A lot funds will be needed to meet the affordable housing shortage crisis in Hawai‘i. The Hawaii Department of Business, Economic Development and Tourism estimates that approximately 21,000 additional housing units need to be built on O‘ahu between 2020 and 2030 to meet residents’ demand.
Where will the millions of dollars come from to develop the thousands of housing units? And what about individuals and families who need monetary assistance to afford even the lowest cost housing in Hawai‘i?
Some funds have and will continue to certainly come from private developers and financial institutions, and the federal government, State of Hawai‘i and the City and County of Honolulu (which comprises the island of O‘ahu) also have dozens of housing assistance funding programs along with millions of dollars set aside for affordable housing. Additionally, these government entities have levied to have more funds allocated for future affordable housing initiatives.
Uncle Sam has some funding programs to help Hawai‘i residents obtain housing.
One of the main ways affordable housing developers can build is through federal Low-Income Housing Tax Credits (LIHTC), which are awarded through the State of Hawai‘i via a competitive bidding process. Since these credits were enacted as a part of the 1986 Tax Reform Act, they have supported the construction and rehabilitation of over 2 million units nationwide.
The U.S. Department of Housing and Urban Development (HUD) has a variety of grant programs, including Affordable Housing Development and Preservation and HOME Investment Partnerships Program (HOME). In Fiscal Year 2022, HUD received $10.3 billion to distribute to communities across the United States.
“This funding is an investment in our communities and provides important services to some of our most vulnerable residents,” HUD Secretary Marcia L. Fudge states. “Our local partners will be able to use these resources to boost housing supply, expand economic opportunity, and lift up American families.”
Anton Krucky, Honolulu’s Director of the Department of Community Services, explains how these federal housing funds must be spent. He says, “When we get our money from HUD, they want us to go after the most chronic homeless people that have been out there for a while, that their issues are great, and we’re trying to help them. That’s what Section 8 targets.”
In this Fiscal Year, $22.3 million of HUD funds were specifically set aside in the Native Hawaiian Housing Block Grant (NHHBG) to support the Department of Hawaiian Home Lands (DHHL) – with the intention of funding the housing needs of low-income native Hawaiian families.
“The State of Hawaii has the highest median home prices in the nation, and too often our native Hawaiian communities are among the most negatively affected by the prohibitively high cost of housing,” explains Jason Pu, Regional Administrator for HUD Region 9, which includes Hawai‘i.
Over the past 20 years, DHHL has received over $150 million in NHHBG funds. With this money, DHHL has reported to have constructed, rehabilitated, and acquired over 700 affordable homes as well as improved over 600 lots and provided over 3,000 families with housing-related services, including financial literacy training, home repair training, and rental assistance.
The U.S. Department of the Treasury is another federal department allocating monies to boost the supply of affordable housing in local communities. States can dedicate a portion of the $350 billion available to them under the State and Local Fiscal Recovery Funds (SLFRF) toward the “development, repair, and operation of affordable housing units,” according to a July 2022 press release.
“Increasing the nation’s housing supply is essential to lowering shelter costs over the long-term,” Deputy Secretary of the Treasury Wally Adeyemo states. “Treasury continues to strongly encourage state and local governments to dedicate a portion of the historic funding…toward building and rehabilitating affordable housing in their communities…”
Another federal funding source that has had a significant impact on affordable housing has come from COVID relief money, also known as CARES Act money.
In 2021, Krucky said that O‘ahu “housed over 830 individuals last year and 301 families [through CARES funding]… [taking] a big chunk out of what was on the street and in shelters.”
In August 2022, Krucky also said O‘ahu had about $20 million in U.S. Treasury State and Local Federal Relief Funds and $9.5 million in HOME-American Rescue Plan funds to award to affordable housing developers this year.
The federal government has a variety of long-standing housing funding initiatives, and the Biden-Harris Administration continues to advocate for an increase in housing supply to mitigate rising housing costs, including by reforming Fannie Mae and Freddie Mac financing programs for multifamily housing construction.
Through the Hula Mae Multi-Family Program (HMMF), for example, over $252 million in tax-exempt revenue bonds were awarded to ten Hawai‘i developers in 2022 to assist in building 1,106 affordable units.
An October 2022 White House press release elaborates, “The President believes that policies that boost the supply of affordable housing are critical to easing the burden of rising housing costs for renters and aspiring homeowners, and must be taken in combination with actions that address near-term housing affordability and promote fair housing.”
In short, there are millions of dollars in federal housing funds given directly through federal agencies and/or distributed through county and/or state agencies each year – and the Biden-Harris Administration promises to continue to expand those funds for affordable housing development and obtainment.
In addition to funds from the federal government, the Hawai‘i State budget also has dedicated funds to affordable housing initiatives. At the close of the last legislative session in May 2022, $1 billion had been set aside for affordable housing, with $300 million specifically allocated to a Rental Housing Revolving Fund (RHRF), $15 million for the ʻOhana Zones housing program, and $600 million to the Department of Hawaiian Home Lands (DHHL).
“I think at this point it’s to deploy the funds in a timely way so that we can get as many people as we can into these homes whether it’s rental housing or for sale housing,” stated State Rep. Nadine Nakamura, Chair of the Housing Committee.
What have these State-funding affordable housing initiatives accomplished? From its inception in 2018 to November 2021, ‘Ohana Zone programs have served 5,510 individuals statewide, placing 1,368 into permanent housing and adding 469 new beds or units in shelter and housing inventory. Another example is the Rental Housing Revolving Fund, which awarded over $136 million in loans or bonds in July and August 2022 to 10 developers for constructing around 1,100 affordable housing units.
Funds from the federal government, funds from the State, and there are funds from the City and County of Honolulu, which comprises the island of O‘ahu.
0.5% of property taxes on O‘ahu go to the Affordable Housing Fund, which is approximately $8 million per year. As of July 2022, there was around $45 million in housing-related special funds in the City and County budget, meaning funds have been saved instead of spent over some years.
However, in August 2022 it was announced that Honolulu Department of Community Services awarded more than $28 million to six projects to add nearly 1,000 affordable housing units to the local market within the next five years.
Hui Kauhale was awarded $6 million for its ongoing Halewiliko Highlands senior housing project in Aiea (140 affordable units). Hawaii Assisted Housing Inc. received $5 million and $3.9 million for its Halawa View II (302 affordable units) and Hocking Hale (40 units) projects, respectively.
Three other projects received funding to acquire land, with a commitment to complete construction within the next five years. Hawaiian Community Development Board was awarded $4.9 million for Ohana Hale (180 affordable units). AHED Foundation received $4.8 million for its Kailua Lofts (42 units), and Hawaii Assisted Living Housing Inc. was promised $3.5 million for its Waialua Mill Camp (268 units).
Units built with Affordable Housing Fund money are for individuals or families earning 60% or less of the area median income, and the units must remain affordable units for a minimum of 60 years. For those individuals that would struggle with the “affordable” rent, voucher programs from other county special funds and federal money can supplement their own rental funds.
“From Day 1 of this administration, our team has emphasized the need to create affordable housing for the residents of Honolulu,” says Mayor Rick Blangiardi. “…I look forward to future funding opportunities.”
Despite 51% of voters saying ‘no’ to increasing the mandatory percentage of tax revenue funds appropriated annually to the Affordable Housing Fund by one percent, on the November 2022 ballot via Honolulu Charter Question 1, the City and County of Honolulu does have funds available to supplement federal and State affordable housing funds – and the City Council and Mayor continue to discuss ways to supplement affordable housing funding.
“Having additional City funding is extremely important,” Kali Watson, President the Hawaiian Community Development Board, a nonprofit builder of affordable units, explains. “It not only allows us to better leverage this funding with other sources, such as Low-Income Housing Tax Credits, Rental Housing Revolving Funds and Bonds, but it also makes these projects more viable and likely to come forward.”
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