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The reality is that affordable housing produced by developers under city and state requirements is governed by loose standards that often result in separate and unequal residences for those with low or moderate incomes. Read more

Separate and unequal.

This notion, as it relates to affordable housing, got some high-profile publicity that struck some nerves last month and led a developer to redesign plans for its 41-story ProsPac Tower in urban Honolulu. But the furor over the idea of a separate entrance — decried by some as a “poor door” — for affordable rentals in the predominantly market-priced condominium building generally overlooked a larger picture.

The reality is that affordable housing produced by developers under city and state requirements is governed by loose standards that often result in separate and unequal residences for those with low or moderate incomes.

In fact, many developers of market-priced housing on Oahu have segregated their required affordable residences far more than the ProsPac project at Keeaumoku and Makaloa streets.

Affordable homes have been produced in different buildings, neighborhoods and ZIP codes — and sometimes years after the associated market-priced homes were built.

City and state agencies have made improvements bringing more parity to the situation, yet disparities still exist.

Victor Geminiani, co-director of the Hawaii Appleseed Center for Law and Economic Justice, said the city and state need to improve standards.

“We don’t really have a clear understanding of what we’re expecting developers to do,” he said in an interview.

In Geminiani’s view, separate entrances at ProsPac Tower were bad. But he gives developer ProsPac Holdings Group credit for integrating affordable rentals in the same building, which is more than other developers have done.

‘Same neighborhood’

The City Council last year approved a condo-hotel fronting Kapiolani Boulevard and allowed the tower’s developer to put affordable rentals above an adjacent Walgreens parking garage.

The City Council also approved plans last year for a tower called Mana‘olana Place across from the Hawai‘i Convention Center without a firm affordable-housing plan. In this case the developer agreed to either give the city up to $3 million or provide at least 20 affordable rentals within a mile of an Ala Moana rail station, perhaps in partnership with a city or state public housing agency.

In Kakaako the developer of the 65-acre Ward Village master plan is clustering 375 affordable condos in one tower being built next to a state-owned rental tower serving low-income residents. The condo tower, Ke Kilohana, is scheduled for completion in 2019, while Ward Village’s first tower, called Waiea, opened in the heart of the community a year ago with residences priced from $1.5 million to $36 million.

On a neighboring 29-acre master plan, landowner Kamehameha Schools satisfied part of its affordable-housing requirement by freshening up and selling 162 units in the 52-year-old Pagoda Terrace hotel in Pawaa to low- and moderate-income buyers.

At yet another Kakaako project, a tower called Waihonua that opened in 2014, developer Alexander & Baldwin Inc. was required to start building 68 affordable homes by the end of 2016. Those homes, planned for an adjacent block, still aren’t under construction.

And in West Oahu the developer of Ko Olina Resort & Marina was allowed to locate much of its affordable housing away from the resort at the Villages of Kapolei.

Harrison Rue, the city’s community building and transit-oriented development administrator, said research studies show that having mixed-income housing in the same neighborhood — not so much the same building — makes for healthy communities.

“We think the most important thing is getting the affordable housing built, and being in the same neighborhood,” he said.

Current city rules, which govern development for most of Oahu excluding Kakaako, don’t mandate this. But proposed changes would provide incentives for it.

The city regulations, last updated in 2010, concentrate on the quantity of affordable housing and income levels of residents served.

Under these rules, developers with projects needing a zoning change or exceptions from certain zoning standards must make 30 percent of all homes in the project affordable to moderate-income residents. Of these homes at least 20 percent must be for households earning no more than 120 percent of the median income, with half of this amount for households earning no more than 80 percent of the median income. Also, no more than 10 percent of the affordable homes can be for households earning up to 140 percent of the median income.

Incentives

New draft rules would give developers an incentive to include affordable housing on the same site as market homes, and would apply to all new housing projects.

Under Bill 58, being considered by the Council, developers could produce fewer affordable units — 20 percent instead of 25 percent in rail station areas, and 10 percent instead of 15 percent elsewhere — if affordable and market units are on the same site. This incentive is only for homes that are sold. For rentals the proposed requirement is 15 percent around rail stations and 5 percent elsewhere regardless of whether they are on the same site with market homes.

A separate set of rules governs projects in Kakaako where zoning is controlled by the Hawaii Community Development Authority.

This state agency allows affordable homes to be produced outside Kakaako if more are produced. That’s what happened with the Pagoda Terrace deal, where 162 units in the former hotel reduced the developer’s affordable-housing obligation by 100 units.

Also under HCDA rules that are similar to what the city allows, developers can opt not to build affordable housing if they pay a fee that the agency uses to develop affordable housing on separate sites. Projects that have used this option include One Archer Lane and One Waterfront Towers.

‘The best design’

In this respect, ProsPac Holdings gets credit from Geminiani for delivering affordable housing and on the same site.

“It represents the best design, so far, for duplication throughout the rail corridor,” he said in a statement last month after the tower entrances were modified.

Originally, ProsPac Holdings proposed separate and unconnected entrances for the affordable rental portion on the tower’s lower floors and market-priced condos above. After community reaction, the developer agreed to connect separate lobbies in the building through an internal corridor.

Part of the difficulty ProsPac Holdings has with its tower design is that market condos and some common areas of the building will be owned by their buyers, while the rental housing portion of the tower will be owned by a company that also shares some common areas such as parking with condo owners.

Several Oahu housing projects that have integrated affordable and market units in the same building either have all rentals, such as 7000 Hawaii Kai in East Honolulu, or all condos such as the Kakaako towers Symphony Honolulu, Pacifica and Keola Lai.

Perhaps the nearest local example of integrated affordable rentals and market condos happened in Kakaako at two separately developed projects that are connected and look like one complex.

These two projects, which opened last year, are the market condo tower Keauhou Place and the rental midrise Keauhou Lane, which helped satisfy an affordable-housing requirement for Kamehameha Schools.

The tower’s main entrance is actually part of the rental building, and access to the rentals is separate and unconnected to the tower.