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Hawaii could lose more affordable units than it can replace

Affordable housing is divided into two groups based on ownership for sale or for rent.

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Excluding units for sale, the affordable rental housing inventory includes units owned by the Public Housing Authority, units developed with funding from the Department of Housing and Urban Development, properties with low-income housing tax credits from the Hawaii Housing Finance and Development Corporation, USDA real estate and inclusion zoning properties managed by counties, including state 201H developments.

In the last 20 to 30 years we have lost over 3,000 of these units when affordability restrictions have expired. There are currently only an estimated 17,000 of these units left. About 4,500 units will lose their restrictions over the next 15 years and another 10,000 units over the next 30 years.

These losses are significant and are impacting our communities in many ways.

Excluded from the above figures are privately owned dwellings, which also serve this demographic. These apartments were expanded years ago, have smaller units and affordable rents. In other communities, these units are referred to as Naturally Occurring Affordable Housing (NOAH).

Recently, many NOAH units, particularly in desirable locations, have been converted to condominiums. It is estimated that over 15,000 units have been converted to condos in Hawaii.

View from Alewa Heights above Honolulu, Hawaii.
Many cities and states have active Affordable Housing Preservation programs to conserve inventory, but that is not the case in Hawaii. Cory Lum/Civil Beat/2021

One factor contributing to the loss of these units is the restrictions on short deeds used to develop these properties. As these restrictions expire, many property owners are seeking higher rents or selling the developments outright. Affordable housing should have long-term ownership restrictions, and there is no financial reason not to have them permanently.

Many cities and states have active affordable housing maintenance programs to conserve inventory, but Hawaii and the counties do not. Such a program is badly needed, whether officials really want to talk about the loss of these units or not.

The only time the public is aware of the impending loss is through media coverage of certain properties. Recent examples include the Front Street property in Maui and Kukui Gardens in Honolulu.

And only when the media draw attention to the problem do the state and legislators try to solve the problem with additional money. It would be more practical to analyze the current real estate portfolio, develop a program to maintain as many units as possible and budget the costs proactively.

No one in the state has an accurate list of unit expiration dates and loss projections.

When title restrictions expire, the state is often forced to raise additional money and use tight federal tax credits to salvage properties. This saves the construction of further new units.

No one in the state has an accurate list of unit expiration dates and loss projections. This should be a priority for HHFDC and the information should be made public.

After developing and owning affordable housing, I don’t have to be paid two or three times for the same property every time the deed restrictions expire, and my grandchildren don’t have to inherit an unexpected gain.

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