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The Honolulu Advertiser
Posted on: Thursday, September 27, 2007

$4.5M for Honolulu housing diverted or unused

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By Johnny Brannon
Advertiser Staff Writer

An audit under way at City Hall is adding fuel to a debate over what role the city should play in providing or encouraging housing that's affordable to low- and moderate-income residents.

The report is expected to document that nearly $4.5 million available to assist development of subsidized housing has been used to pay for other needs or remained unspent.

The money was collected over the past 14 years through special "in-lieu" fees that developers often pay to avoid including affordable housing in new projects. The city lacks clear plans, goals and objectives for using the money, auditors found.

The report is also expected to fault officials for allegedly failing to monitor compliance by developers who promise to include affordable housing in exchange for property zoning changes that allow them to build more units in total.

The audit's findings have been circulating privately for about two weeks, and a response from Mayor Mufi Hannemann's administration is due tomorrow. The final report is expected to be released early next month by city auditor Leslie Tanaka.

Though details have not been discussed publicly, administration officials yesterday repeatedly cited the pending report as a reason for not commenting in detail on a package of City Council proposals meant to spur development of more affordable housing.

One measure would abolish in-lieu fees and require developers to include affordable housing in future projects. Other proposals would provide property tax exemptions and other incentives to developers who emphasize affordable housing.

There is wide agreement that Honolulu's approach to subsidized housing has grown convoluted as rents and homelessness have skyrocketed.

The city's housing department was abolished nearly 10 years ago following a $6 million theft scandal, yet the city continues to operate 12 apartment complexes with nearly 1,300 units, splitting responsibilities among several remaining departments.

The city has long intended to sell the apartments, but there are many questions about how long new owners would keep them affordable to needy tenants.

Hannemann hired a special housing assistant, Raenette Gee, three weeks ago, and his administration is in the midst of developing an overall housing policy.

Meanwhile, voters last year approved a city Charter amendment that earmarks half of 1 percent of annual property tax revenue for affordable housing.

The fund has collected about $4 million so far, sparking a debate over whether it should be spent to help maintain the existing apartments or go toward building new ones.

There is also growing concern over how money from the sale of any city apartments should be spent.

Proceeds would likely be first directed toward paying off any outstanding debt from construction of the buildings, but the council could determine how any surplus should be used, according to city attorneys.

Reach Johnny Brannon at jbrannon@honoluluadvertiser.com.