Developers Push Back on Mayor's Affordable Housing Plan

Jun 29, 2017

Honolulu City Council Zoning and Housing Committee session of affordable housing requirements and incentives.
Credit Wayne Yoshioka

The Honolulu City Council is advancing bills with affordable housing mandates for developers.   HPR’s Wayne Yoshioka attended the hearing and filed this report.

Mayor Kirk Caldwell would like to require developers to build more affordable housing units and keep them affordable for 30 years.  He told members of the Honolulu City Council Zoning and Housing Committee that he wants affordable housing for lower wage earners.

“Where we’re focusing here is 120 percent Area Median Income (AMI) if it’s for sale; rental it’s 80 percent .  But you think, 80 percent AMI level for an

Mayor Kirk Caldwell testified as Transit Oriented Development administrator, Harrison Rue, looks on.
Credit Wayne Yoshioka

individual is $56-thousand.  For a family of four it’s $80-thousand.  The starting salary for a teacher today is $46-thousand.  Sixty percent of the people who work at the City and County of Honolulu, the 10-thousand, are below 80 percent AMI.”

Commercial real estate developer, Daniel Cody, opposes the Mayor’s plan.

“The National Apartment Association released a new study that ranked all the cities in the country as far as how hard it is to deliver rental housing. The average was 2.0.  New York City was 6.0.  San Francisco was 8.0.  Honolulu was over 19.  We are by far and away the hardest place in the country to deliver housing.  And for us to make it harder makes no sense whatsoever.  You’re gonna get less of it, not more.”

Developer Scott Settle warned council members that builders cannot and probably would not build to the City’s proposed requirements.

“You know, as much as we all want it and we wanna force someone to do it by waving a wand or pounding a hammer, it will not get built and we will end up with 30 percent of 25 percent or 15 percent of whatever the number is, of zero.”

Developer Stanford Carr is breaking ground on Hale Kewalo on the corner of Kona and Pi’ikoi Streets in September.  He also warned council members that the affordable housing requirements could backfire.

“Say hypothetically I have a piece of property in Kaka’ako with an antiquated warehouse.  Well, our vacancy factor on commercial warehouse, industrial today is less than one percent.  We got one of the tightest markets in the country and the best yields in the country.   If I build rental apartments, I’m subject to this 30-year mandatory affordability.  I’m not gonna go build it.  I can build a new warehouse or commercial building and not provide any affordable housing.  Don’t constrain a private landowner of his property rights.”

On a separate measure on affordable housing incentives…Christine Nakashima-Heise, outlined a proposal from the Hawai’i Rental Housing Coalition which represents 9 developers and landowners and 70 percent of all construction workers statewide.

“The Construction Alliance leaders, while recognizing workers are busy during this time of the current building cycle, their workers cannot find housing.  They came to us with the astonishing proposal to reduce wages so that their workers could participate in building affordable housing that perhaps they could live in.”

Zoning and Housing Committee Chair Kimberly Pine says all of the proposals will require more work and reported the bills out for the second of three votes and public hearings.

“Thank you very much, everyone for a great discussion.  And we will have many more meetings, side meetings.  You know, this will be continued.”

The Full City Council will consider the measures July 12th.  Wayne Yoshioka, HPR News.