Affordable housing—Hawaiʻi’s biggest challenge—requires comprehensive solutions
A new housing coalition is working to shape the start of a comprehensive and inclusive housing policy plan to finally address Hawaiʻi’s affordable housing crisis.
Kenna StormoGipson is Housing Policy Director for Hawaiʻi Budget & Policy Center, a program of Hawaiʻi Appleseed.
As Director of Housing Policy for the Hawaiʻi Budget & Policy Center (HBPC), Kenna StormoGipson has been working to organize and convene a new, community-driven affordable housing hui, the Hawaiʻi Housing Affordability Coalition (HIHAC).
The coalition’s commitment to center stakeholders with lived experience navigating houselessness in particular is a critical step in developing solutions to Hawaiʻi affordable housing crisis that will actually work and that are actually wanted by the impacted community, and a step that is far too often missing from the discussion around housing.
Through an extensive subcommittee process, the coalition selected four areas to focus its attention on this legislative session:
Expedited permitting for transitional housing (HB2512)
Will Caron (WC): Can you take us through the four HIHAC priority areas, starting with the biggest one?
Kenna StormoGipson (KS): The number one priority for us this year is securing $600 million in funding for the Department of Hawaiian Homelands (DHHL) to help get more families housed.
WC: How many homes is that investment expected to create?
KS: This will pay for at least 2,000 homes; maybe up to 5,000 homes depending on how much is used for down payment and mortgage subsidies to make the homes truly affordable for beneficiaries, who are often kūpuna on fixed incomes. Sometimes it makes sense to build fewer homes to spend more money to subsidize the mortgage so that the beneficiary is paying a mortgage of $800 a month instead of $2,000 a month.
You can’t change the cost of construction. But you can, for example, have a split mortgage where 60 percent of the loan is deferred, and then ultimately forgiven after 30 years when the mortgage is paid. This is similar to how the public student loan forgiveness program works: the public keeps the loan on the books for a period of time but, ultimately, it is forgiven. This is a great way to help beneficiaries get into homes that are truly affordable at their income level.
Another great thing about DHHL housing is that many of these homes are three- and four-bedroom, which can often house six or seven people. Let's say you have six people living in each home and you’ve built 3,000 homes. You’ve actually provided affordable housing for 18,000 residents, and many of those are not necessarily beneficiaries, but family members who are less than 50 percent Native Hawaiian or are other ethnicities entirely. So, although the focus is on beneficiaries, the investment ultimately helps 18,000 Hawaiʻi residents of various ethnic backgrounds.
The other critical point I want to drive home about this investment is that we don't necessarily need to go to Singapore to look at leasehold housing that works. We can look at DHHL, and then modify many of these same approaches to create affordability for all residents.
It will take a few years for DHHL to spend all $600 million, so for next year we should continue this trend of large public investment in permanently affordable housing by providing $600 million to other state housing agencies that serve our residents.
The Hawaiʻi Finance and Development Corporation (HHFDC), for example, has been considering implementing some sort of leasehold housing model for residents along the lines of what Senator [Stanley] Chang has been advocating for with his ALOHA homes bill. Why not put a few hundred million towards a leasehold housing program that is financed by HHFDC and works in partnership with the counties? Or provide the Hawaiʻi Public Housing Authority with the resources needed to upgrade its housing stock?
The bottom line is that we should be making a $600 million investment in long-term affordable housing that is restricted to local residents every year. That is what it is going to take to make a difference on housing. It can be rental, it can be leasehold, or sweat-equity housing like Habitat for Humanity, or ʻohana zones that create low-cost permanent housing for our houseless residents—and, really, we need all of these. And $600 million every year is not a lot to ask—it’s less than 1 percent of the state budget.
We should continue making investments like this in housing every year to turn the tide on affordable housing in our state.
WC: What are some of those things that DHHL is doing really well?
KS: One great thing about DHHL is that it recognizes the importance of not just building the home but thinking through how to then make it accessible for its beneficiaries, even the ones that are only earning $1,500 a month or less sometimes.
We can't just build homes to sell to people that happen to earn enough money to afford the cost of the home if we want to truly solve the housing crisis. So a big chunk of this $600 million investment right now is being planned for down-payment and mortgage assistance, which is exactly what we need to do to create affordability. Hopefully these sorts of subsidies would also be part of any future state leasehold program for non-beneficiaries, like the ALOHA homes proposal.
One example of an effective homebuyer subsidy is individual development accounts or IDAs. This is a program supported by HUD where if a client saves $100, HUD will match it with $300 to help you get your down payment together. That HUD program can be supercharged to make it a six-to-one match if you can get money from other sources like philanthropic sources or, say, from the State of Hawaiʻi or from a county budget. Now that's powerful.
Hawaiian Community Assets (HCA) has been doing these IDAs for 30 years. They use the program to help both DHHL beneficiaries and other low-income homeowners. It’s just more commonly used by beneficiaries because DHHL has a leasehold program specifically for affordable homeownership.
There are people who sign up for the HCA program, and within two years they have the down payment they need, even if they're super low-income. And two years is about the time it takes to build something anyway.
The lesson is really clear: if you’re doing housing right, you're putting money towards getting the homes built, but at the same time you're putting money towards mortgage assistance so people can qualify for the mortgage when they’re built.
Besides the IDA program, I mentioned split mortgages earlier, and the way this works is you can split the mortgage into two pieces. Let’s say the buyer is paying for 40 percent, and the other 60 percent of the mortgage amount is covered by DHHL. If you stay in the house for 30 years—the remaining mortgage is forgiven.
If the home costs $400,000, the buyer saved up their down payment of $12,000 with an IDA program. Now this beneficiary has a $388,000 home. If they have to pay the full $388,000 mortgage, that would be a $1,900 a month payment, which is still way too high for a lot of beneficiaries. The average age of a beneficiary now is something like 63 years old—we're talking about a lot of people on fixed income.
But with a split mortgage, they pay 40 percent of it, and now their monthly payment is only $900 a month. They’re moving into a three bedroom home for $900 a month, and in 30 years they will own that home mortgage-free and can pass it onto their kids. This is a real affordable home ownership program.
And then there’s one more tool that DHHL uses that actually doesn’t require any funding from the state because it’s a federal program. This is a tool that already exists and is open to everybody, but it’s just underutilized. You can actually use a Section 8 voucher to help pay for a mortgage. All you have to do is go to the office and request that your Section 8 voucher be put towards a mortgage, and every county has a process to do that.
In the above example with the $400,000 home and the monthly mortgage payment of $1,900 a month, if the buyer is only earning $1,500 a month on social security but they have a Section 8 voucher, they would only be required to pay 30 percent of their income to the mortgages. The rest would be covered by the voucher. So in this instance, this person is getting into this $400,000 home and is only paying $450 a month out of their pocket by using a Section 8 voucher towards the mortgage.
All of these tools for affordable homeownership could be part of state or county programs for non-beneficiaries as well. They just need to be funded.
WC: Anything else on the DHHL funding bill?
KS: Just one more thing, which is that we need to move away from the idea that these tools can only be used for single family homes. This can be multifamily. This can be for downtown Honolulu. It’s the finance tools that we care about.
WC: OK, what’s the next priority?
KS: The next priority is reducing barriers to creating transitional housing quickly. There are two different programs in this bucket. One is the kauhale program, which has one bill, and the other is ʻOhana Zones, which has a few bills.
The kauhale program does two things. First, it creates a whole bunch of exemptions to get transitional housing up and built fast. Housing in this program could, for example, skip the full-blown environmental assessment, and wouldn’t have to go through a city council hearing. So it speeds up the process of getting transitional housing created.
This would only apply to small-scale transitional housing, of course—not for big, brand new condos or anything like that. Think Puʻuhonua o Waiʻanae, which was able to get up and running so quickly because of the same exemptions.
WC: How were those exemptions initially established?
KS: Initially, they were created through a series of emergency proclamations dealing with houselessness made by the governor. Sometime around 2019, the governor said, “okay, I’m going to stop doing these emergency exemptions for transitional housing. You need to put it in the statute somewhere. It can’t continue to be handled through the governor's proclamations.”
It’s super important to have those exemptions if we want to replicate the success of places like Puʻuhonua o Waiʻanae.
WC: What’s the second thing the kauhale program does?
KS: Not only does it provide those exemptions, but it would also create a community council that would decide how to spend state money in development of transitional housing. And that council would have positions reserved for houseless or formerly-houseless people. The language including people with lived experience within the decision-making body is a huge step forward.
There are, however, some challenges for this bill. It was initially housed under HHFDC, but the department is not usually involved in transitional housing development, so then it was changed to be under the Hawaiʻi Public Housing Authority. Partly for these reasons the bill does not appear to be moving, but it is notable for specifically including the voices of houseless people in the decision making about how funds would be spent.
Fortunately there's a backup plan, which is that a lot of the kauhale program’s development exemptions are now in an ʻOhana Zone bill, HB2512.
WC: What’s the difference between the kauhale program and ʻOhana Zones?
KS: The big downside to the ʻOhana Zone program is that it was established without that community council—that place at the table for the voices of houseless and formerly-houseless people.
Without it, you can end up with something like the Homeless Outreach and Navigation for Unsheltered Persons (HONU) program in Honolulu—spending all this money on a program that only houses people for 90 days and then usually has nowhere for a person to go afterward. Needless to say, it’s not the most popular program among our houseless community members. But there have also been ʻOhana Zone projects with trailer park-style or other more-permanent transitional homes that people really like.
The important thing though is that we want to push on these exemptions to allow transitional housing to get built within a year's time-frame. Without the exemptions, it takes at least three years to create these settlements, and we just can’t afford to wait that long to get folks housed. With the exemptions, we can also keep costs much lower. With the land paid for, these can be built for $75,000–120,000 each. That’s compared to a brand new apartment building unit which, at best, is going to cost $300,000–400,000 per unit.
We’re really pushing on this for our houseless community so that they can get housing up and running as fast as possible.
A big gap in terms of policy is that we still don't have a good plan for what to do with the encampments. It's not in these bills, but the coalition has talked about how, at some point, funds should be directed toward managed encampments.
We officially have around 6,400 houseless people across the state. We are not going to get enough transitional housing units for them all in the next few years. So what is the in-between? There needs to be an in-between for people who are going to be waiting, no matter what, a few years for housing.
They are out there; they are living on our beaches and streets and parks right now. Maybe it can't happen this legislative session, but we need to be pushing to close those gaps—what can we do for the people that are going to be outside for a while?
WC: The next priority is prohibiting source of income (SOI) discrimination?
KS: Yes. There are a few different versions of this proposal to ban discrimination in the rental market against people with housing vouchers, more formally called SOI discrimination.
One bill, HB1752, was drafted to create incentives for landlords to rent to folks with Section 8 vouchers, while prohibiting discrimination in housing advertisements. That’s problematic because it doesn’t say anything about prohibiting discrimination outside of the advertisement, and we had folks with lived experience telling us that this would actually make things even more challenging for renters with vouchers.
WC: How so?
KS: They were telling us that they’d rather just know up front that a landlord won’t rent to them, rather than wasting their time following up on the advertisement only to find out over the phone that the landlord won’t accept vouchers.
Thankfully, when that bill was heard and many service providers pointed this out, the committee went ahead and removed the problematic language entirely, and left just the landlord incentives components.
WC: What does that entail?
KS: It creates a fund to provide money for landlords to repair or clean a unit rented to people with Section 8 in the event that the unit were to be damaged or left in disarray. The stereotype that families with vouchers are more likely to damage a unit—however unfair—is a reality that has to be confronted. And if a fund for landlords gets more of them to rent to Section 8 families because it gives them peace of mind, that could still be useful for getting more people housed.
Then there are two separate bills that actually end source of income discrimination. There’s SB206, which was introduced in 2021, got pretty far along, and has now carried over to this legislative session as part of the biennium. And then there’s SB2399, which is a new bill introduced this year.
The advantage of SB206, obviously, is that it crossed over to the State House last session, meaning it was already more than halfway through the legislative process before session started this year. Ideally we would get either SB206 or SB2399, which actually ban SOI discrimination, as well as the landlord incentive fund contained in HB1752. That would be the win-win scenario.
WC: And the final priority?
KS: The fourth and final priority is very straightforward: We want to boost the money provided to low-income families through the Temporary Assistance for Needy Families (TANF) program. This pair of bills would give an extra $500 a month to families in need to support housing payments.
Importantly, the bill language also expands the TAONF program, the Temporary Assistance for Other Needy Families companion program. TAONF covers families that fall outside the scope of TANF, including Compact of Free Association (COFA) migrant families.
TANF is really low right now—it’s about $600 a month for a family of three. This priority is just an across the board, extra $500 a month on top of existing benefits that folks can put towards shelter. And they can use it for up to five years.
And, just so you know, $500 a month is what a lot of those transitional housing units we were talking about earlier charge for rent. So the amount—an extra $500—is what a lot of folks would need to get into that transitional housing, if we could get more of it built.
WC: Any final thoughts?
KS: Ultimately, are any of these housing bills gonna solve our housing crisis on their own? No. But are they significant? Yes.
In particular, the very large sum of money towards DHHL is an important step in the right direction, not just because DHHL needs the money to get more beneficiaries housed, but because the department’s strategy is well-worth scaling up and studying. If we can modify DHHL’s strategy and expand it to cover non-Hawaiians too, while continuing to make significant housing investments every year, we would make significant progress on our housing crisis.
But we still need a statewide affordable housing plan. We don’t have one. Maui County has its own housing plan. But—at least this legislative session—that still wasn’t on the radar for legislators. So for next year, I want to put it forward that we still don't have a statewide strategic plan, and we really need one so that we can be thinking comprehensively when we come up with policy solutions to address our lack of affordable housing.
