Hawaii Housing Finance and Development Corporation

News Release, February 27, 2024

HONOLULU—The Hawaii Housing Finance and Development Corporation (HHFDC) clarified today several misstatements made by AARP Hawaii (AARP) in its Feb. 26 press release regarding the possible loss of the affordability of approximately 10,000 housing units in the state over the next 20 years.

The press release is based on a report commissioned by AARP but not provided to HHFDC before publication.

Specifically, HHFDC notes that:

HHFDC’s own count shows that 2,082 rental units now affordable under HHFDC’s Low-Income Housing Tax Credit (LIHTC) program are scheduled to have their formal commitments end in the next 20 years.

The AARP report’s 10,000-unit estimate was based on a national data base which does not take into account that developers for most Hawaii projects agree to a 61-year affordability commitment. HHFDC’s incentivizes the longer 61-year commitment period when making financing awards.

From subsequent discussions with AARP officials, HHFDC understands that the 10,000-unit estimate includes units that do not receive assistance from HHFDC but from other public and private sources of funding. It is likely that some of these units are owned by government or nonprofit agencies dedicated to providing housing opportunities and who therefore are not inclined to convert affordable units into market-rate units upon the expiration of affordability restrictions.

HHFDC also believes that the 10,000-unit estimate consists largely of older rental projects that may already no longer be under government restrictions but may remain affordable due to the owners’ choice.

HHFDC projects that its programs will produce 6,497 affordable rental units in the next five years alone, with about 5,700 of those units affordable to households earning 60% of area median income or less.

This will be achieved in part through additional Rental Housing Revolving Fund (RHRF) assistance from the Hawaii State Legislature, which has provided the fund with significant infusions in recent years, HHFDC Executive Director Dean Minakami said. Additionally, HHFDC’s Finance Branch is prioritizing the issuance of RHRF loan awards based on project readiness and efficiency, he said.

The report misstated the number of housing units owned by HHFDC – it is 32 units, not 826.

Over the past decade, HHFDC sold in leasehold most of its affordable rental housing portfolio through a series of transactions that ensured affordability for 75 years while the new project owners committed to substantial renovation programs.

“HHFDC will continue to work with other governmental agencies and non-governmental housing stakeholders toward achieving Governor Josh Green’s goal of providing as many affordable housing options for kamaaina families in the most efficient and effective manner as possible,” Minakami said.

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Affordable Housing Loss Study Debunked

Star-Adv Feb 28, 2024: … The Hawaii Housing Finance and Development Corp. said Tuesday in a news release that the study from Washington, D.C.-based Smart Growth America commissioned by AARP Hawai‘i didn’t account for numerous affordable-housing projects that have affordability terms beyond a federal requirement.

The Smart Growth America report said 11,624 homes in Hawaii developed using local and/or federal tax credit subsidies and reserved for lower-income households are scheduled to have their affordability requirements expire by 2045. Most of these properties are rental apartments.

But HHFDC, an agency that helps finance such housing, said the study relied on a national database and failed to consider that most of this inventory in Hawaii has affordability terms of 61 years instead of the federal 30-year term. The agency also said the database did not include updated terms in some instances.

For example, the 176-unit Kulana Hale senior rental complex in Makiki was listed in Smart Growth America material as having an affordability term expiring in 2017 while HHFDC said that project was bought in 2022 and has 61 years of affordability remaining.

Another project identified by Smart Growth America as having an affordability term expiring before 2030 was Hale Makana o Waiale in Wailuku. HHFDC said the term for this 200-unit project runs until 2052.

HHFDC said only 2,082 low-income rental apartments developed using tax credits awarded by the agency or a predecessor are scheduled to have their mandatory affordability terms end in the next 20 years.

Some of the housing in the Smart Growth America study, which also said that 3,293 affordable homes have expiration terms from 2046 to 2065, did not receive assistance from HHFDC or a predecessor, but was developed using other public and private sources of funding.

Michael Rodriguez, director of housing research at Smart Growth America, presented study findings Tuesday to a few members or acting members of the House and Senate housing committees….

read … Agency disputes affordable housing loss projection

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Almost 12,000 affordable homes in Hawaii could be lost over next 20 years, study says

Star-Adv, Feb 27, 2024: …Hawaii is at risk of losing nearly 12,000 affordable homes over the next two decades, according to a study commissioned by a nonprofit promoting action to prevent such loss.

AARP Hawai‘i commissioned the study from Washington, D.C.-based Smart Growth America, and is scheduled to brief two legislative committees today on results….

The study accounts for rental and owner-occupied housing with affordability requirements expiring between 2023 and 2065….

(CLUE: If affordability requirements do not expire, owner-occupied units will be trapped without real estate appreciation necessary to build equity to buy a better home.)

Such housing, including many units reserved for seniors, typically was developed using local and/or federal government subsidies that came with affordability requirements often running for several decades. When affordability terms expire, such housing can be at risk of being converted to market-priced housing….

According to the report, Hawaii had 14,747 subsidized units with ongoing affordability terms before the Aug. 8 Lahaina wildfire, and nearly 80% of those, or 11,624 units, have terms expiring by 2045. Some of this inventory was destroyed by the fire.

A lot of the affordability term expirations are concentrated over just a few years from 2041 to 2045 affecting 5,423 units. Another 6,201 units have expiration terms through 2040, including 1,056 units through 2025. There are also 3,293 units with expiration terms from 2046 to 2065.

In some past cases of privately owned low-income rental housing projects in Hawaii, developers have acquired new government financing to extend affordability terms under acquisition and renovation deals. Sometimes, though, affordable housing is lost.

One past example that unsettled state leaders was Kukui Gardens, which long had been one of Honolulu’s largest privately owned affordable rental housing communities….

read … Almost 12,000 affordable homes in Hawaii could be lost over next 20 years, study says