A Statewide Housing Shortage. Short Supply & Rising Demand Creates High Prices

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1 A Statewide Housing Shortage Short Supply & Rising Demand Creates High Prices

2 "One of the key challenges for any growing city is to ensure adequate housing to meet resident demand. The redevelopment of Kakaako is helping to ease the housing shortage in Honolulu and meet the increasing demand for urban core living." - Eugene Tian, Economic Research Administrator READ, DBEDT "Decades of under-building have aggravated Honolulu housing shortages. Almost a new Ward Village is needed every year on Oahu, just for new household formation." - Paul Brewbaker, Economist This isn t Honolulu s first rodeo. 40 years ago, the city and the state recognized they had to make a plan for more housing, and do it in a place that would have more jobs With political will and responsible landownership, Kakaako can grow such a community based on local values and traditions. Same as Campbell Estate did in Kapolei, thanks to long-range vision." Rickey Cassiday, Economist

3 We re Not Building Enough Housing for Our Population! Each Year We Need 3,300 New Housing Units On Oahu Alone!

4 There Are As Many Types of Housing As There Are People! Qualified Income Housing As Subsidized or Required By Government Market Housing Willing Buyer/Willing Seller Public Rental Housing Homeless Luxury Shelter Housing Market Subsidized Rental Housing HCDA Reserved Housing Market Rental Unit For-Sale Unit We Need All Types of Housing! Both Qualified Income & Market Housing

5 How is Affordability Defined? Affordable for Some, But Certainly Not For All!For Rental Units? For For-Sale Housing?

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7 How Our Finances Affects Our Housing Status! The Housing Ladder Represents the Range of Our Housing Opportunities We All Need A Place on the Housing Ladder As Our Financial & Personal Situation Changes Over Time, We Might Find Ourselves Moving Up or Down on the Ladder

8 Occupation AMI Level Median Wage 2014 Annual Salary 2014 Food Prep Workers 30% $8.97 $20,220 Waiter 40% $10.81 $28,930 Maids and Housekeepers 50% $15.63 $31,740 Secretaries and Assistants 60% $17.64 $37,480 Maintenance Workers 70% $19.96 $42,730 Police Officer (Rookie) 80% $25.00 $52,000 Teacher (Experienced) 100% $27.88 $58,000 Registered Nurses 140% $41.32 $85,380

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10 Kakaako Qualified Income Housing Summary What is Being Done to Ensure that People Of Low & Moderate Income Can Live in Kakaako?

11 POTS Innovations & Initiatives Allow Developers to Construct More Units If Out of District Rycroft Terrace 162 units for 100 unit credit Relax Parking Standards for TOD Units Typically 1 stall/unit required FAR Density for Affordable Units Not Counted Towards Project Maximum Provide Flexibility in Zoning Requirements Regarding Setbacks, Other Design Specifications Given Release From Public Facility Dedication Fees for Constructing Reserved Housing Units Zoning Builds Car Free Community, Active & Complete Streets, Jobs & Place

12 Current Qualified Income Programs No Government Subsidy Reserved For-Sale Housing % AMI 20% of all units Reserved Rental Housing 100% AMI 20% of all units No Government Subsidy Workforce Housing % AMI 75% of all units Government Provides Land, Tax Credit, Gap $$ Low Income Rental 60% AMI Public Housing 30% AMI

13 A Case Study for Constructing Low Income Rental Housing Units Halekauwila Place Requires Much Government Subsidy & Support

14 Realities of Housing Development Subsidized Housing Revenue Income Itself Cannot Sustain Financing Gap Financing Needed At least 1/3 of Capital Stack Must Be Subsidized Pre-Development & Construction Timeframe Can Be 4 Years or More Costs of Construction Rival Costs of Market Housing Requirements for 30% AMI Clientele Reduces Revenue Entitlements Require Time & Expense Market Housing Market Housing Must Have a Sustainable Business Plan or It Will Not Be Built Increasing Requirement for Reserved Housing Can Be Problematic! Securing Entitlements Also Require Time & Expense Makes Project Timeframe Unpredictable Pre-Sales Must Produce Enough Non-Refundable Deposits to Allow for Construction Loan to be Given

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18 What More Can We Do? HCDA Committee on Reserved Housing

19 What Should the HCDA Do? Build More Low Income Rental Units! Build More Moderate Income Rental Units! Preserve the Qualified Income Units that We Have Now! Support the Construction of Market Housing Too! While We Need to Focus on Those Who Need Our Help, We Cannot Forget that Housing is Needed by All in Our Community Each Year, More than 5,200 New Households are Formed!

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21 Financing More Low Income Action (LIHTC) Rentals HCDA Rule Change Statute Other Have Congress Increase the State s LIHTC Allocation ID Pool of Corporations w/appetite For LIHTC Credits as Private Equity Investments Issue State Tax Exempt Bonds (Hula Mae) to finance LIHTC Projects Have Congress Increase the C&C s HOME Allocation Work w/state ERS to Finance LIHTC Projects Work w/c&c to Establish TIF to Support Infrastructure/LIHTC Projects

22 Build More Low Income (LIHTC) Rentals Action Work w/hhfdc to Amend Its Qualified Allocation Plan (QAP) to Allow Families 80% AMI to participate in LIHTC HCDA to Work w/hhfdc to Coordinate Definitions, Rules & Programs Work w/c&c Honolulu to Allow Bike/Mechanized Parking to Sub for Current Requirements for LIHTC Projects HCDA Rule Change Statute Other

23 Build More Moderate Income Units Action HCDA to Allow Developers Flexibility to Provide Rental or For-Sale Units w/o Permit Amendment HCDA to Specify that Qualified Income For Sale Units are for Families Making Btwn % AMI Reserved Housing to Apply When 10+ Residential Units are Proposed to be Built Developers Given Incentives to Build Larger Reserved Housing Units HCDA Rule Change Statute Other

24 Preserve Existing & Future Reserved Housing Units Action HCDA to Extend Buy Back Period for For-Sale Units to 30 Years Work w/ers to Establish Buy Back Pool of $ for Qualified Income For-Sale Units HCDA to Extend Reserved Housing Rental Unit Regulatory Period from 15 to 30 Years HCDA to Utilize AMI Indexing Instead of Shared Equity Program to Set Buy Back Prices for RH Rental Housing Management Agents to Verify Renter Income Levels on an Annual Basis HCDA Rule Change Statute Other

25 Reduce Development Costs for Qualified Income Units Action HCDA Rule Change Statute Other Automatically Qualify HCDA Reserved Housing and LIHTC Units for 201H HRS Fast Track Permit Processing HCDA & C&C Honolulu to Eliminate On-Site Parking Requirement for RH or LIHTC Housing in Transit Rich Zone Developers of RH or LIHTC Units To Be Disqualified From Complying w/doe Impact Fees HCDA RH and LIHTC Developers to Be Exempted From Property Tax & General Excise Tax Until Certificate of Occupancy is Granted Tax Credit Program to be Established & Provide LIHTC Developers of LEED Silver Projects w/credit

26 Market, Reserved & State Housing Totals Prior to 2012 Project Market Reserved (AMI) State (AMI) Kamakee Vista (80%) Pohulani (80%) Kauhale Kakaako (80%) Na Lei Hulu Kupuna 0-76 (60%) Honuakaha (60%) Market & Reserved Totals ( %) - Totals (% of 5227 Units) (7%) 981 (18.8%) 26% of the Housing Units Constructed Prior to 2012 were for Qualified Income Families!

27 Market, Reserved & State Housing Totals Units Completed After 2012 Project Market Reserved (AMI) State (AMI) Pacifica ( %) Ala Moana 0 54 (100%) - Rycroft Terrace (30-120%) - Waihonua Halekauwila Place (60%) Totals (% of 1250 Units) (27%) 204 (16.3%) 43% of the Housing Units Completed After 2012 were for Qualified Income Families!

28 Post 2012 Units Under Construction Project Market Reserved (AMI) State 801 South St A ( %) - Symphony ( %) - Waiea 177 Off Site - The Collection 467 Off Site - Anaha 318 Off Site South St B ( %) - Total (% of 2395) (43.5%) % of the Units Under Construction are for Qualified Income Families and a Result of Existing HCDA Rules

29 Recently Approved Kakaako Projects Market, Reserved & State Unit Totals Project Market Reserved (AMI) State (AMI) 404 Ward (90-140%) Waimanu (100%) - Keauhou Lane ( %) - KS Land Block B ( %) - Land Block 2, Project Off Site - Vida 265 Off Site - Artspace 0-84 (60%) Total (% of 1969) (40.7%) 84 (4.3%) 45% of the Permitted Kakaako Projects are for Qualified Income Families!!

30 Kakaako Housing Project Totals Market, Reserve & State Units Housing Type Present Market Reserve State Prior to Completed After Under Construction Approved/Permitted Total # (% of 10,841) 7, % of all Housing Units will be for Qualified Income Families!! 2,557 (23.6%) 1,269 (11.7%)