Bill would toughen Kakaako requirements
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A bill moving forward in the state Legislature would set stricter affordable housing requirements for developers in Kakaako.
Any new project in the development district higher than 45 feet would be required to set aside at least 25 percent of the units for low- and moderate-income families. The current requirement is 20 percent.
The bill also would end the option for the state to accept cash payments in lieu of satisfying the housing requirement.
The Hawaii Community Development Authority, which oversees development in Kakaako, and large developers oppose the bill, saying it would discourage new projects in Kakaako. Those who support it say it's time that more affordable and workforce housing is developed in the area.
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Future Kakaako building projects that are 45 feet or higher will have include a higher proportion of affordable housing units if House Bill 2732 passes. Above, the Kakaako skyline.
A bill that would increase the affordable-housing requirement for future Kakaako high-rise developments is making progress through the state Legislature
House Bill 2732 would require developers of high-rises to set aside 25 percent -- rather than the current 20 percent -- of a project for reserved, or affordable housing, in Kakaako. After Dec. 31, 2017, the reserved housing requirement would go up to 35 percent.
The new requirement would apply to any developer with a project taller than 45 feet, or with a floor area at least one and one-half times the lot area. It would apply to developers of commercial, industrial and resort uses as well as residential projects.
Developers of lots less than 1 acre would be exempt under the bill.
The Hawaii Community Development Authority, which oversees the development in Kakaako, has testified against the bill.
Executive director Anthony Ching said since developers outside of the Kakaako community district aren't obliged to perform at the same standards, it would result in a a disincentive for developers to pursue projects in Kakaako.
Developers opposed to the bill say it will discourage new projects in Kakaako. Backers say that if HCDA is to achieve its goal of a "live, work, play" district, then it's time that the agency offer more affordable housing in the neighborhood.
But Rep. Karl Rhoads, (D-Kakaako, Downtown), said he introduced the bill because of the urgent need for more affordable housing.
"Affordable housing, I think, is one of the most important issues the state faces right now," said Rhoads. "The fact that the state has invested so much in that area makes it logical to get something out of it other than luxury housing."
Reserved housing in the bill is defined as units for sale to a family with no more than 140 percent of the median income, or rent to a family with no more than 100 percent of the median income.
HCDA currently requires developers to provide at least 20 percent of total units for sale or rent, or to make a cash payment.
The bill would eliminate the cash-payment option.
Large developers such as General Growth Properties and Kamehemaha Schools oppose the bill, as do Servco Pacific and the Gas Company.
The Land Use Research Foundation is also opposed to the bill.
Supporters of the bill, however, include Marshall Realty, Central Pacific Bank, Central Pacific HomeLoans, Marcus & Associates and appraisers Yamaguchi & Yamaguchi.
Marshall Hung of Marshall Realty is among the team of developers, Downtown Affordables LLC, that built an affordable high-rise at 215 N. King St., on the edge of Chinatown. He is also building Country Club Village 6, an affordable condo in Salt Lake.
Support for the bill also came from Momi Cazimero, award-winning designer and former University of Hawaii Regent.
"Without affordable housing, our future generations will not remain here to help build Hawaii's future," said Cazimero in written testimony.
She feels that HCDA has strayed from its original mission in Kakaako.
"We think workforce housing is a very important component in making sure we have a strong, sustainable community," said Blenn Fujimoto, vice chairman of Central Pacific Bank. "There needs to be a balance, and Kakaako seems to be a good fit for affordable housing."
Fujimoto said Kakaako has the roads and sewer capacity, and is close to urban employment centers.
Developers, on the other hand, say that increasing the requirements would make it difficult for their projects to pencil out.
Kamehameha Schools said the bill will slow, if not stop, all beneficial development in Kakaako.
Allen Leong, operations director for KC Rainbow, developers of Moana Pacific and Moana Vista, said the new requirements might have a chilling effect.
"It would be seen as an obstacle among developers," said Leong. "It will create a burden for the developers."
Leong suggested that the rules remain flexible enough so that a developer might be able to build the reserved units -- say in Kalaeloa -- instead of just in Kakaako.
Construction costs continue to rise, as the cost of gas, materials and labor, also continue to go up, he said.
A companion bill, Senate Bill 2294, was deferred in committee. Both the original House and Senate bills sought a 50 percent reserved housing requirement.