Jul 27, 2010

Honolulu's Need for Affordable Housing

Honolulu's Need for Affordable Housing
    1. Dept of Planning & Permitting Primary Urban Core Sustainable Community Plan states, "The PUC [Primary Urban Core] is essentially “built-out” – i.e., there is no reservoir of vacant land designated for future urban use.
      • The PUC Sustainable Community Plan suggests that only Kakaako can support new high-density/high-rise development. Whereas the other older neighborhoods in town cannot support high-density redevelopment. 
      • Therefore, small-scale in-fill projects, such as Accessory Dwelling Units can play a key role in providing thousands of additional dwelling units within the Primary Urban Core. The Live/Work/Play idea can be a reality and will help eliminate long commute times and traffic congestion.
      • The report states:   
Other PUC neighborhoods, such as Makiki and McCully-Moiliili, already have substantial amounts of medium- and high-density housing. Several important factors, however, hinder the development of new residences, especially new multifamily dwellings. These factors may be briefly summarized as follows:
• Higher Prices. Prices for all types of housing – both sale and rental prices – are extremely high in the PUC, with single-family houses clearly beyond the affordable range. Prices for apartments are generally high because of higher costs for landand for construction of high-rise structures.
• Housing Preferences. Due to the high price of real estate in the PUC, homebuyers seeking affordable housing are typically limited to apartment dwellings in the PUC. (Most new housing, and practically all of the new single-family housing, is being built in Ewa and Central Oahu.) Living in multifamily housing in the PUC is readily accepted by elderly and other households without children but is viewed as less desirable by families who can afford to buy. In addition to resistance to apartment type  housing, families are also concerned about the lack of schools and parks in PUC apartment neighborhoods.
• Rental Unit Development. Market conditions also discourage development of rental units. For many years, pure rental projects were developed only when heavily subsidized by government. Indirectly, rental units have  become available asinvestors purchased individual condominium units and then rented them out.
• Higher Risks. Development of a multifamily, high-rise structure carries more developer risk than lower-density housing because the structure must be completed (and the investors fully extended) before any sales are closed. Honolulu’s Uniform Building Code requires “Type 1” construction for large apartment buildings. Type 1 standards essentially demand a reinforced concrete structure, which is very expensive. With the high carrying costs of a completed building, slow absorptioncan cut into or eliminate profits. The higher risk makes it more difficult and costly toobtain development financing.
• Infrastructure Deficiencies. Infrastructure deficiencies are found in most of the older, in-town neighborhoods. Some affect broad areas and are costly to correct, such as insufficient capacity of a sewer trunk line or a pump station. In such cases,development cannot occur until the City makes improvements to expand capacity. For upgrading local water, sewer, or drainage lines, the developer typically bears the full cost of the required improvement (even though other properties may benefit aswell). The cost of required infrastructure improvements can make a project infeasible.
• Zoning Regulations. Zoning regulations strictly limit the floor area and the lot coverage of apartment buildings. High minimum parking requirements, combined with limitations on lot coverage, force the development of costly structured parking. In addition to substantially increasing project design and construction costs, existing regulations force apartment buildings into a tower configuration with a parking pedestal.
These factors limit the availability of affordable housing for middle- and lower-income families in the PUC. While the City and County of Honolulu cannot directly affect market factors, it can support new housing development by modifying zoning and building regulations, and upgrading infrastructure.
    1. The state of Hawaii, Dept of Business Economic Development and Tourism states, "Market forces, alone, will not deliver necessary housing".
    2. In Hawaii, who needs Workforce/Affordable Housing?
      1. Police Officer, Firefighters, Nurses, Teachers, Hotel Workers, Retail Clerks, Plumbers, Retiree.
    3. ADU's in existing Residential neighborhoods can provide housing to help meet demand
    4. ADU's do not require taxpayer dollars to build or maintain, and in fact contribute to gov't revenue to help maintain public infrastructure (roads, sewers, clean water supply)
    5. How many new Dwelling Units needed per year to meet Need for affordable housing?
      1. NEEDED NOW: 23,000. Hawaii Housing Finance and Development Corporation states: "The Hawaii Housing Policy Study, 2006 Update estimates the statewide need for approximately 23,000 affordable and workforce housing units (approximately 16,400 rental and 6,400 for-sale units) for the five-year period 2007-2011."
      2.  PLANNED WITHIN 5 YEARS: 3,981 (within 5 years). Hawaii Housing Finance and Development Corporation (2008 annual report) states only 3,981 subsidized housing units will be created from 2009-2013.
        1. BUILT IN 2003 (last construction boom):  3,473 units (census data - includes all Dwelling unit types: single-family, two-family and apt units)
        2. BUILT IN 2008: 2,088 units as per Dept of Planning & Permitting, records 
        3. BUILT IN 2009: 1,135 units as per Dept of Planning & Permitting, records
        4. These number fall way short of demand 
    6. Illegal Dwelling Units are often created to meet demand
      1. Example: Rec Rooms converted illegally into Separate Rental Units.
      2. Prelim study of Honolulu MLS data revealed 9.5% of single-family homes sold in 2009 contained more than 1 dwelling unit.
        1. MLS data shows that 48% of Sold single-family listings in June 2010 in the Metro Area of Honolulu, contained separate living areas.
    7. Public Perception of ADU's and Affordable Housing (ULI 2009 survey - page 5):
      1. 62% favor gov't "encouraging small ohana cottages on single family lots for homeowners to rent out"