Affordable rentals hard to find

By James Gonser
Advertiser Urban Honolulu Writer

Hawai'i's tightest home rental market in 25 years is taking its toll on people like Eddie Smith.

Eddie Smith is homeless and spends his nights at the Institute for Human Services in Iwilei. Smith, a 55-year-old veteran, has a federal Section 8 voucher to rent an apartment, but can't find one he can afford. Yet he keeps looking. Eugene Tanner • The Honolulu Advertiser

Meanwhile, he is living at the Institute for Human Services.

"I don't know what I'm going to do," Smith said from the homeless shelter. "I'm going to keep looking through the paper and places people tell me about. I'm checking all of them out. I guess I'll still be here at IHS awhile longer."

This is the flip side to Hawai'i's booming housing market, a double whammy born of decades of not building affordable housing and aggravated now by a rental market that is shrinking — and rents climbing — as owners rush to cash in on soaring home prices.

Experts cite the lack of affordable housing as one of the chief reasons for the growing number of homeless in Hawai'i, and the fear is that the worsening rental situation may squeeze Smith and others like him out of the market and leave them to fend for themselves on the streets, as 6,000 people already do on any given night.

Gov. Linda Lingle offered a ray of hope when she announced in her State of the State address that she is placing a priority on building affordable rentals and has asked the Legislature to approve $100 million in funding for loans.

That would be a significant step forward, advocates say, but with more than 20,000 people already either on the waiting list for public housing or unable to find a rental for their Section 8 rent vouchers, solutions are still years off.

Betty Lou Larson, chairwoman of the Rental Housing Trust Fund, a state fund administered by the Housing and Community Development Corporation of Hawai'i to lend developers money to build affordable rental housing, estimates that 2,000 affordable rental units need to be built every year just to meet demand, and nothing near that is planned.

Only about 2,000 such units have been built since 1992.

"That is why we have double the homeless of four years ago," said Larson. "Families double up, live in substandard housing and more of them are on the beaches."

Lingle estimates Hawai'i's affordable housing shortage to be 30,000 units.

"One negative effect of our expanding economy and prosperous real-estate market is the serious lack of affordable rentals in low-income categories," Lingle said during her State of the State address in January.

"To address the need for affordable rental housing, I am calling upon the Legislature to increase by $100 million the borrowing authority of the Housing and Community Development Corporation of Hawai'i."

House Bill 2451 to provide that money is moving through the Legislature, and Lingle has been meeting with private developers in hopes they will take up the challenge of building affordable housing.

Nationwide problem

The federal government stopped construction of public housing in the 1980s during the welfare reforms of the Reagan administration, leaving the states and private industry with the burden of building affordable housing.

Hawai'i was hampered by a down economy throughout the 1990s that limited its role in such projects, and as for private industry, there's just no profit in it without government assistance.

"There are no private developers doing rental housing," said Gary Furuta, project manager for Hawai'i Housing Development Corp., a nonprofit that is one of the few groups building affordable housing in Hawai'i.

The company used Rental Housing Trust Fund money to build the Wilder Vista affordable housing project, where the first residents started moving in last month.

"It just doesn't pencil out," Furuta said. "You are limited in the rents you can charge, so the value of the loan you can get will just not cover the cost. You just don't get enough income to justify the amount of money it is going to cost for the brick and mortar and land.

"Condos are driven by financing the purchase price. It can be underwritten. If you want an affordable housing project, you need that partnership with government."

Plan to sell apartments

Meanwhile, government has its own money problems.

Honolulu Mayor Jeremy Harris recently announced a plan to sell more than 1,000 city-owned rental apartments, which could generate more than $140 million for the financially troubled city.

However, that would mean taking all of those apartments out of the rental market. Harris said low-income tenants will be eligible to buy apartments in the 12 buildings to be sold, but the plan would permanently remove hundreds of subsidized units from an already tight market.

Larson believes her Rental Housing Trust Fund can provide the help that private developers need to make affordable projects happen, but said more money needs to be placed in the fund.

The program is financed through a conveyance tax charged on all property sold and requires that at least 50 percent of their housing units are affordable to people making below the median income.

"I think there needs to be more of a commitment to increasing the Rental Housing Trust Fund," Larson said. "If developers know the money is going to be there, then they will spend the time and the money to develop proposals."

Going to extremes

An affordable housing unit is defined as one that costs no more than 30 percent of the renter's income.

A full-time minimum-wage earner ($6.25 per hour in Hawai'i) can afford a monthly rent of no more that $325 according to that formula, and the fair market rent for a one-bedroom unit is $748 in Hawai'i — the highest in the nation.

That means that people like retiree Richard Porter, still have to go to extremes to be able to pay for even an affordable rental.

Porter, 62, lives in a studio apartment in Kulana Hale Senior Apartment, a project that was funded by the Rental Housing Trust Fund.

Porter ended four years of homelessness last July when he was able to combine his Social Security income with a federal Section 8 rent subsidy along with down payment help from Catholic Charities to pay his rent.

More than 8,000 people that have been approved for a Section 8 rental subsidy — despite combing the classifieds and seeking help from service providers — can't find homes to rent in their price range. There are 11,000 Section 8 vouchers now in use in Hawai'i.

Porter had been living on the beach in Waikiki. He is not an alcoholic or drug abuser, just a man who was unemployed and ran out of money. Now he has a roof over his head, a telephone and a view.

"It's great," Porter said. "It means you don't have the police hassling you and the weather, when it rains, it's bad."

Thousands of other people end up on waiting lists and get by as best they can in the meantime, sometimes with the help of family or friends.

Waiting for a 'miracle'

An estimated 41,007 families in Hawai'i are considered "hidden homeless," those that share homes with others, according to a new state Department of Human Services report called the Hawai'i Housing Policy Study.

The same study found that nearly 13,300 of Hawai'i's poorest families have put their names on waiting lists to move into one of the state's 65 public housing projects, which have a total of 5,300 units.

But when everything comes together, with a motivated renter, an affordable project and a little luck, miracles can happen.

Danielle Yee, 34, just moved into a two-bedroom affordable apartment in the new Wilder Vista with her son, Jameson, 1 1/2.

Yee was renting a room with no prospects of affording anything more when she saw Wilder Vista under construction. She works part-time and met the income requirements, so she picked up an application and entered the lottery for an apartment.

Yee wanted a one-bedroom because it was more affordable, but when a larger apartment was offered, she jumped at it.

"This is a godsend for me," Yee said. "If I can stay here for the rest of my life, I'm going to stay here. My dream has come true. I don't want to be rich. I just want to pay my rent, buy my son what he needs for school and to have some money in the bank."

But, advocates say, stories like Yee's are all too rare and finding affordable housing shouldn't take a miracle.

Reach James Gonser at jgonser@honoluluadvertiser.com or 535-2431.