahead to construct condo towers on Kakaako makai land.

Still A Chance To Get It Right

Under the current rules of the Hawaii Community Development Authority, the agency governing all Kakaako development, at least 20% of the total number of units in any building in Kakaako must be “reserved housing,” or affordable — put aside for qualified individuals or families earning no more than 140% of the area median income.

Using federal AMI guidelines for Hawaii, that would mean in order to qualify an individual could earn no more than an annual pre-tax salary of $111,001, and a family of four no more than $158,600.

HCDA’s definition of affordable in its reserved housing category means the units have to be priced to make sure that working individuals or families spend no more than a third of their gross monthly income on housing.

“OHA would seek to offer its affordable units at the lowest possible AMI it can afford to. This could mean offering units at below 100% AMI,” the agency wrote.

OHA has not specified yet how many condo units it wants to build so it is impossible to know how many of them would constitute the 20% affordable requirement and how much they would cost. But, for example, if the agency could build a total 2,000 condos, 400 of them would have to be affordable.

To get an idea of what reserved or affordable units currently cost on the mauka side of Kakaako, the development called Ulana in newspaper ads offered its least expensive reserved housing one bedroom, one bath units for $524,000 to $556,000 — still a hefty price for a first-time home buyer.

OHA told lawmakers the law to prevent residential tower building on Kakaako Makai oceanside is outdated.

But any law that protects rare open oceanside space in urban Honolulu is not outdated, especially looking back to the poor planning that turned Kalakaua Avenue into a tunnel of looming high-rises.

Or consider Waikiki Beach, most of it now forever blocked off from view by hotels and massive concrete shopping centers selling European luxury goods of scant value to most Hawaii residents.

There is still a chance to get it right by keeping the oceanside of Ala Moana Boulevard free of 350-foot-tall residential towers.

If OHA is interested in helping Hawaiians get affordable housing — and it clearly is with its ongoing efforts to help its beneficiaries qualify for homestead land — it should fully develop its Kakaako Makai land the way it is currently allowed by law and look elsewhere to build high-rises.

The agency is currently allowed to build commercial properties on the Kakaako land, which it proposes to do in the Hakuone plan with cultural features and services to promote a Hawaiian sense of place to benefit all. The plan includes special day care facilities, educational centers and waterfront promenades dotted with restaurants and other entertainment and shopping venues.

Since OHA believes it was shortchanged in the 2012 settlement, it could insist on going back to the negotiating table to get the state to give it additional land in other places where it could more easily build residential towers to benefit the thousands of Native Hawaiians and other residents now lacking enough money to buy their own homes.

That’s something everyone would feel good about.

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About the Author

Denby Fawcett

Denby Fawcett is a longtime Hawaii television and newspaper journalist, who grew up in Honolulu. Her book, Secrets of Diamond Head: A History and Trail Guide is available on Amazon. Opinions are the author's own and do not necessarily reflect Civil Beat's views.

Latest Comments (0)

The key point OHA apparently forgets, is that they (trustees) at the time of the negotiation for these lands accepted the value, including its restrictions for the agreed upon value of $200M. That puts the onus on OHA and it's trustees to do their due diligence for the benefit of all Hawaiians. If they failed to do that, they are personally liable for that failure. As in any business deal, it's buyer beware. You don't come back 11 years later and saying, we where duped. Nobody twisted your arm to take state's valuation, where where the competitive appraisals and negotiations at the time? The state has been more than generous in suggesting they would be open to going back to the table and possibly looking at additional compensation, which should be graciously considered, given OHA's position. My guess is most Hawaiians would prefer living on the land versus in a condo, so more rural land would be prized and OHA can still build a fishing village and cultural center in Hakuone as they profess. Even though OHA screwed up there may be a way to make the situation pono with the state's open door to do what is right.

wailani1961 · 6 months ago

How would any development of Kakaako Makai fit in with the city's ordinance under community workforce agreements? Bill 37 from 2019 stated: "To address rising sea levels and the effects of climate change on the City’s coastline, the City must act quickly to move roads parks, and infrastructure in-land."

Natalie_Iwasa · 6 months ago

Keep the current law in statute as is.

macprohawaii · 6 months ago

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