Introduction
RAIL, AFFORDABLE HOUSING AND TOD: A LOOMING CRISIS AND AN OPPORTUNITY
The City and County of Honolulu is constructing a twenty-one-stop rail line, currently estimated to cost around $9.2 billion. The success of this project ultimately depends on development around the stations. With proper planning, TOD can bring tens of thousands of new affordable housing units, alleviate traffic congestion, and make Hawaiʻi an even better place to live and work. The success of TOD depends upon effective collaboration among a wide variety of public and private partners.
BACKGROUND: RAIL PROJECT, COUNTY AND STATE INVOLVEMENT
Rail transit is a project of the City and County of Honolulu, but it is financed with administrative support from the state. Honolulu voters approved the rail project in 2008, and funding has come primarily from a half cent sales tax on Honolulu residents. However, the Honolulu City Council started serious discussions about the impact of rail years before. Since starting TOD planning in 2007, the city has created eight neighborhood TOD plans which cover 19 of the 21 stations. Four of the plans have been adopted, and the other four plans are in process. These TOD plans will update the zoning codes to provide higher density and other incentives to promote development along the rail. The two stations not covered in city plans, Kakaʻako and Civic Center, are located on land under state jurisdiction, and therefore are subject to TOD plans created by a state agency, the Hawaiʻi Community Development Authority (HCDA).
ESTABLISHMENT OF THE TOD COUNCIL
Recognizing the need for multisector collaboration, the state officially started coordinating efforts with the establishment of the TOD council in 2016. Act 130, SLH 2016 established the TOD council and defined the Office of Planning as the lead agency to coordinate smart growth and TOD planning in Hawaiʻi. The Office of Planning has significantly fewer resources to devote to TOD than does the City and County of Honolulu. The city has six full-time TOD employees and there is a TOD subcabinet meeting twice a month where departments deliberate over TOD implementation details. Currently, the state TOD Council is administered with part time support from an Office of Planning administrator. Funding was recently allocated to hire a TOD project coordinator and a program manager. Despite these limited resources, in 2017 the TOD Council published a strategic plan and helped agencies to determine priorities. One priority was a regional infrastructure plan to assess delivery options for TOD on state lands. The Office of Planning requested $1 million for TOD planning statewide and was supported by the 2017 State Legislature with $1 million in funding for TOD planning on O‘ahu.
Since first convening in the middle of 2016, the council has created a plan, outlined priorities and helped agencies better communicate about TOD opportunities. However, there are still some structural issues which inhibit effective collaboration.
BACKGROUND OF THIS STUDY
This study is part of a larger project on the Waipahu TOD area being completed by the UH Community Design Center. The overarching goal is to identify barriers to TOD Council collaboration and suggest strategies to ameliorate them. Specifically, the purpose of this project is to:
1) Understand the roles of the various agencies involved in TOD and what key TOD stakeholders see as barriers to collaboration;
2) Highlight positive trends and strategies to build on existing strengths; and
3) Identify structural issues that are impeding collaboration and suggest new solutions.
SITE FOCUS
We address these questions by focusing on the Waipahu site. Meeting with agencies and partners involved in the development of a single site helped to frame and focus the conversation, while
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allowing identification of underlying structural issues that are thematic and applicable to other sites.
Waipahu was the site chosen as part of a larger study for the UH Community Design Center for several reasons. The Waipahu station has the potential to be developed more quickly than some of the other early rail stations based on market conditions around the station, the amount of infrastructure funding required, and the number of landowners who need to collaborate. Timely TOD site plan implementation is key for the public to see the value of the rail and to support its development. The hope is that a successful project would generate public support for TOD plans that have been overshadowed by controversy associated with the Honolulu rail project.
This study used the Waipahu station site to draw some larger lessons for TOD implementation by identifying barriers to agency collaboration and progress towards development.
METHODS
This project was completed by Colin Moore, Kenna Stormogipson, and Joy Agner from the University of Hawaiʻi at Mānoa’s Public Policy Center. Methods included attending TOD Council meetings from February 2018 - October 2018, attending HHFDC board meetings, talking to local housing developers and Waipahu area elected representatives, and interviewing key agency stakeholders for the Waipahu site. The following agencies were invited to participate in the study: Hawaiʻi Public Housing Authority (HPHA), Department of Education (DOE), Hawaiʻi Housing Finance and Development Corporation (HHFDC), Department of Accounting and General Services (DAGS), Office of Planning (OP), and the City and County of Honolulu TOD Program. Descriptions of key organizations, and interview findings that extend beyond the scope of the main report can be found in Appendix II. For best practices comparison, we also attended the 2018 RailVolution Conference in Pittsburgh, Pennsylvania and interviewed TOD staff from other cities including Los Angeles, Denver, Seattle, Charlotte and Minneapolis. To better understand the CIP funding process and its relationship with TOD prioritization, we examined support for TOD funding priority requests in each stage of the CIP funding process.
Key Findings
1.1 TOD Council members agree on the importance of TOD and are willing to collaborate.
We found widespread agreement that Transit Oriented Development is an important tool for the state to address housing shortage and to create livable communities. Council members understand the value of TOD goals and how they relate to their organization, even if the main mission of their agency is not related to housing. For example, the Department of Education supports TOD principles of denser and more mixed-use development because it can lead to teacher and staff housing on school properties. The benefits and goals of TOD are clear to all government stakeholders, but what is less clear is how to best achieve those goals through the TOD Council.
TOD SUCCESS STORY: POHUKAINA ELEMENTARY SCHOOL
The Pohukaina Elementary School Project is an example of TOD principles and agency collaboration add value to a project. It is a partnership with DOE and HHFDC to build housing on lands originally set aside for a school, which will now result in over 400 new affordable homes. 690 Pohokaina Street is located a few blocks from a planned train station and is in a very desirable neighborhood. These dynamics prompted discussions about making best use of the land and incorporating TOD concepts of higher density and mixeduse.
DOE adopted a vertical design which provides more land for housing. DOE then collaborated
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with HHFDC, combining DOEʻs knowledge of educational needs with the tools and expertise of HHFDC to develop 690 Pohukaina into a school with mixed-income housing. The 10-story school will be an innovative educational land use model for the state and is integrated into a forward-thinking TOD development plan.
This partnership between DOE and HHFDC will result in 590 units of housing, 74% of which are affordable at various levels of area median income (AMI) but not exceeding 140% AMI. Over 430 residents will now have access to affordable homes, close to a rail station and downtown jobs. Some of those residents will likely be teachers and parents of students at the elementary school next door. Additionally, a county owned park across the street will serve a dual purpose as both a public park and an elementary school play area. Enormous public benefit is being created through this collaborative effort between state agencies and the county.
TOD SUCCESS STORY: MAYOR WRIGHT HOMES, A PUBLIC-PRIVATE PARTNERSHIP
An excellent example of a higher density, mixed-income, TOD is the Mayor Wright project in Kapalama. Located a few blocks from the planned Iwilei station in downtown Honolulu, Mayor Wright currently provides public housing for 364 low income families. The Mayor Wright redevelopment project will provide one-for-one replacement of the existing 364 public housing units, and over 2,000 units of new housing stock at mixed income levels ranging from to 30% AMI to market rate. The phased redevelopment has a total projected cost of approximately $1.5 billion dollars, which positions it as one of the largest public housing undertakings in Hawai‘i’s history.
Mayor Wright shows how a public-private partnership can effectively create affordable housing solutions. Under this model, the public sector provides land, zoning incentives (height and density), public housing expertise and a portion of the financing, while the private sector provides planning, implementation and most of the financing.
A HIGH IMPACT, HIGH COMPLEXITY PROJECT
The Mayor Wright Homes Project is a massive undertaking. As a public-private partnership seeking federal funding, the redevelopment effort is significantly more complex than a comparable private sector project. The development must conform to strict state and federal regulations guiding environmental review and the HUD approval process. Additionally, existing residents must be relocated, the current building demolished, and the State legislature must approve financing for the project.
Beyond the redevelopment site itself, Mayor Wright Homes will require support from the City and County of Honolulu for infrastructure upgrades to accommodate approximately 2,000 more units. Steering a project of this magnitude through city, state and federal review processes will be a complex task with a 10 - 15 year timeframe.
1.2 Agencies collaborate when there are structured discussions and adequate incentives.
There is enough trust and understanding between TOD stakeholders that, under the right conditions, some very productive conversations emerge. For example, at a structured planning discussion called a “charrette” last fall, agencies and private landowners found ways to add value to the UH West Oahu TOD area by leveraging their strengths. For example, some private landowners in the area were receptive to fewer freeway lanes in exchange for a well-designed and less car-dependent TOD neighborhood. In separate but related conversations, the University of Hawaiʻi is exploring how it could partner with HHFDC to build more staff and student housing on UH property.
1.3 TOD Council has strengthened relationships and inspired collaborative
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discussions.
Council meetings have spurred efforts to develop ideas and potential agency collaborations outside of TOD meetings. Some stakeholders have begun meeting separately in order to identify strategies to work together. These relationships help break down silos and enhance effective communication across agencies. Without regular council meetings, there would be fewer incentives for inter-agency discussions.
2.1 The council has made planning for TOD areas more efficient; the current infrastructure plan for the rail corridor is one example. A central reason for the creation of the TOD Council was to create efficiencies in the planning process. The current infrastructure plan being conducted on state lands along the Honolulu Rail Transit corridor is an important investment, which might not have occurred without the council. Even though the request for $1 million to fund the plan came from the Office of Planning, having a TOD Council already in place made the request more compelling and relevant. Creating an infrastructure plan is critical to any large development process, and yet most agencies would not have had the funds to create these plans for their parcels of land. Even if they did have the funds as an individual agency, it would be significantly more expensive for each agency to fund its own plan.
Each agency will acquire critical information about what infrastructure is needed and potential ways to finance the improvements. Also, the needs and plans of various agencies for a particular station area will be compiled into one plan, which allows for important efficiencies and opportunities regarding future development. One agency can more easily adjust its plans to take advantage of other proposals for an area. For example, if the DOE is planning on building an elementary school in an area, HPHA might decide to design an affordable rental property geared towards families with young kids who will place the highest value on proximity to the school. Or perhaps school staff can share parking with apartment tenants who need overnight parking, but not daytime access. Once information is organized and discussed, it is much easier to find connections and add value. In short, the TOD Council can lead to more efficient outcomes by agencies because they can see how their individual needs fit into an overall site plan.
3.1 The role of TOD Council in implementation is unclear. While some council members felt that important progress towards TOD had been made, others were skeptical that the TOD Council was accelerating development efforts. Sharing information across agencies is useful, but it is not enough to implement a development plan. Ultimately the TOD Council does not have the authority or funding to address many of the obstacles impending development. In its current structure, the TOD Council is more of a public forum than a space for inter-agency collaboration and negotiation.
For example, development in the Iwilei-Kapalama area is estimated to require $700 - $900 million worth of infrastructure investments over several decades. The TOD Council does not have the authority to appropriate funds or to facilitate funding negotiations between stakeholders, so council members must wait for another authority, such as the Honolulu City Council or the Hawaiʻi State Legislature, to assist with implementation.
4.1 The council incentive structure requires modification to align agency interests with TOD priorities and for consensus to be built.
As an advisory group, the TOD Council cannot dictate how agencies use their resources or mandate that TOD become a priority for individual agencies. Instead, the council most often supports agency interests that already coincide with TOD goals, as opposed to shaping agency priorities towards TOD.
In addition, the diversity of agencies represented, ranging from DOE to HPHA, presents a challenge to
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building consensus when representatives on the TOD Council hold different levels of authority within their organizations. For example, the Director of HHFDC and the administrator of the county TOD program often attend council meetings, but the DOE is such a large department that the Assistant Superintendent of Facilities almost never attends. Although this makes sense from the agency’s perspective, the designee for some agencies may not have the authority to approve a TOD Council action plan or recommendation. Without the right people involved, decisions that could be made in one meeting must wait to go up the chain of command. This delays decision-making and makes collaboration more difficult.
5.1 The state and the county both play important and interconnected roles in TOD.
The City and County of Honolulu and the State of Hawaiʻi both have important oversight and stewardship roles in the development process. For example, all construction permits are granted and finalized by the County Department of Planning and Permitting, even if a property is on state land or is under the jurisdiction of a state agency. Likewise, the environmental review process is determined by a state agency, the Office of Environmental Quality Control (OEQC) for all projects in the state.
A slowdown or impediment in one jurisdiction affects outcomes for both. The table below shows some of the division of authority between jurisdictions
Development Process City State Permitting Construction permits approved by the Department of Planning & Permitting.
Design Review / Entitlements Responsible for lands not under State jurisdiction.
Infrastructure Infrastructure Operations. Manages county roads, drainage, water and sewer.
Sets standards for environmental review through the Office of Environmental Quality Control.
Responsible for HCDA controlled lands, and some projects on State lands.
Manages State roads. Sometimes funds county infrastructure in special cases.
This table illustrates how important both state and county authority are to any large new development. In fact, it is not possible to go through most large projects without being impacted by both state and county land use regulations.
5.2 Paying for infrastructure: County or State? Both benefit from new development.
The counties are increasingly looking to the state for help with financing infrastructure, especially infrastructure on state properties. The state has a much larger budget than the counties and there is precedent for funding infrastructure. Recently, the state provided significant funds to rebuild county roads and utilities on Kauaʻi and Hawaiʻi Island after natural disasters in 2018. State investments in infrastructure have also supported housing development as was the case with the Kakaʻako neighborhood. In the late 1970s Kakaʻako was a blighted area and needed costly infrastructure improvements to attract development. The state asserted zoning control of Kakaʻako and appropriated tens of millions of dollars for infrastructure.
Regardless of which jurisdiction funds infrastructure improvements, both benefit financially and
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politically from development that meets TOD goals. New development increases the property tax base for the counties, which adds to their revenues, while increased commercial activity in a neighborhood generates more general excise tax (GET) for the state. Both jurisdictions are viewed more favorably by the public when projects are completed, affordable housing is built, and vibrant communities are created.
5.3 State and county are landowners in TOD areas, but the state owns the most land.
Although the county and state both own land in station areas, the state is the largest landowner along the Honolulu Rail Transit corridor. Over 1900 acres, or 30% of the total land area, is controlled by the state. Yet the state lands belong to many different agencies such as: HHFDC, DOE, HPHA, DAGS, DLNR, etc. Any development plan for a station area depends on the support of local landowners and often these landowners are state and county agencies.
6.1 The current Capital Improvement Project (CIP) funding structure does not incentivize collaboration. State CIP funding is the primary funding mechanism for TOD Council projects; however, the current CIP process does not emphasize the role or authority of the TOD Council. The council prioritizes CIP requests for the legislature, but it is not clear that TOD requests are given any more weight than regular department requests. Additionally, council CIP recommendations are submitted after the departments and the governor have determined funding priorities. Consequently, the council functions more like a stamp of approval rather than a process for rewarding collaborative efforts.
For example, if agencies were instructed to come up with a plan to best utilize $50 million to advance TOD goals, they would be motivated to negotiate a plan with the highest benefit for all stakeholders. However, if the $50 million is simply divided between individual agency requests that happen to coincide with TOD priorities, it would not incentivize collaboration. The current funding structure rewards individual department requests, but not collaborative efforts.
As the graphic below demonstrates, CIP funding is not straightforward, and it is hard to determine the influence of TOD Council requests on funding outcomes.
6.2 Advantages of TOD approved CIP requests vs. other agency requests is unclear.
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Agency Request Public Safety Dept. 1,500,000 Budget & Finance Recommendation 0 Governor Recommendation 0 TOD Priorities Released 1,000,000 Legislative Decision 10,000,000 November JuneJanuary Department of Education 0 0 60,000,000 55,000,000 10,000,000 Example 2: $55M for Pohukaina Elementary School (2017) Example 1: $1M for OCCC Consulting Services(2017) CIP Funding Process and Timeline Illustrated with Three TOD Council Priorities Dept. of Business, Economic Development, and Tourism 15,000,000 15,000,000 15,000,000 17,000,000 0 Example 3: $17M for Alder Street Affordable Housing and Juvenile Services (2017) 11
TOD projects do not seem to be prioritized over non-TOD requests. Based on a review of TOD requests and the amounts that were funded, it seems highly variable and difficult to predict what will or will not be funded. Additionally, the percentage of requests being funded range from 31% in 2017 to 77% in 2019 (See appendix I). A weak connection between council recommendations and funding success is likely to dampen member commitment to the council and encourage agencies to focus their energies elsewhere.
Recommendations
1. The governor and the Legislature should use CIP Funds to incentivize collaboration: Reward good teamwork, not individual requests. Awarding funding to individual agencies with TOD related projects is less effective than providing funds for collaborative inter-agency TOD projects. Council members need to know that the benefits of being team players outweigh the costs of compromise and the time and resources required to create collaborative plans. Providing funding for TOD plans creates incentives to take collaborative efforts seriously. To achieve this, the Governor and Legislature must prioritize CIP funding requests that have the support of the TOD Council.
2. Work to secure funds that the council can use to provide seed-money grants to help agencies with TOD projects. The TOD Council should reward collaboration by providing seed-money grants in the range of $25,000 - $100,000 to support TOD projects that result from inter-agency planning. Smaller budget items that can stimulate TOD development include site plans, design and engineering consultations, small business support, art funding to generate interest in a site, and communication support to attract private and federal funding.
A featured speaker at a TOD Council meeting, Kelly Kline, talked about using $100,000 of funds during her time as Chief Innovation Officer for Fremont, California to bring regular art activities to an underutilized site in the downtown area for a year. The positive press attention, added foot traffic and creative activities helped to transform perceptions of the area and ultimately attract many times more private investment than the initial $100,000 investment. In this case, a one-time expenditure of public funds was able to help jump-start urban revitalization.
Even a relatively small discretionary budget of $1 - $2 million could support collaborative efforts and provide crucial support to TOD projects. The ability to reward good ideas, even on a limited basis, will improve agency morale and enhance the role of the council.
TOD SUCCESS STORY: HENNEPIN COUNTY, MINNESOTA
Rewarding teamwork and good planning is what Hennepin County, Minnesota (pop. 1.2 million) has used to jump-start development along light-rail lines in Minneapolis and surrounding cities for decades. Starting in the mid 1990s, the county created a “Community Works” program to spark investment in economically depressed communities, and to support development along new light rail corridors. Over 20 years later, the program has attracted more than $883 million in private and public investment, and it is nationally recognized as an effective way to promote economic development. Over the years, the county has contributed $94 million in funding toward various “Community Works” projects, which then catalyzed another $789 million in federal, city and private investment. Every dollar spent by the county was matched by $8 from other sources. The projects have also been successful at economic development; the average increase in property values near community works projects is 17 points higher than surrounding areas.
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Patricia Fitzgerald, the manager of the “Community Works” program, credits a yearly capital fund of $2.2 million to support project requests as critical to agency buy-in and collaboration. Even though “Community Works” support is often in the $10,000 - $100,000 range, it generates partner support and confidence in a project. Also, outside agencies now turn to “Community Works” for advice on proposed projects and how to best attract investment. Some amount of seed funding can go a long way towards fostering collaborative efforts and project implementation.
3. The TOD Council should improve the process for communicating to the governor and Legislature how CIP requests are strategic and cost effective. Even within the current CIP funding structure, the council can better demonstrate how TOD projects can catalyze private investment, support affordable housing goals and fit into the larger vision of sustainable communities. TOD requests can be framed as addressing multiple policy objectives at once, and a strategic way to leverage the $9.2 Billion committed to the rail line by incentivizing development along the rail.
4. Continue to realize efficiencies of conducting important TOD planning work as a council.
The council should continue to bundle the planning needs of multiple agencies into larger efforts such as the infrastructure plan currently underway. According to several agencies, a helpful next step would be a market analysis of state priority areas, which could build upon a study currently underway by the county to analyze the market across the entire corridor. By starting with the county study, the state can save resources and expand the scope in priority areas.
Along the same lines of aggregating agency needs, the council could also enact centralized procurement for common planning services needed by multiple departments. For example, it is usually helpful to consult designers, architects and engineers when considering a project. Instead of having each agency procure these services separately, OP could enter into a master agreement with a consultant and then any agency who needed their services could contract services without having to perform an RPF process. This would save significant transaction costs and hopefully encourage agency focus on TOD areas.
5. Create a TOD Subcabinet in the Office of the Governor.
If council members are consistently reminded that TOD is a priority for the governor, then TOD projects will naturally rise on the priority list as will dedication of time and resources towards TOD planning. One way to create consistent communication between the governor and TOD Council members is to create a subcabinet which meets regularly.
This is how the City and County of Honolulu has fostered TOD collaboration between departments. The mayor hosts a TOD subcabinet meeting every two weeks where hard conversations and detailed negotiations can occur. Which department will take the lead on relocating utilities for a block? Are there departments with parcels of land that are underutilized which could be re-purposed towards TOD objectives? Having a subcabinet with members that have the authority to make these types of decisions, with oversight from the governor, would facilitate negotiations that are critical to moving development forward.
TOD SUCCESS STORY: CHARLOTTE, NORTH CAROLINA
The influence of the mayor was key to the success of TOD in Charlotte, North Carolina, according to Brian Nadolny a Project Manager with the Charlotte Area Transit System. Similar to Honolulu, the mayor of Charlotte would convene all the involved decisionmakers to work on TOD plans and then report on their progress. Over the course of several
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different city administrations, each new mayor remained a strong advocate of TOD and pushed departments to prioritize TOD projects. The focus on the development around light rail stations was effective and contributed to the enormous success of light rail. When the rail first opened ridership was predicted to be 9,000 passengers a day. It turned out to be 15,000 people a day – a 67% increase over the prediction. Not only did ridership increase, but tens of thousands of units of affordable housing were built near station areas as a result of development incentives and inclusionary zoning. A TOD subcabinet in the Office of the Governor would provide incentive and structure to catalyze TOD projects.
6. Explore how the state and county can leverage their resources and interdependence for mutual benefit.
The complexity of development and the ways a single project is impacted by both state and county authority and funding can be an obstacle to efficiency and an impediment to attracting private investment. However, it also presents opportunities when an improvement in one jurisdiction results in significant benefits to the other and advances the goals of both. Although a detailed analysis of how county authority and financial support affects state projects is beyond the scope of this study, future studies could determine which resources or process improvements might have the biggest impact on TOD success.
Even without a more comprehensive analysis here are a couple suggestions for how the interdependence of the county and state can be leveraged for mutual benefit:
7.1 Performance incentives from the state to the county for process improvements, such as construction permitting.
A common way for a jurisdiction with more resources to influence another is by financially rewarding changes and innovations. The federal government will frequently award money to states who have improved a process that is of interest on a national level such as teacher evaluations, emergency management planning, and criminal justice reform.
7.2 Leverage information from funded studies to benefit both jurisdictions.
Since the state and county both stand to gain from successful TOD, each jurisdiction has funded various studies to support development in TOD areas. The county funded a study on infrastructure improvements for the Iwilei-Kapalama TOD area. At the same time, the state funded a study on state lands in TOD areas, which partly includes the Iwilei-Kapalama area. Similarly, the county has commissioned studies on market feasibility in TOD areas, while the state department of education recently hired a demographer which could provide valuable information about demographic and subsequently market shifts in TOD areas.
As much as possible, the state and county should optimize funded studies to provide information that is useful for both jurisdictions. For example, if the state funds an environmental study for the Mayor Wright development, it would be cost effective to expand the parameters and include the entire TOD station area, thereby eliminating the need for a second and perhaps duplicative study by the county.
8. Increase public support through communication strategies that make the goals and positive impact of TOD clear.
Currently, the messaging around TOD is overshadowed by the rail project, which has been contentious on multiple levels. Clear, consistent, and compelling messaging should link TOD with issues of greatest importance to the public such as affordable housing, reducing traffic, increasing job opportunities and creating sustainable communities. In Los Angeles, California, a sales tax that contributed to TOD projects was passed utilizing data from focus groups, and strategizing how the tax would be messaged to the public to increase buy-in. Well-tested messaging can increase public
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confidence and buy-in as well as magnify current successful efforts.
9. Develop a cohesive vision for the council through a concept mapping process. Concept mapping is a tool that has been utilized in other large, long-term state initiatives with diverse partners, such as the Healthy Hawaiʻi Initiative, to develop a shared vision and goals, strategies to achieve those goals, and the responsibilities of each member of the Council. A clearer internal vision of the role of the TOD council and a structure that gives the TOD council more authority will likely increase buy-in among agencies, and could enhance public messaging about TOD.
Conclusion
The findings in this report make clear that all of the involved agencies and individuals participating in the TOD Council intend to contribute to smart and successful long-term development in Hawaiʻi. In order to achieve their aims, some changes are necessary:
• Modify incentive structures to reward collaboration and negotiation;
• Leverage state and county interdependence to create mutual gains;
• Harness public and policy-maker support through better messaging and communication;
• Create a more cohesive vision for the council through a concept mapping process.
With these changes, the TOD Council has the ability to make significant contributions to improving collaboration among agencies. Without these structural changes, the potential of the council, and the intention of its establishment in 2016, will not be fully realized.
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APPENDIX
I CIP Requests
Agency Descriptions:
Challenges and Distinguishing Assets
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II
Roles,
17
Date 2016 TOD FUNDING
Nov 2015 Site Master Planning of State Lands in TOD areas: incl. infrastructure assessments (DBEDT), OP Request
Mar 2016 Establishing Inter-Agency Council (DBEDT), Initial Funds (In TOD Council Bill)
TOTAL
Date 2017 TOD RELATED REQUESTS
Amount Dep Request B&F Rec. Gov Request Leg Funded
$1M $500k FY17
$50k
Amount Dept B&F REC. Gov Request Leg Funded
Jan 2017 Aloha Stadium Planning (DAGS), TOD endorsed $1M $0 $0 $0 $10M FY181
Jan 2017 Statewide Master Planning, Infrastructure (DBEDT), TOD endorsed $1M $1M $1M $1M $1M FY18
Jan 2017 Pohukaina School, Kaka’ako (DOE), TOD endorsed $55M Not Listed Not Listed Not Listed $10M FY18
Jan 2017 Kauluokahai Community, East Kapolei (DHHL), TOD endorsed $2M Not Listed Not Listed Not Listed Part of Lump Sum
Jan 2017 Alder Street, Honolulu (HHFDC), TOD endorsed $17M $15M $15M $15M None
Jan 2017 TOD Planner VI Position (DBEDT), OP request $60k $60k $60k $60K None
Jan 2017 Other Current Expenses for TOD Council (DBEDT), HHFDC request $25K $25K $25k $25K None
Jan 2017 Funding for TOD Council Support (DBEDT), OP request $25K $25K $25K $25K None
Jan 2017 Funding for Proof of Concept TOD Plans NOT REQUESTED NA NA NA NA $250k FY18
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$1M $1M $1M
$50k NA NA NA
FY17
REQUESTED VS FUNDED: $1,050k $550k PERCENTAGE FUNDED OF REQUESTED: 52% Percentage of Requests Received Some Funding 100%
TOTAL REQUESTED VS FUNDED: $76,110,000 $23,250,000 2017 PERCENTAGE FUNDED OF REQUESTED: 31% Percentage of Requests Received Some Funding 50% (4 of 8) 1 The $10M for “Stadium Planning” appears to have been repurposed from an original “Health and Safety” request. Initially there was a request of $10M for “Aloha Stadium Lump Sum Health and Safety” by DAGS, which was approved by the Governor for $10M, but then not funded. For purposes of tracking TOD funding, this $10M appropriation is considered to fully fund the original $1M requested for planning, with the other $9M used for other purposes. APPENDIX I: CIP REQUESTS 18
Date 2018 TOD RELATED REQUESTS Amount Dept Request B&F Rec. Gov Request Leg Funded
Jan 2018 Mayor Wright Homes, Infrastructure (HPHA), TOD endorsed $4.5M $0 $4.5M $4.5M $4.5M FY19
Jan 2018 Pohukaina School, Kaka’ako (DOE) TOD endorsed $60M $0 $0 $60M $10M FY19
Jan 2018 OCCC Jail in Kalihi, P3 Planning Funds (PSD), TOD endorsed $1M $1.5M $0 $1M None
Jan 2018
Jan 2018
Alder Street via Rental Housing Revolving Funds, RHRF; (HHFDC) TOD endorsed (HB2748 SL 2018) $25M $50M $50M $50M $200M FY182
Dwelling Unit Revolving Fund, DURF, for several projects; (HHFDC) TOD endorsed (HB2748, SL 2018) $25M $25M $25M $25M $10M FY18
Jan 2018 TOD Council Meeting and Travel Budget (DBEDT), OP request $20K $20k $0 $0 $15K FY19
Jan 2018 TOD Program Manager (DBEDT), OP request $90k Not Listed Not Listed Not Listed $70K FY19
TOTAL REQUESTED VS FUNDED $115,610,000 $49,585,000
Percentage Funded of Requested 43%
Percentage of Requests Received Some Funding 86% (6 of 7)
2 The $200M was allocated to the Rental Housing Revolving Fund to fund various projects, not just Alder St. For the purpose of tracking TOD Council endorsements, this lump sum indicates that Alder St. was fully funded for the $25M requested by HHFDC.
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19
CIP REQUESTS
Date 2019 TOD RELATED REQUESTS Dept Request Dept Request B&F Rec. Gov Request Leg Funded3
Jan 2019 East Kapolei Master Development Plan, EIS (DLNR), TOD endorsed $1M $5M4 $0 $1M $1M5
Jan 2019 Dwelling Unit Revolving Fund Infusion (HHFDC), TOD endorsed (CIP bill HB1259) $55M $25M $25M $25M $42M FY20
Jan 2019 P3 Program Office (DAGS), TOD endorsed $156K $156K $70K $156K $0
Jan 2019 Funding for TOD Program Manager (DBEDT), OP Request $23K $23K $23K $23K $23K FY20/21
Jan 2019 Rental Housing Revolving Fund, Mayor Wright (HPHA), HHFDC Request (HB1312) Not Listed $0 $150M $150M $50M6
Jan 2019 TOD Council Meeting and Travel Budget (DBEDT), OP Request $15K Not Listed Not Listed Not Listed $15K FY20
TOTAL REQUESTED VS FUNDED
Percentage Funded of Requested
Percentage of Requests Received Some Funding
3 These go into effect on July 1st 2019, assuming the governor does not veto the bill with the appropriations.
4 Department of Land and Natural Resources requested $5M for Environmental Studies statewide, not just East Kapolei.
5 $1M was funded for Environmental Studies statewide, not specific to East Kapolei, but could be used for that location.
6 $50M not counted towards total of Requested vs. Funded, since it was not requested by the Department.
(4 of 5)
WAIPAHU TOD COLLABORATION
$43,038,000
77%
80%
APPENDIX I:
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APPENDIX II: Agency Descriptions: Roles, Challenges and Distinguishing Assets
DAGS: Department of Accounting and General Services
ROLES AND RESPONSIBILITIES
DAGS is responsible for providing physical, financial and technical infrastructure for all state departments and agencies. This ranges from managing the payroll and cybersecurity Executive Branch systems to providing grounds keepers for buildings and providing office space for departments and agencies.
Transit Oriented Development / Waipahu Transit Center Station
As the main State office space manager and the centralized CIP ser vice provider for most Executive Branch agencies, DAGS plays a key role in many development projects on state lands.
The Stadium Authority is another important contribution of DAGS to TOD. The authority is administratively attached to DAGS, and currently DAGS is assisting with a Master Plan and EIS for the nearly 100 acres of state land overseen by the Stadium Authority at Halawa Station.
DAGS is also working to relocate the Oahu Community Correctional Center (OCCC) located between the Kalihi and Middle Street TOD stations. Moving OCCC to another location will open up 16 acres of land in a prime TOD area and would likely catalyze redevelopment throughout the Kalihi neighborhood. Unlocking the potential for mixed-used development in these TOD areas is contingent upon relocating OCCC, so DAGS role is very important to the overall success of the Kalihi and Middle Street stations.
Near the Waipahu Transit Center Station (WTCS) site, DAGS manages a 4.5 acre Waipahu Civic Center that has DAGS office space and a public library. The fee title is held by DLNR and DAGS is assigned the executive order to manage the property. Although developing this particular site is not currently at the top of DAGS priority list, if this becomes a state priority DAGS would assist in whatever way possible.
CHALLENGES
Adequate Staffing
DAGS, like many agencies, is currently short staffed and experiencing difficulties filling positions when the job market is so competitive. They have a long backlog of health and safety projects, which must take priority and with limited funding DAGS struggles to meet demand.
Neighbor Island Priority
The places with the biggest backlogs of DAGS projects are on the neighbor islands. That is where the demand for more office space is greatest, and where DAGS is presently focusing any discretionar y efforts.
DISTINGUISHING CAPABILITIES AND ASSETS
Land Swaps-- facilitating agency transfer of land rights
DAGS has a substantial role in negotiating state office space lease agreements for state Executive Branch agencies, and in managing construction projects. As TOD progresses, the experience of DAGS in these areas can help with negotiating and managing projects with multiple state agency lease holders and building occupants.
Familiarity with all the agencies
As the provider of technical and physical infrastructure to many state departments, DAGS is familiar with the agency programs and protocols needed to relocate offices or support operations. Again, this expertise in meeting the facility needs of a wide range of departments and agencies, can be an
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important asset when implementing a multi-agency TOD plan.
Civic Center Management
DAGS manages most state civic centers throughout the islands. On O‘ahu, DAGS manages civic centers at two TOD station areas, Waipahu and Iwilei.
As transit-ready development progresses on neighbor islands, DAGS is also involved as a stakeholder with nearby Wailuku and Kahului civic centers on Maui and Lihue Civic Center on Kauaʻi.
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HPHA: Hawaii Public Housing Authority
ROLES AND RESPONSIBILITIES
The Hawai‘i Public Housing Authority (HPHA) manages 6,270 low-income public housing rental units throughout the state, 86% of which are federally funded, with the remaining 14% being state-owned housing units. HPHA efforts focus on developing affordable rental and supportive housing and housing services to the people of Hawai‘i.
For many of the Hawaiʻi’s most vulnerable population, the HPHA is the last hope before homelessness. Unfortunately, many families remain on the HPHA’s wait list for several years before receiving either public housing or rental assistance vouchers. With an acute shortage of affordable housing in Hawai‘i, a backlog of repairs over $750M, and the vast majority of the HPHA’s property inventory at or near the end of its useful life, HPHA is challenged to seek new and creative ways to increase its housing inventory. Redevelopment of its existing state-owned housing property assets through the formation of public/private partnerships, leveraging public and private capital resources and utilizing Transit Oriented Development (TOD) incentives are all strategies that HPHA is currently pursuing to meet this challenge.
DISTINGUISHING CAPABILITIES AND ASSETS
Federally Funded: More Independent HPHA was formed pursuant to Chapter 356D of Hawaii Revised Statutes (“HRS”) and is overseen by an eleven-member board. The Executive Director has general supervision, daily management, and business affairs authority, pursuant to the direction of the Board. As a mostly federally funded organization, the HPHA has more independence than other state agencies in terms of decision making and authority. The majority of HPHA’s annual budget is funded under the U.S. Department of Housing and Urban Development (HUD). However, to protect this federal interest, HUD limits third-party financing. This restricts HPHA’s ability to finance capital improvement or redevelopment. Additionally, as federal resources for public housing continue to come under pressure due to declining appropriations and insufficient subsidies, the operating resources required to effectively manage and maintain HPHA’s existing federally subsidized housing have come under increasing pressure.
The average age of properties within HPHA’s portfolio is approaching 50 years. Many have undergone no modernization since they were built decades ago. Maintaining this portfolio is challenging and costly, not only for renovations of vacant units, but for the continued repair and maintenance of occupied units. Last year alone, the state Legislature appropriated $20M to address the capital repair needs of HPHA’s public housing inventory.
Further limiting HPHA’s ability to fulfill its mission, Section 9(g)(3) of the US Housing Act of 1937 (Faircloth Amendment) limits the construction or funding of new public housing units if the construction would result in a net increase in the number of public housing units the HPHA owned or operated as of October 1, 1999. These challenges, combined with the acute shortage of affordable housing in Hawai‘i, compel HPHA to seek innovative approaches to redevelop, preserve and manage the state’s limited housing resources. To achieve this, HPHA has begun to strategically pursue public/ private partnerships to access the public and private capital resources necessary to redevelopment its properties and revitalize the communities they serve. HUD encourages this approach through programs such as Rental Assistance Demonstration (“RAD”) and Mixed-Finance strategies.
Transit Oriented Development / Waipahu Transit Center Station
HPHA has identified ten properties within its existing portfolio, with close proximity to rail stations, where utilization of TOD incentives could significantly expand the inventor y of critically needed affordable housing on O‘ahu by approximately 10,000 units.
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At the Waipahu Transit Center Station (WTCS) site, HPHA operates and manages two housing properties that could benefit from this strategy: Kamalu and Hoʻolulu. Both properties are over 40 years old, are currently reserved for senior housing, and have a combined total of 221 studio and 1-bedroom units. These properties could be redeveloped to protect vital public housing stock while also providing significant additional affordable housing units to accommodate existing need and anticipated future growth of the Waipahu/Kapolei area. They are attractive redevelopment candidates due to their proximity to the Waipahu Station, Waipahu Civic Center, Waipahu District Park, Waipahu Library and other state-owned properties.
HPHA welcomes the opportunity to participate in any redevelopment effort coordinated with other state agencies, particularly as it relates to infrastructure costs, master planning and environmental studies. HPHA would prioritize the redevelopment of its Waipahu properties to accommodate such a master planning effort.
CHALLENGES
Federal and State Laws and Regulations
As an agency where a majority of projects receive federal funding, HPHA must comply with stringent federal rules, regulations and laws. For example, HPHA must receive environmental approval from both the state and federal level by complying with the National Environmental Policy Act (NEPA), as well as HUD approval for housing projects. There are also strict regulations for how tenants must be relocated during a demolition and construction process and how impacted stakeholders must be consulted and notified. In the planning process for Mayor Wright Homes, over 200 community groups and Native Hawaiian organizations had to be consulted and invited to participate in the planning.
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OP: Office of Planning
ROLES AND RESPONSIBILITIES
OP is responsible for statewide strategic planning and coordination of land use to best meet the needs of Hawaiʻiʻs people. This mandate ranges from planning for climate change to advancing smart growth initiatives. Additionally, OP represents the State of Hawai‘i in petitions before the State Land Use Commission to redistrict land from one type of land use to another. For example, if a person owns property designated as “agricultural” and wants to change the land use designation to “urban” they would apply to the Land Use Commission and OP would present the stateʻs position. In this way, OP is trusted to provide an objective viewpoint on whether land use proposals serve the best interests of Hawai‘iʻs residents.
Transit Oriented Development / Waipahu Transit Center Station
As the agency entrusted with guiding long-term land use planning, OP was designated the lead agency for the TOD council when the Council was formed in June 2016. OP is the agency specifically tasked with coordinating other state and county agencies via the TOD Council to advance state interests in affordable housing, clean energy initiatives, and other statewide goals. Although other stakeholders participate in TOD policy and planning through the TOD Council, OP is the only agency to have its statutory mandate amended to include transit-oriented development and smart growth. The same legislation, Act 130, Session Laws of Hawaii 2016, which created the TOD council, also updated the responsibilities of OP in HRS Ch 225M to include: “Section 10: smart growth and transit-oriented development…” with eight sub-sections outlining new responsibilities for OP. The Office of Planning was the only agency to have their responsibilities expanded as part of forming the TOD Council.
CHALLENGES
Staffing
Although current staff are very supportive of TOD and welcome the role of OP in the planning process, the resources afforded to OP have not kept pace with the added responsibilities. When the TOD Council was first formed, $50,000 was appropriated to OP for TOD council administrative support. Those initial funds were used for travel stipends for neighbor island council members, strategic planning on neighbor islands, and educational workshops. In 2018, OP was appropriated funds for an executive administrator and this year was funded for a program manager. Previous to 2018, the administration of the TOD Council was funded by HHFDC. OP is currently filling the position of program manager.
As a result, staff have simply had to add TOD on top of their previous workload, which has inevitably led to some tasks being incomplete. In comparison, the City and County of Honolulu has six full-time staff dedicated to TOD planning.
Structure of TOD Council
Another challenge for the TOD Council is that every agency has its own mission and set of priorities separate from TOD, and so each agency must balance time spent on TOD with other agency priorities. In the absence of extra funding or strong direction from the executive office, the incentives to devote resources to TOD are relatively weak. Without stronger incentives, it can be difficult for the TOD Council to align Council goals with the various agency goals.
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DISTINGUISHING CAPABILITIES AND ASSETS
Good Fit for Lead Agency
In spite of the staffing challenges, OP recognizes the importance of TOD and understands that TOD planning requires multi-agency coordination and facilitation of efforts. OP is an appropriate agency to lead the TOD planning process for two main reasons. First, its core mission is to ensure that lands in Hawaii are used strategically and for the overall benefit of Hawaiʻi residents. OP is the agency entrusted to take a “big picture” view of land use. Second, OP is a more neutral agency regarding development plans because it does not control parcels of land that could be used to fulfill other agency goals such as generating revenue. In this way, the focus for OP is not on any particular land parcel but on how the overall development of TOD areas will help achieve the state’s policy priorities.
WAIPAHU TOD COLLABORATION
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City and County of Honolulu: TOD Program
ROLES AND RESPONSIBILITIES
The City and County of Honolulu has a Transit Oriented Development Division within the Department of Planning and Permitting. The city TOD program has been in place since 2007 and is responsible for developing and coordinating TOD plans and policies since land use, zoning regulations, and project approvals (other than on state lands) are under city jurisdiction.
Major responsibilities include: Convening stakeholders to develop plans for 19 of the 21 station areas (two stations are within state zoning control), updating land use ordinances, mixed-use zoning and design criteria for TOD areas, communicating with developers and the public about TOD plans and opportunities, developing infrastructure and finance strategies, and catalyzing development of TOD areas.
Transit Oriented Development / Waipahu Transit Center Station area
The City Council has adopted four of the eight TOD Plans (with multiple stations in most plans). The Waipahu Neighborhood TOD Plan was the first to be adopted in 2014. Like the other area plans, it took several years to finalize and was the result of five large community workshops, dozens of meetings with stakeholders, and several drafts before final approval.
After adoption of the Waipahu TOD plan, TOD zoning was updated in 2018 to allow higher density, more mixed-use development, and reduced parking near stations. Developers can take advantage of these updated requirements to generate more value and create more housing and business opportunities. One main goal of TOD is to address the housing shortage in Honolulu. Current plans show capacity for 1,500 units within ½ mile of the Waipahu stations.
CHALLENGES AND OPPORTUNITIES
Significant Infrastructure Upgrades Needed: Larger than current capital budget
Most TOD areas require significant infrastructure upgrades to support new development and affordable housing. The city’s infrastructure assessment identified almost $1.5 billion in new and upgraded infrastructure projects needed along the corridor over the next three decades. The IwileiKapalama TOD area near downtown Honolulu is estimated to need $750 to $900 million worth of infrastructure upgrades over the next two decades to accommodate the needs of thousands of expected new homes. However, the city’s entire capital improvement budget is $900 million per year, and while some of the needed funds can be included in the annual capital budget, significant additional money is needed to support development and large projects.
Coordinating with State agencies and landowners
The city TOD strategy is to use the community-based TOD plans to identify where development is desired and then incentivize private development through several means; height and density bonuses, infrastructure investments, and funding for key public projects. Several major private TOD projects have been approved, which all take advantage of the added height and density bonuses. The city works closely with the TOD Council to prioritize development on state lands near rail stations and identify the critical infrastructure needed to support development.
Attracting Affordable Housing Development
While much of the recent housing development in downtown TOD areas has been luxury projects, city policies focus on encouraging and requiring affordable housing development in TOD areas, and maintaining that affordability for decades. The vision is to provide residents with improved mobility while lowering housing and transportation costs. The recently adopted Ordinance 18-10 requires a percentage of most developments to include affordable housing, with a higher amount in TOD
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areas. The companion Ordinance 18-1 provides up to $70,000 in incentives. There is also potential to streamline the permitting and development process for affordable housing. The County of Maui has had some success with this approach and the city is considering similar measures. Bill 7, currently under review, would reduce regulations and permitting time for affordable rental housing projects.
DISTINGUISHING CAPABILITIES AND ASSETS
Urban Planning, Zoning and TOD Expertise
As the permitting agency for all new construction permits and the main agency for design review, DPP has the most experience with urban design and negotiating with developers over entitlements. In addition, the county has six hired staff for TOD and has been engaging with stakeholders since 2007, even before the rail had secured funding.
Infrastructure Delivery
The city has a TOD subcabinet which meets twice a month and includes city departments responsible for the infrastructure which enables development: sewer, water, storm drainage, electrical, and transportation. The city has been having regular meetings with HECO for two years, and has incorporated electrical needs into the infrastructure strategy, with a special focus on the IwileiKapalama area in partnership with state agencies via the TOD Council. The city has responsibility for most of the infrastructure on Oahu and has the most experience with constructing and maintaining the systems needed for development.
WAIPAHU TOD COLLABORATION
28
DOE: Department of Education
ROLES AND RESPONSIBILITIES
The Department of Education (DOE) is the largest department in the state in regards to both funding and the number of people directly served (not including Medicaid). The DOE serves roughly 180,000 students and employs over 22,000 people. It is the 9th largest school district in the country and the only statewide school district. The primary mission is to assist its students, “to ensure that all students reach their aspirations from early learning through college, career, and citizenship.”
Transit Oriented Development / Waipahu Transit Center Station area Land dedicated for use by DOE along the rail corridor can support students and teachers in Hawai`i as part of a larger community development plan. 690 Pohukaina is an excellent example, a mixeduse development project in Kaka`ako where a 10-story vertical school will be built alongside two residential towers. A smaller footprint for the school integrates two important community needs: affordable housing and education.
A school may also be included in the redevelopment of the Waipahu Transit Center Station. Inclusion of a vertical school, similar to 690 Pohukaina, would allow enough space for 200-300 units of housing to be built on state lands.
CHALLENGES
Holding Space for Future Student Needs
In addition to supporting current student needs, the DOE must anticipate and prepare for future needs because demographics are always changing. The DOE has recently hired a demographer to better predict changes in student enrollment. Demographic shifts complicate TOD plans because the DOE must focus not only on current needs, but anticipate shifts in student needs and enrollment into the future.
Lack of Development Expertise
While the DOE operates and maintains over 4,400 schools, offices, and other buildings on school campuses, it does not act as a developer attempting to maximize revenue on a property. The DOE does not have expertise in preparing, packaging and marketing land for income; therefore, it is essential to work with other partners.
Challenges of Act 155 – Monetizing Public Lands
In 2013, the Hawai‘i Legislature passed Act 155 requiring the DOE to “establish a pilot program to generate revenue from (DOE land) for public purposes such as workforce housing, to build and retrofit twenty-first century schools and create more school-centered communities.”
Since the passing of Act 155, the DOE has accomplished a great deal toward the ultimate goal of leasing school public lands. Since the DOE became a statewide system in 1965, it has never had the Fee Title to public-school lands, only the authority to operate schools on the property. Act 206/Act 210, transferring fee from the city to the state and DOE, was never attempted in the last half century, but under Act 155 it became a reality. Pohukaina was also originally an Act 155 project, and although it has encountered many obstacles as a result of being a multi-agency project, much has been learned which will make the process easier for future sites.
Some of the main obstacles to implementing Act I55 include:
• Development Expertise Needed for Site Selection Process: Determining which sites
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had the most revenue potential was outside of DOE staff expertise. To narrow down potential locations for a pilot site, outside consultants were hired and there was a Request for Information (RFI) process to see which sites generated the most private development interest.
• 55-year lease maximum: Upcoming legislative fix to 99-years. The original Act 155 had a 55-year lease maximum, which is too short of a lease term for some private developers that would invest in expensive improvements. However, this obstacle is likely to be removed soon with the passage of legislation which allows for Act 155 land to be “under leases for a term of not more than ninety-nine years per lease”. (SB1303, SL2019) Barring a veto by the Governor, this new legislation goes into effect July 1st, 2019.
DISTINGUISHING CAPABILITIES AND ASSETS
Access to Customers
With thousands of staff and hundreds of thousands of parents who interface with the schools, the DOE has a ready built client base for any number of commercial activities from housing, to shopping or eating. Schools are already a natural hub of community activity and this can be leveraged in TOD planning.
Demographic Data
Although the DOE follows city and state development plans, the DOE research on demographic trends and where future families can be expected to live and work, can be very valuable information for other aspects of the TOD planning process.
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HHFDC: Hawaii Housing Finance and Development Corporation
ROLES AND RESPONSIBILITIES
HHFDC provides resources and development assistance to facilitate low-income housing development. It has been one of the largest sources of affordable and workforce housing in Hawai‘i. HHFDC administers federal and state tax credits which build approximately 300 affordable rental housing units a year and has also supported development of for-sale affordable homes.
Affordable housing developers receive financial assistance from HHFDC through the Dwelling Unit Revolving Fund (DURF), and the Rental Housing Revolving Fund (RHRF) which provide favorableinterest loans to supplement other forms of financing.
Additionally, HHFDC can assist developers to obtain entitlements to build at higher density than current zoning and can waive certain requirements such as minimum parking, which are not health and safety related. In exchange for these waivers, the housing project must have at least 50% plus 1 of the units be affordable to households with incomes below 140% of area median income (AMI).
Transit Oriented Development / Waipahu Transit Center Station (WTCS)
HHFDC controls some parcels along the rail corridor, but its most significant role in TOD is that the agency has the tools and expertise to administer development projects. HHFDC has successfully worked with developers to create thousands of low-income rental and for-sale units over the years. Agency staff are experienced in packaging and soliciting Requests for Proposals (RFPs) for housing projects and ensuring that affordable housing requirements are met.
Within half a mile of the WTCS, HHFDC controls four parcels of land totaling 6.6 acres which currently consist of two parking lots, Plantation Town Apartments (residential condo towers), Mokuola Vista low-income rental apartments, and the Waipahu Community Head Start childcare program.
CHALLENGES
Limited Amount of Tax Credits for Affordable Rentals
One of the main challenges for HHFDC is that there are a limited number of state and federal tax credits available per year. The federal 9% tax credits, which fall under the state’s volume cap, are based on the state’s population, and with Hawaiʻi being a relatively small state of 1,400,000, the amount of LIHTC tax credits is about $3.8M per year.
Time Intensive Process for For-Sale Developers
Developers who are interested in building for-sale affordable units, must go through a stringent application process, referred to as the “201H Process”, after the chapter in the Hawaii Revised Statutes which enables the project to obtain exemptions. To comply with this process, developers must go through a series of public meetings, obtain approval from the city council, have detailed plans of the project, and prove financial capability. After a project is approved and completed the developer must then sell at least 50% plus 1 of the units with certain income and resale restrictions and equity sharing agreements.
A significant percentage of HHFDC units have been for-sale units. In the previous 5 years, HHFDC assisted 4 projects totaling over 1,300 units under the 201H process, of which 485 for-sale units, comprising 37% of the total, have been completed. With Hawaiʻi having demand for over 64,000 homes, and many potential buyers priced out of the market, HHFDC is exploring ideas for increasing the number of for-sale units.
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DISTINGUISHING CAPABILITIES AND ASSETS
Experience with Affordable Housing Projects
As mentioned earlier, HHFDC has enabled the building of thousands of units of affordable housing over the years. HHFDC has staff who are accustomed to negotiating the terms of affordable housing projects and working with the development community.
Financial and Legal Tools
HHFDC has many unique tools that can be used to incentivize affordable housing development. The Rental Housing Revolving Fund for example, can loan money to developers at 1% interest or even less to cover financing gaps that traditional banks will not cover
The 201H state statute allows for significant exemptions to regulations that developers must follow such as building height and density, lower parking requirements, and waivers for street design (such as how far a building is set back from the sidewalk).
All of these financial and legal tools are designed to enable a developer to construct homes at a lower price per home.
Experience Partnering with other Agencies to Facilitate Development
HHFDC has worked with other agencies who have valuable land resources but lack the tools needed to enable development. This is the case with 690 Pohukaina St., where HHFDC is partnering with DOE to create affordable housing next to a school on state lands. HHFDC received a set-aside of the state land and is overseeing the development process.
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STRATEGIC PLANNING SESSIONS 33 33
