Implementing an Affordable Housing Requirement

More than 50 years after the post-statehood construction boom that transformed Hawaii, the island of Oahu
finds itself in a housing crisis and needs to build more than 24,000 housing units to meet current demand.
Over three quarters of the demand is for households earning less than 80% of the area median income (AMI),
or $83,700 for a family of four. The Mayors Affordable Housing Strategy addresses these needs with new and
revised policies, incentives, regulations, and investments in partnership with developers, builders, and other
stakeholders. Key priorities include the use of city lands for affordable housing, rental housing funding, the
accessory dwelling unit program, transit-oriented development (TOD) infrastructure investments, and new
TOD zoning around the future rail transit stations.
Two related bills are being introduced to the City Council. Both bills, directors reports, and extensive
background research and analysis are available on the Mayors Office of Housing website at:
www.honolulu.gov/housing/resources-on-affordable-housing
Affordable Housing Requirement (AHR). This bill establishes an affordable housing requirement on
most new private residential development and substantial rehabilitation projects to help address the critical
shortage of affordable housing units on Oahu.
The AHR applies to projects of 10 or more dwelling units, including subdivisions (hotels, timeshares,
and several project types that already include affordable units are exempted).
Units are required to stay affordable for 30 years to build up and maintain the affordable housing
supply. This period resets when a for-sale unit transfers ownership.
The levels of affordability focus on homebuyers earning at or below 120% of the AMI and renters
earning at or below 80% of the AMI. The required number of affordable units may be adjusted for
varying unit sizes and lower income ranges, and may be different for rehab projects.
The AHR will apply first to the Ala Moana, Downtown, and Chinatown TOD areas, and it will then be
phased in islandwide over a three-year period.
The TOD areas will offer new mixed-use zoning with the potential for additional height and density, so
the AHR is higher in TOD areas than the rest of the island.
Development types and circumstances vary, so the AHR includes several options for compliance. These
include for-sale or for-rental dwelling units, production on-site or off-site, payment of a fee in lieu of
construction (set at an amount to encourage developers to actually build affordable units), and/or
conveyance of improved land.
Affordable Housing Incentives. This bill provides one-time incentives for creating affordable units
and annual property tax waivers for affordable rental units (for as long as the units remain affordable). The
incentives will apply to AHR projects, some TOD permits, and to all units in qualifying affordable rental
projects built in compliance with new state legislation for affordable rental projects where all units are at or
below 140% of AMI, with 20% of the units at or below 80% of AMI (note that HB 1179 has been adopted but
not yet signed). The incentives include:
Waive building permit and plan review fees
Waive wastewater system facility charges
Waive park dedication requirements (land or fees)
Provide a real property tax exemption during construction for projects that include affordable units
Provide an annual real property tax exemption for affordable rental units
Several City departments worked collaboratively to develop these incentives. The Mayor has asked the
Board of Water Supply (BWS) Board of Directors to consider similar waivers for water hook-up fees; water
fees are set under a separate rate-making process by BWS.
The one-time fee incentives per unit are estimated to range from $23,000 to $64,000, depending on unit
size, location, and project type.

5/24/17
 PROPOSED AFFORDABLE HOUSING REQUIREMENT (AHR)
Project Location: TOD Areas Project Location: Islandwide
Applies to designated rail transit station areas Applies islandwide (outside of TOD areas)
PHASING
The AHR becomes effective: The AHR becomes effective:
(1) ON ADOPTION ONE YEAR AFTER ADOPTION
The AHR for TOD areas (below) is effective only in The islandwide AHR (below) is effective outside of
the Ala Moana, Downtown, and Chinatown TOD TOD areas.
areas (the remaining TOD areas are exempt).

The AHR for the remainder of the rail transit station

areas becomes effective in two phases:
(2) ONE YEAR AFTER ADOPTION
The islandwide AHR (in right-hand column below) is
temporarily applied to the remaining TOD areas.
(3) THREE YEARS AFTER ADOPTION
All TOD areas are subject to the TOD areas AHR.
Note: The islandwide AHR is temporarily effective
in the TOD areas between the Iwilei and East
Kapolei rail transit station areas between one and
three years after adoption (as specified at left in the
TOD areas phasing paragraph (2).

COMPLIANCE OPTIONS
TOD Areas Islandwide
RENTAL (on-site or off-site): RENTAL (on-site or off-site):
15% of the units at up to 80% of AMI 5% of the units at up to 80% of AMI

FOR SALE FOR SALE

ON-SITE Construction: 20% of the units at up to
120% of AMI (1/2 at up to 100% of AMI)
OFF-SITE Construction: 25% of the units at up to
120% of AMI (1/2 at up to 100% of AMI)
FEE IN LIEU OF CONSTRUCTION
(or LAND DEDICATION):
Cash contribution (fee of $45 per finished SF) or
improved land in lieu of building affordable units
ON-SITE Construction: 10% of the units at up to
120% of AMI (1/2 at up to 100% of AMI)
OFF-SITE Construction: 15% of the units at up to
120% of AMI (1/2 at up to 100% of AMI)
FEE IN LIEU OF CONSTRUCTION
(or LAND DEDICATION):
Cash contribution (fee of $27 per finished SF) or
improved land in lieu of building affordable units

PERIOD OF AFFORDABILITY
The minimum required period of affordability is 30 years for all areas and project types.
The period of affordability resets to 30 years on transfer of for-sale units.

EXISTING REQUIREMENT FOR UNILATERAL AGREEMENTS (required only when rezoning land)
Project Location For Sale or On-Site Off-Site In-Lieu Fee
For Rental Production Production
No difference by location 30% required at up to 140% of AMI None

Required period of affordability is 10 years or less for any unit type or location.
At least 10% of the units are affordable to households earning no more than 80% of the AMI.
At least 20% are affordable to households earning no more than 120% of the AMI (equals 10% if 10% is already provided at
no more than 80% of the AMI).
At least 30% are affordable to households earning no more than 140% of the AMI (equals 10% if 20% is already provided at
no more than 80% and 120% of the AMI).

5/24/17