Posted on: Sunday, May 29, 2005

ISLAND VOICES
Solving affordable housing crisis

By state Sens. Ron Menor and Gary Hooser, and Reps. Michael Kahikina and Scott Nishimoto

At the beginning of this legislative session, the lack of affordable housing loomed as one of the most daunting issues confronting the members of the state Legislature.

The state's lead agency on housing, the Housing and Community Development Corporation of Hawai'i, reported to lawmakers that more than 28,000 affordable units were needed, and nearly 40 percent of those will be required by those earning below 80 percent of the median family income (approximately $50,000 on O'ahu) — a group that represents at least 47 percent of all households in Hawai'i.

This information came on the heels of the previously released Homeless Point-in-Time report that told us approximately 6,000 people are homeless in our state at any given time. Equally troubling were the revelations of the number of "hidden homeless," those relying on public assistance, relatives or friends for shelter because they cannot afford a place of their own. In just 10 years, the size of this group more than doubled, from about 90,000 to more than 220,000.

Realizing that tackling the affordable-housing issue would require a tremendous breadth and depth of knowledge, industry experience and financial resources, legislators joined forces with a variety of public and private sector groups, as well as nonprofit entities, that understand and care about housing.

These stakeholders put much time and energy into a collaborative effort to deal with the challenges facing our state in the area of affordable housing. The result was the passage of housing legislation including the Omnibus Affordable Housing Bill (SB 179, SD 3, HD 2, CD 1).

We applaud all those who gave us the benefit of their time, effort and expertise to deliver measures of which we can be justifiably proud. But we remain mindful that the solutions to our housing problems require coordinating many moving parts across a wide range of agendas and responsibilities. Land use, regulatory and financial issues, and other concerns, must be addressed in order to provide the rental and for-purchase housing Hawai'i residents need.

Those of us involved in the creation of this year's legislation are well aware that it will require not just this session, but also future sessions, to reverse our affordable-housing crisis.

If it is signed into law by the governor, we can say the Omnibus Affordable Housing Bill made significant progress in addressing our state's affordable-housing needs. This legislation provides a strong foundation from which lawmakers can accomplish much more in the upcoming 2006 session and beyond.

The bill made significant headway by focusing incentives and limited state resources on three important priorities:

• Meeting the housing needs of low- to moderate-income residents and households whose incomes are at or below 80 percent of the median income, for whom affordable housing is in short supply.

• Stimulating the construction of badly needed rental units throughout the state.

• Funding initiatives to meet the needs of the growing homeless population in our state.

Some of the key elements in the comprehensive approach to meeting affordable-housing needs adopted by the House and Senate include:

• Increasing funding in the budget for affordable housing by adjusting the conveyance tax rates for the most expensive properties and putting more of the revenue generated by the conveyance tax into the Rental Housing Trust Fund.

• Appropriating approximately $1.65 million each year for the next two years plus adding $1 million next year from the Rainy Day fund for homeless shelters and services.

• Providing millions of dollars for repair and renovation of vacant units in public housing projects.

Notwithstanding these appropriations, legislators recognize that the state simply doesn't have the resources to go it alone. We also know from experience that the private sector can take on construction projects with greater efficiency and cost-effectiveness than government agencies. That's why the omnibus legislation was crafted to foster more public and private sector partnerships, which will be necessary to create the thousands of additional affordable-rental units that many of our state's residents badly need.

For example, the bill includes a provision to make better use of decommissioned housing, that is, those housing projects HCDCH intends to demolish because they are no longer deemed suitable for occupancy. Authorizing our state housing agency to sell or lease decommissioned housing on favorable terms, such as a 99-year lease for $1 per year, would allow the nonprofit and for-profit entities to build or rehabilitate rental housing in which a significant portion of the units are set aside for lower-income renters.

Other innovative approaches include increasing the financing options for the development of affordable housing by allowing existing funds to be used in new ways to provide grants, low-interest loans and other types of financing for the construction of affordable-housing projects.

We also expanded tax credits for developers who create such projects and exempted the transfer of real property from the conveyance tax when it is transferred to a developer for state-certified low-income housing projects.

The affordable-housing legislation just passed also streamlines the governmental approval process for affordable-housing projects by giving the counties greater flexibility to exempt projects such as multifamily apartment or townhouse complexes from density restrictions if they include low- income rental units.

And by enabling fast-track approval for state-sponsored projects consisting primarily of units affordable for those making no more than 140 percent of the median family income (approximately $92,000 on O'ahu), the omnibus bill also helps moderate-income, as well as lower-income residents.

These low-income families and individuals will realize

significant benefits from the bill's provision to reorganize HCDCH. In one of the most important features of the bill, the Legislature required that HCDCH be reorganized and divided into two agencies: a public housing agency and a housing finance and development agency, each with a clearly defined role and responsibility. This will greatly enhance the state's effectiveness in dealing with our housing crisis in the future.

We believe the types of initiatives described here will get us off to a good start in meeting the affordable-housing challenge. The Omnibus Affordable Housing Bill lays a solid foundation for additional new, creative initiatives. But follow-through is essential if these are to be realized.

We must maintain our momentum to make the great strides needed in the coming year and beyond to meet affordable-housing demands of our state for all residents, regardless of their income level.

The omnibus bill created a joint House-Senate task force on affordable housing that will work through the interim to develop recommendations for legislation in the coming 2006 session.

We hope more members of our community who have an interest in affordable housing will work with the task force and participate in the legislative process to ensure we overcome Hawai'i's affordable-housing crisis.

Ron Menor is chairman of the Senate Committee on Commerce, Consumer Protection and Housing and co-chairman of the Senate Affordable Housing Task Force; Gary Hooser is co-chairman of the Senate Affordable Housing Task Force; Michael Kahikina is chairman of the House Committee on Housing; and Scott Nishimoto is vice chairman of the House Committee on Housing. They wrote this commentary for The Advertiser.