The issue of affordable housing is one that continues to affect Hawai‘i. With home prices averaging north of a million dollars, it’s become simply impossible for many families to live in the islands.

That is why recent initiatives between the state government and private sector offer a promising way of alleviating the affordable housing crisis. This public-private partnership is a welcome model that ought to be further developed to put an end to the crisis that is affordable housing in Hawaiʻi.

In 2022, the Legislature appropriated about $300 million to the state’s Rental Housing Revolving Fund, which made low-interest loans to real estate developers.

What was the result? Well, all things considered, not bad: A little over 10,000 affordable housing units are expected to be built by 2026, according to state estimates.

That’s far below the amount needed to sufficiently satisfy the demand for housing, but it is a step in the right direction.

On the county level, the Honolulu City Council recently passed Bill 3, which aims to provide greater financial incentives for developers to build affordable housing. The bill, shrewdly introduced by Councilman Tyler Dos Santos-Tam, is the public-private partnership in action.

By utilizing the superior efficiency of the private sector, this allows affordable housing to be built at a rate faster than what the government can do.

It should be noted that the rail, a project largely overseen by the government, will for the foreseeable future be delayed. The verdict: The government can’t do everything on its own, necessitating a collaboration with the private sector.

These public-private initiatives are reminiscent of the policies implemented in New York in the 1960s and 1970s. Gov. Nelson Rockefeller at the time issued bonds as a way to raise funds to increase the size of New York’s public education system. Rockefeller did this to defray the cost that would have otherwise been put on taxpayers.

A government working with its private sector, as shown in this case, demonstrates the applicability of this model.

Similar to the government, the private sector faces hindrances of its own when it comes to building affordable housing. However, those limitations are extrinsic to the capabilities of individual developers.

For instance, many developers face high construction costs as a result of bureaucratic inefficiencies and burdensome regulations. The most salient example of this is when developers have to obtain the necessary permits to begin construction.

But how can this be done when the Department of Planning and Permitting constantly faces backlogs?
What the state should do therefore is slash the excessive regulations that are holding back the crucial development of affordable housing.

As promising as this public-private partnership is, it will require a certain political will to sustain this relationship. A developer will not undertake a project if there isn’t an incentive to do so, which requires that there be one in place.

And that is where the government can beneficially step in.

Although there is much work to be done to increase the supply of affordable housing, the heightened collaboration between the government and private sector provides a roadmap for filling the problematic affordable housing gap.

But why is it important that the private sector be incorporated into this issue?

That’s because the government has repeatedly demonstrated its sluggishness and is riddled with inadequacies that affect its productivity.

On the other hand, when the government creates the conditions for unlocking the industrial prowess of the private sector, that is where progress lies.

If lawmakers can continue supporting the public-private partnership to address affordable housing in Hawaiʻi, then perhaps being “priced out of paradise” won’t be as commonly heard as it is now.