Hawaiʻi stands to lose over 11,000 affordable housing units within the next 20 years, according to a new report from AARP Hawaiʻi.
Affordable housing project developers are given funding subsidies and, in return, they agree to keep their units affordable for a set period.
But that time is coming to an end for some properties.
“Those units came in and they came online 30-some years ago, that tends to be around the time period,” said Smart Growth America Housing Research Director Michael Rodriguez.
“We're talking about things that were built in the 80s, 90s, actually and that wave of expiration is coming through.”
Smart Growth America is the nonprofit organization that conducted the study for AARP Hawaiʻi.
Rodriguez said if nothing is done, that would mean the state could lose two-thirds of its affordable subsidized units.
Expiration dates
One of the biggest sources of funding for affordable housing projects is the federal Low-Income Housing Tax Credit, given to states based on population size.
Expirations are now looming because the state heavily relies on affordable housing projects built through subsidies initiated in the 1980s and 1990s.
AARP Hawaiʻi State Director Kealiʻi Lopez said the organization has heard from people in emergencies, scrambling to find housing after the unit has reached its expiration date.
“We thought, gosh, why don't we find out what the inventory is of the expirations,” she said.
“And then begin working with the state as a starting point to find out what they can put in place to either address the expiration date or what programs can be put in place to help residents once a property is not going to be affordable.”
The expirations start smaller in the near term with 1,056 units expiring between 2023-2025. However, as time goes on, the report sees steeper drop-offs.
Between 2031 and 2035 over 2700 units’ affordability would expire. That number jumps up to 5,423 between the years 2041 and 2045.
The reason for this trend is that a majority of these expiring units were built using Low-Income Housing Tax Credits.
The way the tax credit works is that developers are selected through a point-based system. Although the federal government usually mandates a 30-year affordability period, projects can score higher if they increase their affordability period up to 61 years, which makes them more competitive for the subsidy.
Federal low-income housing tax credits are given to states by the federal government based on population size. For example, a state like Illinois with a bigger population received $28 million, while Hawaiʻi received $3.36 million.
Lopez said there should be a way for more expensive states to get more funding even though the population size is lower because the cost to build is so much lower in a state like Illinois in comparison to Hawaiʻi.
Affordable housing projects are rarely funded by a singular program and low-income housing tax credits are often combined with other funding such as the state rental housing revolving fund.
That’s why the AARP report sees such a massive drop off between 2041 and 2045 because not only are a huge amount of units from low-income housing tax credit funding expiring, but units funded through state programs may start expiring as well.
Affordable housing inventory
The state does have some tools to incentivize private owners to keep units affordable.
Hawaii Housing Finance and Development Corporation said in an email that developers can be awarded tax credits to rehabilitate projects for extra years of affordability.
For example, Pauahi Kupuna Hale in Honolulu’s Chinatown increased its affordability period for an additional 56 years to fund a rehabilitation project on the property.
Also, a little under half of the state’s affordable housing inventory is owned by nonprofits and public entities, which are almost guaranteed to remain affordable even after the affordability period expires.
Catholic Charities is a nonprofit that has over 400 affordable housing units and is continuing to build more. The organization also helps place people in housing. Their legislative liaison Betty Lou Larson explained that there needs to be both long-term and short-term solutions.
“What's the plan for those that are expiring soon to help the tenants look at, or work with the tenants and landlords to have a plan, not just let it expire and then do something. But again, we want to prevent this in the long term,” she said.
“I have to say there are for-profits that do very nice projects and there are for-profits that are very community minded. But again, in 50 years, we don't know who's going to be there, who's going to be making the business decision. And it's a business decision. It's not necessarily that their mission is to keep housing affordable.”
HHFDC is also suggesting more safeguards for tenants such as the possibility of requiring owners to give a minimum of 12 months' notice that the affordability period will be ending, limiting the amount of rent increases.
The department projected that in the next five years, it expects a total of 9,600 new affordable units to come online.
Comparing numbers
HHFDC also put out its own projections on the expiring affordability period of units. It differs significantly from the AARP Hawaiʻi study.
AARP Hawaiʻi said that may be because its figures come from a broader pool of subsidies that HHFDC does not track because they do not administer them.
Both AARP Hawaiʻi and HHFDC will be presenting their findings to the state Legislature in a joint housing committee on Tuesday.
Lopez said affordable housing is AARP Hawaii’s top priority.
“People want to age in place and it's hard to age in place if you don't have a place,” she said.
“One of the things that we see is very challenging is many family caregivers who are taking care of their loved ones aren't able to get support and help to come into their home because the workforce is so limited.”
AARP is currently advocating for two measures in the state Legislature: one that would remove some restrictions counties impose on building accessory dwelling units and one that would allow office buildings to be converted to housing.
Both have hearings scheduled this week.
