HONOLULU — Two years after the city adopted a grant program to incentivize development of low-rise affordable rental housing, only a handful of projects have taken advantage of the program and $9.86 million of the $10 million allotted remains untapped. 

What You Need To Know

  • The proposed legislation builds on two previous bills. Bill 7 (2019) helped to green-light low-rise affordable rental housing. Bill 1 (2021) added a grant program to provide completion bonuses of up to $15,000 per unit, up to a $10 million cap

  • As of September 2023, more than 40 Bill 7 projects applied for permits. Of those, only eight started construction, two have been completed and one other successfully applied for and received a completion bonus. In total, only $140,000 has so far been disbursed

  • Bill 3 (2024), developed in collaboration with the Office of Housing, would provide eligible developers pre-construction grants that would count against the $10 million cap

  • The Council is expected to take up Bill 3 on first reading on Jan. 24, 2024

 

Honolulu City Council member Tyler Dos Santos-Tam is now proposing a new measure that provides developers an alternative for accessing the existing completion bonus for new units.

“We say the same things over and over again,” Dos Santos-Tam said. “Our rents keep increasing. Our children keep leaving. Our families can’t survive. Nothing seems to change. We need to bring housing costs down. That only happens when we build more affordable housing. That’s why we proposed this bill – to give more people the opportunity to stay here, save money and live fairly.”

The proposed legislation builds on two previous bills. Bill 7 (2019) helped to green-light low-rise affordable rental housing. Bill 1 (2021) added a grant program to provide completion bonuses of up to $15,000 per unit, up to a $10 million cap.

As of September 2023, more than 40 Bill 7 projects applied for permits. Of those, only eight started construction, two have been completed and one other successfully applied for and received a completion bonus. In total, only $140,000 has so far been disbursed.

Bill 3 (2024), developed in collaboration with the Office of Housing, would provide eligible developers pre-construction grants that would count against the $10 million cap. Developers would get up to $25,000 for units built for families earning between 60% and 100% of the area median income. Units for shoes making up to 60% of the AMI would be eligible for grants of up to $35,000.

Developers would be required to pay their workers the prevailing wage. If fully used, the program could add up to 1,100 new affordable units to the Honolulu market.

“We need housing at all income levels – especially for our working middle-class residents,” said Denise Iseri-Matsubara, executive director of Office of Housing. “That’s why this bill is so important. It provides financial subsidy to help make affordable rentals feasible to build while also providing an opportunity to revitalize urban neighborhoods.” 

The Council is expected to take up Bill 3 on first reading on Jan. 24, 2024.

Michael Tsai covers local and state politics for Spectrum News Hawaii. He can be reached at michael.tsai@charter.com.