Government officials are calling for more affordable housing development in Hawai’i. But what do developers say? HPR’s Wayne Yoshioka reports.
Hawai’i will need 65-thousand housing units in ten years, one third of them affordable rentals. That according to the State Department of Business Economic Development and Tourism. Developer Peter Savio has delivered 10-thousand affordable units since 1980. He says the problem is off-island financing that drives up cost. But, he says, the state can help.
“So if the government is willing to float bonds, is will to provide favorable interest rates, its good. But it’s only works if their gonna finance a hundred and five or a hundred ten percent so the local developers don’t have to bring in mainland partners. The partner piece the equity piece is the most expensive portion of the money. And the state should be willing to take that risk to help build affordable housing.”
Savio says local developers won’t need 20-30 percent profit margins if they don’t have off-shore financing partners. Developer Christine Camp says zoning and permitting requirements are also problematic with redundant county and state systems.
“When you’re facing five to seven years of permitting process before one unit can bring in the first rent or first dollar for sale of a unit, then the risk goes higher. And so the investors coming in put a greater premium on it. So it may require 5 percent more in return for that capital or it could be 20 percent more for that capital.”
Camp says cutting red tape is not an option given environmental and public safety requirements. Ryan Harada is a development partner for 801 South at the old Honolulu Advertiser site. The project delivered 750 work force housing units in exchange for double density. The units averaged in price between 395 and 512-thousand dollars. Harada says the Hawai’i Community Development Authority’s latest proposal to lower the percentage qualification for area median income, AMI, below 140 percent will hurt the working middle class.
“Hundred-forty percent AMI for a single person amounts to about 86-thousand. People look at 86-thousand and say, ‘Oh, that’s a good income.” That is. But when we get a lot of couples coming in, that goes up to 98-thousand. So that means each of ‘em is making less that 50-thousand. And that’s where a lot of people don’t understand. They look at a 140 percent and say, “Aw, that’s too much.” But for a couple in Hawai’i trying to buy a house, each of them having to keep their income under 50-thousand, that’s tough to do.”
Senator Will Espero is sponsoring a bill that could provide 2 billion dollars in bond financing for developers, statewide. He says affordable housing development on O’ahu is a high priority and should follow the rail transit system.
“We have to be very smart on how we develop the remaining open lands and building up – some people don’t like that idea – but in 50 years I project that we’re gonna have an additional 500-thousand people living on O’ahu. Imagine that. And then in a hundred years we’re gonna have 2 million people living on O’ahu.”
In my next report, Hawai’i developers weigh-in on solving the affordable housing crisis.