Mahalo for supporting Honolulu Star-Advertiser. Enjoy this free story!

Dense condominium towers built by the state near transit stations and sold at cost under leasehold land tenure could be the solution to Oahu’s chronic affordable-housing crisis. Read more

Dense condominium towers built by the state near transit stations and sold at cost under leasehold land tenure could be the solution to Oahu’s chronic affordable-housing crisis.

The idea was presented at a conference Friday at the Capitol by state Sen. Stanley Chang, and some event participants see merit in what the lawmaker calls a radical but politically realistic plan.

Chang, who bases the plan on a long-running and successful Singaporean government program, contends that the state could build and sell spacious high-rise homes with pools and other amenities for $300,000 with 99-year land leases.

As the incoming Senate Housing Committee chairman, Chang has drafted a bill to create a board-led state authority that would carry out the plan financed by bonds and repaid from condo sales.

“It is affordable to both the buyers and the state,” he said.

To produce 10,000 such homes would cost $3 billion, but Chang said the cost wouldn’t be a taxpayer expense.

THE PLAN

Proposed by state Sen. Stanley Chang 67,500: Number of condo units the state would build on state land and sell at cost

$300,000: Price per large unit with a 99-year lease

>> Construction would be paid for with bonds; sales revenue would be used to repay bonds.

>> No cost to taxpayers.

“It is revenue neutral to the state,” he said. “All that money is going to be recouped in the form of sales prices to the new buyers as they come in.”

The estimated $300,000 home price, based on current construction costs, would be affordable to low-income households and compares with a roughly $425,000 median resale price for previously owned condos and $800,000 for single-­family homes on Oahu.

Such a price would be possible, Chang said, because of high building density, no land costs and no profit.

As an example of density, Chang suggested there could be 20 towers developed on the 43-acre McKinley High School campus based on one tower with 500 homes on 2 acres, which is what exists at the twin-tower 801 South Street project in Kakaako.

With 270 acres of state land available near planned rail station sites including Aloha Stadium, Leeward Community College, Honolulu Community College, McKinley High and other sites, 67,500 homes could be built, Chang said.

Such volume would top the state’s projected need for 65,000 affordable homes statewide by 2025.

“I think we have the makings of a solution here,” said Anthony Aalto, former chairman of the Sierra Club’s Oahu chapter, who participated in the conference and has advocated for more dense development in urban Honolulu so more green space and agricultural land can be preserved.

Local economist Paul Brewbaker said some elements of Singapore’s leasehold condo development model could work in Hawaii, though he said it may be problematic to evict condo owners when land leases expire.

Christine Camp, a local developer who heads Avalon Group, called Chang’s draft bill aspirational. However, she questioned whether procurement rules, funding, environmental regulations and a new bureaucracy would limit the effectiveness of such a program.

Chang said Singapore, which is half the size of Oahu and has about five times as many residents, shows that what he proposes can work.

Singapore created its program in response to a housing crisis several decades ago and can sell a roughly 1,000-square-foot unit with three bedrooms for $180,000 with a 99-year land lease, according to Chang, who visited the country earlier this year and is organizing a delegation to return in May.

The country has built so many affordable leasehold condos that 82 percent of the population lives in public housing, Chang added.

At Friday’s conference other strategies for boosting affordable-housing production were presented, including a city initiative to provide incentives for developers to build low-rise rental apartments.

Brewbaker said taller buildings need to be allowed in parts of the urban core that include stretches of King and Beretania streets.

“We need to change the zoning,” he said. “How many high-rises are being built on Beretania? … How many condo are being built on King Street by the No. 2 bus line? Zero. What is up with that?”

Gabu Heindl, an urban planner and architect in Vienna, explained via Skype how the government of Austria’s capital has built thousands of subsidized rentals in response to housing affordability problems. She said the city, with a population of about 1.8 million, spends $741 million a year on subsidized housing and that 60 percent of the population lives in such homes.

Chang has dubbed his proposal “affordable, locally owned, homes for all,” or A.L.O.H.A. He proposes making such homes available to any Hawaii resident who doesn’t own real property regardless of their income. A requirement to occupy the home could be ensured by using keyless biometric door locks, he said.

There also would need to be resale conditions that would limit owners from profiting off their purchase. In Singapore someone may buy a public-housing unit only once.

Chang said a buyer who dies could pass their home to children, but the home would revert to the state at the end of the land lease.

“I am not OK with a Hawaii that is out of reach to all but the extremely wealthy,” he said. “We need to find a way for not just millennials, but every future generation of Hawaii to be able to live here and to have a home here.”