In Hawai‘i, land is expensive, construction costs are high, and development opportunities are limited – making the cry to develop tens of thousands of housing units to meet the need for low- and moderate- income families seemingly unattainable. However, one of the affordable housing solutions being touted in Hawai‘i – and in communities around the world – is to utilize public lands.
The idea is public lands can be allocated for mixed-income or 100 percent affordable housing as a way to reduce development costs and increase affordable housing opportunities for lower-income workers. A study by the National Housing Conference and Urban Land Institute found that “both communities and developers accrue multiple benefits when they form partnerships to provide affordable and mixed-income housing on public land.”
The following are some of the key findings from case studies in Washington D.C. and other communities throughout the country, such as New York City and San Francisco. Local Hawai‘i examples also illuminate some of the possible benefits of using public lands to develop housing.
Discounted or “free” public land can provide a valuable subsidy to make an affordable housing development financially feasible – especially in high cost housing areas like Hawai‘i.
In short, the cost of land typically comprises a large percentage of total development costs. But when developers can partner with the State of Hawai‘i or the island county governments to utilize public land for their development, this might make mixed-income or affordable homes more financially feasible.
For example, let’s say a developer wanted to purchase land to build a 100-unit high rise on O‘ahu. While the cost of land varies greatly, in this example, let’s say the cost for the land is $15 million total or $150,000 per unit, and the hard and soft development costs per unit are $450,000. This would make the total development costs per unit to be $600,000 – with land being 25% of the total development costs.
If this is a mixed-income development, 30 units (30% of the units) are sold for $300,000, which would fall in the range of affordable housing for Honolulu County (affordable for residents earning 80-140% of the area median income (AMI)). This would be selling the units for 50% less than the cost to build them – and significantly less than market value.
While the developer can sell the remaining 70 units for market price, those 70 units would need to be priced at least at $529,000 to offset the $9 million loss from each of the affordable housing units for the developer – to simply break even on only the development costs.
By utilizing public lands, a huge cost can be cut during development – making it more feasible for developers to build affordable housing – and even more units than our example.
Public land in transit-oriented development areas can be used for development opportunities – that don’t need parking or cause traffic congestion.
With the construction of the Honolulu rail, ideas around transit-oriented development have arisen, and the use of public lands around rail stations might not only boost rail ridership, but also could create opportunities for affordable housing development.
According to the TOD website, “TOD is about enhancing the neighborhoods around the stations and increasing the number of people who live and work within easy walking distance. Focusing our island’s future growth along the rail corridor will help curb development on rural and agricultural lands, creating a more sustainable future for O’ahu.”
And one of the specific aspects of TOD on O‘ahu is “to stimulate the production and retention of affordable and workforce housing.” Time will only tell if the public lands along the Honolulu rail will be transformed to livable communities with thousands more affordable housing units, but this is one big proposal for the use of public lands in Hawai‘i.
Simultaneously developing affordable housing along with public facilities, such as schools and fire stations, and infrastructure, such as utilities, can lead to cost savings, better designs, and more accessibility.
An example of this study-found benefit can be seen in the Honolulu neighborhood of Kaka‘ako, where many of the most recent affordable housing developments in Hawai‘i are found. According to the Hawai‘i Community Development Authority, a State agency, more than $225 million has been invested on infrastructure and public facilities in Kaka‘ako, including parks.
By using public lands in Kaka‘ako HCDA hopes “to create an outstanding physical neighborhood which will be known for its environmental excellence, and its active, pedestrian-oriented public realm.”
Through case studies around the United States, it has been found that using public lands for affordable housing development also can present challenges, such as the following:
In the 2022 legislative session, more than 20 bills were proposed in the House and Senate relating to “public lands." Of all those bills, only one was passed that granted easements on development public lands between the Department of Land and Natural Resources to the Department of Agriculture – not relating to building affordable housing units.
The Department of Hawaiian Homelands is responsible for hundreds of thousands of earmarked lands for Native Hawaiians; however, the distribution of those lands has deemed difficult for decades.
Will more support spur distribution of these public lands for lease by Native Hawaiians?
A popular bill that passed both the House and the Senate – HB2511 – related to the Department of Hawaiian Homelands (DHHL) and its 203,500 acres of trust lands, 9,959 homestead leases statewide, 44,096 lease applications – and its 28,700 applicants on the waitlist for Hawaiian homelands. While thousands of Native Hawaiians have waited years to lease public land for $1 per year to meet their home or agricultural needs, this bill promised to spur DHHL to pursue a multi-pronged approach to eliminating its waitlist. It was signed by Governor Ige in July 2022 and provided $600 million to DHHL.
“The appropriation of $600 million in House Bill 2511 is a huge step forward, but clearly not fulfilling all the requirements of the Hawaiian Homestead Act. I’m proud of all the progress we've made at DHHL over the last several years. As governor, we have moved forward in critical ways to provide beneficiaries with more options,” Ige said at the bill signing ceremony.
‘Aloha Homes,’ or the development of affordable homes in high rises on State- and County-owned land has been proposed at multiple legislative sessions – without full passage.
Senator Stanley Chang has been an advocate of using public lands for affordable housing for years, namely in his ‘Aloha Homes’ policy idea. “Aloha” stands for “Affordable, Locally Owned Homes for All.” Modeled off affordable housing policies in countries like Singapore, his policy idea calls for affordable homes to be developed on public lands – mostly in dense urban areas along the proposed Honolulu rail line. They would then be sold as 99-year leasehold condos to qualified low- and moderate-income Hawaii residents – with 75% of the profit from resales going to the government for building upkeep to maintain low maintenance fees.
Chang has yet to be successful with ‘Aloha Homes,’ as many high-level professionals oppose its viability, including the Executive Director of the Hawaii Housing Finance and Development Corp. and Linda Schatz, a developer of workforce housing and wife of U.S. Sen. Brian Schatz. Despite the opposition, Chang continues to advocate for the use of public lands for affordable housing.
He says, “I believe whatever the amount of the housing shortage is, whether it’s 65,000 over 10 years or whether it’s 100,000 units by tomorrow, until somebody says, ‘I’m going to build 65,000 units and they’re going to be built right here,’ that is the only way to solve the housing shortage. And the only entity who can do that is the State of Hawai‘i. … To expect private developers to build homes for $300,000 or $400,000 is not realistic in my opinion.”
Chang admits his ideas “do not represent the mainstream of public opinion in Hawaii,” but without the use of public lands, how can affordable homes be built?
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