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The Honolulu Advertiser
Posted on: Wednesday, April 21, 2010

Kaka'ako housing scheme returns



Members of the alliance who signed the commentary were:

Frances Holmes

Dexter Okada, U. Okada & Co., Ltd.

James Frierson, landowner

Christine Kaneshiro, landowner

Gary Onishi

Servco Pacific Inc.

Robert Oda, President, Kakaako Improvement Assn.

Linda Wong, landowner

Van Takemoto, landowner/Island Fender

Steve Scott, landowner/Scott Hawaii

Bryant Hoernig, landowner/Honolulu Hardwoods Inc.

Lisa Eveleth, landowner/Limit LLC

Joseph Nicolai, landowner/JN Group Inc.

John Covington

Leslie Miasnik, Pankow Builders

Michael A. Han, landowner – 1181 Kapiolani

Charles Heitzman, Kaka'ako Resident

Paul Quintiliani, Kamehameha Schools

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By Dexter Okada, Jim Frierson and Steve Scott

Last year, The Advertiser published an editorial (July 15, 2009) against Senate Bill 1350, which mandated that improvements for both commercial and residential properties of 20,000 square feet or larger in Kaka'ako must include 20-30 percent "reserved housing" for residential properties and 10-20 percent reserved housing for commercial properties. Landowners would be required to build reserved housing prior to development or be forced to purchase pricey "housing credits" from an affordable housing developer.

As the editorial stated: "After more than 30 years of trying to successfully redevelop Kaka'ako to create a vibrant, well-planned community, you'd think government would get better at it."

This year, after a resurrected version of SB 1350 (HB 2849) failed to gain enough support in the Senate, another "vehicle" bill was found SB 2408 and the contents of HB 2849 were inserted, proposing the same increases in reserved housing requirements as last year. All this in spite of the fact that similar bills calling for increased requirements have failed in the last two sessions, and that the Legislature's own Construction Industry Task Force has called for a reduction in "reserved housing exactions." In fact, the task force recommends that lawmakers "temporarily lower county affordable/workforce housing requirements to stimulate immediate housing construction."

Increased reserved housing requirements will stop improvements to Kaka'ako and therefore jobs. Due to the economic situation we are in, we should be looking at ways to create good paying jobs, not doing the opposite because of special interests. As the Advertiser editorial rightly pointed out last year: "the winners here would arguably be large housing developers, who could benefit by building excess units and cashing in on selling the credits."

How would that happen? The newly amended SB 2408 spells it out: Landowners facing exactions could purchase credits from a reserved housing developer at a prescribed range of prices from $70,000 for a 500-square-foot studio to $145,000 for a 1,300 square-foot, four-bedroom unit. This legislation would therefore create a captive market for reserved housing developers, who first sell the units on the open market, and then sell credits for the units to landowners for additional profit.

Proponents of the bill claim that we need to provide at least 5,000 reserved housing units in Kaka'ako. They base their claims on a 1982 study, which called for largely public subsidies of affordable housing. Five thousand units is the equivalent of 37 percent of the unbuilt residential units planned for the district. There is no basis for 5,000 units today, if you ask experts who have looked at reserved housing demand, and SB 2408 moves the responsibility for reserved housing to the private sector.

We, as residents, business owners and landowners in Kaka'ako, would like to see government facilitate the construction of a healthy and vibrant mixed-use community in Kaka'ako, which includes residential (including reserved housing), commercial and industrial development. It won't happen if Senate Bill 2408 or a version of it passes. Orderly and well planned development in Kaka'ako is what is needed, not special-interest legislation which would stymie development even more in this poor economy. Even with the current 20 percent reserved housing requirement on residential developers, very few if any projects have gotten off the ground over the past two years. What makes the Legislature think that by increasing the requirements they will get people to build more reserved housing?

We who have an interest in what happens in Kaka'ako need everyone's support to shine the light on this "special interest" legislation so that it doesn't pass in one form or another.