APPENDIX

I CIP Requests II Agency Descriptions: Roles, Challenges and Distinguishing Assets

APPENDIX I: CIP REQUESTS

Date 2016 TOD FUNDING Amount Dep Request B&F Rec. Gov Request Leg Funded

Nov 2015 Site Master Planning of State Lands in TOD areas: incl. infrastructure assessments (DBEDT), OP Request

$1M $1M $1M $1M $500k FY17

Mar 2016 Establishing Inter-Agency Council (DBEDT), Initial Funds (In TOD Council Bill)

$50k NA NA NA $50k FY17

TOTAL REQUESTED VS FUNDED: $1,050k $550k

PERCENTAGE FUNDED OF REQUESTED: 52%

Percentage of Requests Received Some Funding 100%

Date 2017 TOD RELATED REQUESTS 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

TOTAL REQUESTED VS FUNDED: $76,110,000 2017 PERCENTAGE FUNDED OF REQUESTED: Percentage of Requests Received Some Funding $23,250,000 31% 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.

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 Alder Street via Rental Housing Revolving Funds, RHRF; (HHFDC) TOD endorsed (HB2748 SL 2018) $25M $50M $50M $50M $200M FY182

Jan 2018 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 Percentage Funded of Requested Percentage of Requests Received Some Funding $49,585,000

43%

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.

APPENDIX I: 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 $43,038,000

Percentage Funded of Requested 77%

Percentage of Requests Received Some Funding 80% (4 of 5)

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.

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 service 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 discretionary 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

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.

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 inventory of critically needed affordable housing on O‘ahu by approximately 10,000 units.

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.

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.

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.

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

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.

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

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.

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.

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.