Getting to the Bottom of Affordable-Housing Barriers

By Karen Nakamura Posted in: BIA

This is the second of a three-part series.

We will discuss the first three barriers that make workforce housing unavailable. These are:

1) Time

2) State extractions

3) County extractions

Time is a major cost driver, and as the saying goes, “time is money.” Why does it take so long to get approvals? The first thing that needs to be done is to get input from all stakeholders who will be impacted by the project. This takes one to two years of public hearings throughout the community.

All this information is then put into an Environmental Impact Statement (EIS) and reported back to the stakeholders. The stake-holders then have another opportunity to change their mind and demand new changes. Negotiations take place between the stakeholders and the project to negotiate these changes into the project. This is also when the state demands free land from the project to build schools, freeway on and off-ramps and infrastructure needed by the state to mitigate issues in the EIS.

After the project is vetted and approved at the state level, the same process is held at the city level. Now the city can demand sewage treatment plants, roads, drainage systems, water wells, fire hydrants, parks and badly needed infrastructure upgrades in the area impacted by the project. This process may take up to another two years because the stakeholders have another opportunity to put more demands on the project.

All these costs are a direct cost of the project even before the project is designed. Now the development plans and the general plans are designed to incorporate all these costs.

Also hidden in these extractions is the percent of workforce housing negotiated by the state that must be supplied within the project. This is called “inclusionary zoning.” How is this done? Workforce homes are subsidized to meet the cost that a median income family could afford. The subsidy is supplied by the higher-priced homes within the project. For example, the homes around a golf course or homes that have views are priced higher to subsidize the workforce housing that is built within the project. When homebuyers cannot afford that higher-market priced home and these subsidies cannot be absorbed, the project stalls or dies.

Does anyone care if a project fails? Our attitude has been that we don’t need more homes. Is there political will to change this process? When the supply is low and the demand is high, the cost of homes continues to increase. For every project that is stalled or killed, we are the victims, unless you already have your own home and really don’t care.

Karen Nakamura is executive vice president /CEO of the Building Industry Association of Hawaii.