Thoughts on the Oahu Islandwide Housing Strategy

In September 2014, Honolulu Mayor Kirk Caldwell released a draft plan, “Housing Oahu: Islandwide Housing Strategy.” The draft plan outlines a housing strategy that promises to add over 4,000 affordable housing units over five years; or over 8,000 affordable housing units with the State of Hawaii’s help. Over a 15-year period, the plan hopes to meet the need for 24,000 additional housing units.

The housing strategy is based on several housing principles, including longer-term affordable housing (to help keep people in their homes), healthy and age-friendly communities (walkable and accessible neighborhoods with good transit service), and affordable housing integrated within all communities (to avoid neighborhoods segregated by income). While this plan is designed for Honolulu, it can be a test-case for neighbor islands and other cities as well.

There are five basic components to Honolulu’s Strategic Action Plan:

1. To develop affordable housing, we could develop our own projects along the transit corridor and rehabilitate existing housing. The city would have to become a developer and landlord, or partner with development and property management companies. There are approximately 224 parcels of city-owned property within the ½ mile transit corridor, and another 519 parcels of state-owned property – but no estimates about how many parcels are under-utilized or undeveloped. Note: We would need to create a Strategic Development Office, almost 20 years after Honolulu disbanded the Housing Development Office; and possibly a Community Land Trust or Land Acquisition Fund, both of which would mean bigger government, more bureaucracy, and possible duplication of services.

2. To integrate affordable housing into new developments, we could change the affordable housing requirements for developments over 10 units. The city would reduce the minimum number of affordable units, but set lower income levels (80% of AMI [area median income] instead of 120% of AMI); and longer periods of affordability (30-60 years instead of 10 years).

3. To promote affordable housing, walkable cities, and urban living along the rail transit line, we could support transit-oriented development. The city would encourage affordable housing near rail stations with financial and zoning incentives, as well as city investments.

4. To encourage affordable housing in existing neighborhoods, we could expand zoning for multi-family, ohana, and accessory dwellings. The city would update zoning codes to allow for 17,000-22,000 accessory dwelling units (ADUs) to be added on existing single-family lots. These rental units could be small cottages, additions, or converted garages.

5. To aid the homeless, we could implement Housing First. The city would find homes for the long-term homeless immediately, without first requiring enrollment in a treatment program. There would be protections in place for landlords against damage to the unit. Note: I haven’t heard anything about public safety protections (physical safety and peace of mind) for neighborhood residents.

In my opinion, three things are missing from the draft Islandwide Housing Strategy:

1. There are no cost estimates or funding sources. We have a starting price tag: the Honolulu City Council has allocated over $47 million in FY2015 for housing and homeless services, the US Department of Housing and Urban Development has awarded $2 million in initial funding for the Equitable TOD Fund (to be matched by banks’ Community Reinvestment Act funding), and over $10 million has been allocated towards homeless-directed programs and services. What is the value of tax credits and incentives for developers? How much money will be allocated for Housing First and additional social services? Will approving more building permits require more permitting staff and building inspectors? How will we pay for these programs and services?

2. The plan does not address infrastructure and utilities. With no answers for where rail will get its electricity, how can we plan for more housing units? What is the status of our water supply and sewer lines? What will we do with all our trash? Will we need to build, maintain, or widen roads to accommodate more traffic? Will we need to build more schools and parks? What about parking (even if residents along the rail line don’t have cars, visiting family and friends need to park somewhere)?

3. The plan lacks an education component. With many young adults deferring home purchases or requiring downpayment assistance “due to lifestyle choices in early adulthood” (page 6), we may want to start practical homeownership classes in high school, focusing on financial management, credit, and tenant’s rights. And I think we should state that it’s okay to rent. Home ownership is not for everyone; not all of us want to deal with the stress of a mortgage and home maintenance, or being tied to one place for long periods of time.

I would also like to share three ideas to help promote ohana units, accessory dwellings, and home ownership:

* The property tax rate for accessory dwellings could be lowered for 1-5 years. This would encourage homeowners to build ohana units and accessory dwellings on existing single-family home lots. Also, the additional property tax revenues could be funneled back into the affordable housing fund for that same period of time, adding to the 0.5% of property tax revenue (approximately $4 million per year) that is dedicated to the Affordable Housing Fund. The Action Plan proposes property tax exemptions or credits only for transit-oriented developments, not for individual homeowners. I don’t know how much this would cost the city – I consider it additional revenue, not “lost” revenue.

* The general excise tax (GET) could be waived for 1-5 years for accessory dwelling rentals. This would encourage homeowners to build and rent an ohana unit or accessory dwelling – and make filing GET taxes easier, and it would give renters a break from paying the GET on rent. For a $750 per month unit, this would save renters $400 per year. Alternatively, the money from the GET could be deposited into a Home Savings Account, which could be used for a downpayment on a home.

* Hawaii could create Home Savings Accounts, similar to a health savings account, college savings plan, or retirement fund. The money could only be used for a downpayment on a home. Deposits would be made with after-tax money, and interest would be tax-free. Family members would be able to “pool” the money, as long as account holders were also named on the homeowner title; or “gift” the money to a beneficiary whose name would be on the homeowner title.

Do you have any comments, suggestions, or concerns about Honolulu’s proposed housing strategy? If live in another city, what affordable housing programs have worked in your area?

The future of affordable housing

The deadline for submitting your comments about the Oahu General Plan is November 30, 2011, and I hope that you’ve taken a moment to think about Oahu’s future. Affordable housing is just one of the eleven key planning issues covered by the Plan.

The Affordable Housing Trend Report starts with the assumption that “affordable housing is a pressing need for the county.” It highlights several issues affecting affordable housing: the aging population, transit-oriented development, gentrification, densification, the conversion of affordable housing to market-rate housing, and green building.

In a statement of the obvious, the report reveals, “While sometimes linked to mental illness, drug use, and outside factors, the availability of affordable housing can prevent homelessness” (page 13).

But the most surprising thing about the report isn’t the trends and key issues; it’s a chart on page 12 that illustrates “The Flow of Subsidies from Public Agencies to Private Entities.” This Institutional Structure chart highlights six federal government programs, eight Hawaii programs, and four Honolulu programs that funnel taxpayer money to developers and property managers, all with the goal of making housing affordable in Hawaii. There are five voucher programs, three block grant programs, tax credits, tax-exempt bonds, two investment programs, and public housing. Despite similar goals and the duplication of services, the report warns, “interagency cooperation may prove difficult” (page 11).

Why is it “difficult” for the various agencies to work together? Why can’t we combine affordable housing programs and reduce the duplication of services?

Affordable housing is an issue for states and counties. Aside from military housing, I don’t understand why the federal government is involved in affordable housing at all. Right away, we could eliminate six programs and vastly scale down the size of the Department of Housing and Urban Development.

At the state and county level, the state should be responsible for any affordable housing tax credits, block grants, and funding for affordable housing projects; while the county should be responsible for building and maintaining affordable housing units.

After reading through the report, I have to wonder: what is government’s role in affordable housing? How many years is government expected to provide affordable housing? Why doesn’t the General Plan address the personal responsibility for housing?

Think about these questions, and consider some ideas for affordable housing reform:

* Affordable housing should have time-limits, such as three years for individuals and five years for families; they must agree not to have additional children. This encourages people to work hard and save money so they can move out and find a home of their own.

* Affordable housing should include an agreement to contribute to a monthly “Community Day,” one day of work to help clean and maintain the grounds and common areas, for all able adults and older children. This encourages people to have pride in their homes and helps create a sense of community.

* Affordable housing should partner elderly residents and families with young children. This gives people a way to build friendships, offer companionship, and help others.

All of these affordable housing programs are not affordable for taxpayers, and they don’t solve the problem of homelessness. How do you think we can improve the affordable housing programs we have and ensure that they don’t become generational affordable housing programs?

Keeping Hawaii graduates in Hawaii

Hawaii is a beautiful, unique place to live, but let’s face it: it’s expensive to live here. It’s remote and there aren’t a lot of high-paying jobs. That’s why we’re so concerned about the “brain drain” when some of our most talented and motivated graduates leave Hawaii.

There are a lot of abstract solutions – like diversifying our economy, creating more jobs, lowering corporate taxes, and encouraging small business growth. Those are all important goals, and we shouldn’t lose sight of them.

But let’s think about some specific tactics we can use to keep our talented and motivated graduates in Hawaii. Here are three ideas:

* Guarantee affordable housing units for up to three years after graduation. In partnership with the University of Hawaii, Hawaii businesses, and hotel operators, we could build residential buildings or designate affordable housing units for recent graduates. Who would qualify? 1) Hawaii high school graduates who attain a degree from an accredited university anywhere in the US; and 2) University of Hawaii graduates. Graduates would need to be in the top 10% of professional fields like education, emergency response, engineering, law enforcement, medicine, and science. This would encourage high school graduates to return to Hawaii to work, even if they attend an out-of-state college.

* Create a car sharing service. Hawaii could implement a car sharing service (ideally available to everyone) which would let you sign up for a driving plan (including insurance), reserve a car for a certain amount of time (in hours or days), use it, and then return the car. This would help young graduates who may occasionally need a car, but who can’t afford one. The service should pay for itself, once the initial program and cars are in place. Companies like Zipcar.com and cities like San Francisco (citycarshare.org), Philadelphia (phillycarshare.org), and Boulder (carshare.org) are already doing it. Why not Hawaii?

* Offer a tax credit or low tax rate for recent graduates. We could create either a Hawaii tax credit or a low tax rate (perhaps even 0%) for Hawaii graduates for the first three years of employment in Hawaii. Who would qualify? 1) Hawaii high school graduates who attain a degree from an accredited university anywhere in the US; and 2) University of Hawaii graduates. Of course, Hawaii would have to be their principal residence, and they would have to file Hawaii tax returns. This would encourage graduates to find a job in Hawaii, help them in the early years while their salary is low, and make it easier for them to stay.

Hopefully, after three years, the graduates will have settled into life in Hawaii, earned a raise or two, and saved up enough money to afford to live here.

These are just a few ideas for stopping Hawaii’s “brain drain.” What else can we do to help our young residents stay in Hawaii?