Story updated at 12:05 p.m., 3/28/2018

The Honolulu City Council unanimously passed a bill Wednesday that would significantly expand Oahu’s affordable housing requirements.

Bill 58, a cornerstone of Mayor Kirk Caldwell’s strategy to address the city’s affordable housing shortage, would require developers to build affordable units in all new residential projects with more than 10 units.

The city’s current affordable housing policy only affects developers who want to rezone land, requiring them to build units that remain affordable for just 10 years.

Councilwoman Kymberly Pine, who chairs the Committee on Zoning and Housing, loosened Caldwell’s original proposal that called for units to remain affordable for 30 years but at the behest of housing advocates, she nixed the option that would have allowed developers to pay a fee instead of actually building affordable units.

Developers, many of who attended Tuesday’s committee meeting, opposed the measure, fearing regulations will make it unfeasible to build projects.

“I probably have not worked on anything that has been more divided than this particular issue,” Pine said.

Anthony Quintano/Civil Beat

Honolulu will now join local governments across the United States, including other counties in Hawaii, that mandate developers build affordable housing – a policy known as “inclusionary zoning.”

The policy aims to reduce the concentration of poverty by ensuring poor people can afford to rent or buy in wealthier communities.

The Council approved a companion measure, Bill 59, earlier this year which gives developers incentives to build moderately priced units around planned rail stations.

Caldwell’s administration introduced both policies to create a carrot-and-stick approach to get developers to build affordable units.

The administration introduced the package in May as a way to encourage the development of economically diverse communities around the Oahu’s $9 billion 21-station, 20-mile rail project.

A temporary permitting process that requires City Council approval has so far guided developments near planned rail station and resulted in four high-end towers near Ala Moana with units that vary in affordability.

Manaolana Hotel Place and Residential Condominium, the first project granted a temporary permit, included no affordable housing. The developer instead paid the city $2.4 million in in-lieu fees.

During Tuesday’s committee meeting, Pine replaced Caldwell’s requirement that units stay price-controlled for 30 years with a tiered system that reduces the length of time units must remain affordable if the number of affordable units increases.

The change only applies to for-sale units, which must be sold to buyers at or below 120 percent of area median income – an individual in Honolulu making $87,950 annually or a family of four with annual income of $125,560.

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Under the system, if a developer sells just 5 percent of the units in a project at affordable rates, those units need to remain affordable for 30 years years.

On the other end of the spectrum, if a developer sells 15 percent of the units at affordable rates, the units can be resold at market rate after just five years.

Local affordable housing advocates touted Cadwell’s original proposal as “revolutionary” and preferred that all units remain affordable 30 years.

“We just can’t afford this public investment in rail to be squandered after five or 10 years,” said Gavin Thornton, the co-executive director of the Hawaii Appleseed Center for Law and Economic Justice.

Developers building projects around planned rail stations will need to double the number of affordable units they build only if they are seeking height or density bonuses.

If a developer offers the affordable units as rentals rather than for-sale, the units must remain affordable for at least 30 years to people making at or below 80 percent AMI – an individual in Honolulu making $58,600 annually.

Among local governments with inclusionary zoning policies, more than 80 percent require that units stay affordable at least 30 years, roughly a third have a 99-year requirement.