A Honolulu program to incentivize affordable workforce housing hasn’t lived up to its expectations, a recent report has found.
The University of Hawaiʻi Economic Research Organization reviewed the city's Bill 7 program and sent its report to the Honolulu City Council on March 27.
The University of Hawaiʻi Economic Research Organization presented a review of the city's Bill 7 program that it sent to the Honolulu City Council in March. The measure became law in 2019, providing tax exemptions, relaxed development standards and waivers for parking requirements as incentives for developers to build affordable rental units.
Gavin Thornton, the housing policy director at the Honolulu Department of Housing and Land Management, told the city council that the program “appears to be a meaningful workforce housing tool. It targets an important income gap, appears to improve feasibility for many small infill parcels, and it's generally located in transit-rich areas, where reduced parking requirements are more defensible.”
Part of the success of the Bill 7 program, according to UHERO's report, is that standard zoning rules are not financially viable for developers to build affordable housing in small, urban plots. Its incentives have helped with that issue.
But UHERO found implementation was the main issue with the program. The time from application to permit issuance was an average of 661 days, or nearly two years, despite promising 90-day permit times, according to the report.
“At the same time, the program is not producing units at the intended scale. Applications appear to have slowed, and permitting time frames are longer than the program envisioned,” Thornton said.
Under the program, 189 housing units have been produced and hundreds have been permitted, though the bill's goal is to build 500 units annually. UHERO said the program still helps the construction of affordable housing, suggesting the output can still be considered a win.
UHERO's recommendations to improve the program include allowing taller buildings near rail stations, and expanding it to other areas.
Speeding up permitting times would also be helpful, possibly by making Bill 7 projects a “distinct operating system rather than simply another permit category within the existing queue.”
UHERO notes that Oʻahu needs nearly 26,000 new housing units by the end of 2027 to meet the demand on the island.
