Everyone talks about affordable housing as if they understand the definition. But what is “affordable” housing?

According to federal, state and county governments, housing that is affordable (either owned or rented) costs no more than 30 percent of a household’s income. In Hawaii, households are paying 40 to 50 percent or more of their income for housing.

In Hawaii, “affordable residents” include individuals and households with incomes up to 140 percent of Area Median Income, with several subgroups, each with their defined category. Income guidelines are organized by AMI levels and those with lower income levels receive preference and direct subsidies from the federal government and/or the city and state.

Cory Lum/Civil Beat

Anything lower than 60 percent of area median income brings eligibility to receive subsidies. Any project that caters to the 80 percent of AMI to 140 percent of AMI are usually private projects that do not receive direct public subsidies.

Subsidies for housing vary depending whether it’s a federal, state or city program and what income group is targeted. With each subsidy, there are deed restrictions as to who can live in the units and how long the units must be affordable to an income group. Income determinations are standard but deed restrictions can vary in length and other requirements.

The Hawaii Housing Finance Development Corporation and the U.S. Department of Housing and Urban Development have longer-term deed restrictions for 30 to 60-plus years and the different counties and Hawaii Community Development Authority also have different term restrictions.

Deed-restricting projects that have taken direct government subsidies in the form of free land, tax credits or grants should be in perpetuity.

Taxpayers have contributed their money to subsidizing these projects and therefore ensuring they are affordable in perpetuity makes common sense. Typically, these projects that require direct subsidies fall below 60 percent of area median income.

Subsidies Are Needed

Hawaii only receives enough funds (federal tax credits) to do about 150 to 225 units per year and without them there is no feasible way to build housing at this AMI level. Additionally, the state also subsidizes these units with tax credits, grants and loans.

Projects that do not take direct subsidies but may benefit from indirect subsidies from additional density should have their affordable units restricted under a defined period. Deed-restricted periods for these projects have in the past been anywhere between 10 to 30 years.

We need state subsidies to build rental housing for our essential workers and a new housing program with deed restrictions.

Without our essential workforce our community’s social fabric crumbles. They perform essential services to keep us safe, to educate our children for a better future, and provide health and social services. These essential workers are having a challenging time affording a home in Hawaii.

The subsidies required to build more housing for our essential workers is so great that we have now created a housing crisis where we have fallen behind on housing production to meet the growing needs of our island population. The more we fall behind, the increase in costs of goods and services keep rising which makes it harder to achieve production of housing. This delay in production only exacerbates our housing crisis as we try to play catch-up over decades of falling behind.

We also must remember that if we build new housing units, the people who move into them free up an older unit, which helps to create a lower-priced unit either for sale or for rent.

We need incentives, not disincentives.

Everyone agrees more rentals are necessary to solve the housing crisis because they can cater to both families and unrelated individuals in one unit. We often see lower-income single residents living together as roommates because their combined income can afford a housing unit whereas fee-simple homeownership would be out of their reach. Three roommates earning 40 percent AMI equals a 120 percent AMI household.

The combination of potential income ranges run the full gamut from 10 percent AMI up to 140 percent AMI. Roommates are a very large segment of the market and span a vast potential income range and occupations. One time or another almost everyone lives in a roommate situation.

The number of homeless are also impacted by the lack of rental housing. Rooms to rent are at some of the highest rent-per-square-foot in both Honolulu and Maui, but this is the last affordable choice before homelessness for many.

Let’s Change Our Approach

We have grown to believe that private developers on their own can provide housing for all income groups to solve this issue. Decade after decade as a community we talk about how to increase production by adding rules and regulations which have never worked. This approach has left us with a huge deficit, more regulations and little production. We need incentives, not disincentives.

Government is the only institution that can create a solution on a massive scale to solve this crisis and that means generating revenue to subsidize housing. We consider education, water, sewer, roads and airports as critical infrastructure. Shouldn’t the most fundamental human need, which is housing, be considered infrastructure as well?

It is time to consider a massive overhaul on housing policy at the federal, state and county level.

It is time to consider a massive overhaul on housing policy at the federal, state and county level. Housing is as critical as the tax overhaul, immigration and health care. But on the federal level this conversation is nonexistent and on the state level we seem to talk about it a lot but there’s inertia, lack of leadership vision, and government agencies that are trigger-shy to initiate anything.

Housing tax levies (incentives) are being implemented all over the country to meet this critical infrastructure need and Hawaii needs to do the same. The Hawaii Housing Finance Development Corporation, a state agency that aids in financing affordable housing is set up to administer funds if a housing tax levy is approved.

It will cost the state and its taxpayers half as much to subsidize workforce housing as to provide very low-income housing with tax credit units and this serves a broader market. About $1 billion could create 15,000 units which, if delivered timely, could over-supply the market and cause rents overall to go down. This helps all renters and would be a big incentive to developers trying to comply with the city’s new affordable housing rules. With the federal and state allocation for tax credits it would take 75 years to build 15,000 units for those with income below 60 percent AMI.

Alternatively, to solve the housing crisis we also need to implement policies that raise the income levels of essential workers. To create a policy that just demands housing units at various income levels puts out half a solution. We must create incentives for developers that help solve this subsidy gap and push policy that supports higher minimum wages for our residents.