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Developers to Lawmakers: Cut Processing Time

Wayne Yoshioka

A Joint Legislative Committee conducted another informational hearing on Affordable Housing today.  As HPR’s Wayne Yoshioka reports, this time, lawmakers heard from developers.

Local developers need land to build affordable rental housing, preferably publicly owned land with low-cost leases.  They also need government subsidies and tax credits.   Developer Christine Camp built a 269 unit rental project in Hawai’i Kai two years ago with 20 percent of the units priced as affordable.  But she says the time and money needed before applying for the building permit were astronomical.

“Our interest expense is $86-thousand for the 3-year duration.  Per unit, $19-thousand for the entitlement and processing.  Just the cost of doing environmental issues, traffic issues, the studies that communities want us to do.  Over a hundred thousand dollars was due to the cost of time and uncertainty that needed to be clarified.  It wasn’t related to building.”

Camp says the state legislature can also help by removing the 38-million dollar cap on conveyance taxes used for the rental housing revolving fund.   That money is used to help developers close the estimated 35 percent financial gap when building affordable housing.  Michaels Development Company development officer, Liz Char, echoed the need for legislative help in financing.

“Increase the availability of tax credits, GE exemptions, property tax exemptions, low interest loans such as the revolving fund and the city’s affordable housing fund and potential access to in-lieu fees, all contribute to making affordable housing financially feasible by helping to provide financing and also lowering the carrying costs of the project’s development costs.”

Credit Wayne Yoshioka
Joint Legislative Housing Committee informational hearing

But, Reverend Bob Nakata, from the Faith Action for Community Equity, says affordable housing appropriations were cut by the legislative finance committees last session and the alternative is to place a heavier financial burden on those who can afford it.

“When you have units in Kaka’ako being sold for one, two, several million dollars apiece, why can’t we have a higher rate from the conveyance tax because it appears that those are the people who have the money and the developers who develop these things should be contributing more.”

But, Land Use Research Foundation executive director David Arakawa says providing funding and incentives for affordable housing have already cut market rate housing for individuals in the “gap group” earning $100-thousand or more annually.

“Because of the inclusionary requirement, you have to build 30 percent below what it costs you.  So we call it the Corolla and Lexus effect.  So if you’re forced to build 30 percent Corollas at a loss, then you need to build Lexuses to make up the difference from what you lost.  So the people who would normally buy Camrys don’t have   Camrys to buy.”

The joint housing committee members asked developers to work with other stakeholders on affordable housing bills for next year’s legislative session.  Wayne Yoshioka, HPR News.

Wayne Yoshioka
Wayne Yoshioka is an award-winning journalist who has worked in television, print and radio in Hawaiʻi. He also has been on both sides of politics as a state departmental appointee and political/government reporter. He covered Hurricane Iwa (1982) as a TV reporter; was the State Department of Defense/Civil Defense spokesperson for Hurricane Iniki (1992); and, commanded a public affairs detachment in Afghanistan (2006). He has a master's degree in Communication from the University of Hawaiʻi at Mānoa and is a decorated combat veteran (Legion of Merit, Bronze Star and 22 other commendation/service medals). He resides in Honolulu.
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