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Friday, November 15, 2013
Who Can Afford Kakaako Workforce Housing?
By News Release @ 11:13 PM :: 6723 Views :: Development, Rail

Nov. 16, Saturday
Supplemental Public Hearing, 10:00 am at HCDA

RCP resident, Ariel Salinas, will be presenting his analysis of the affordability of 801 South St Tower B -- see press release below:

Who Can Afford Kaka`ako’s Workforce Housing?

News Release from Kaka'ako Cares

A financial analysis of the actual cost of apartments in the proposed Tower B of the 801 South Street project will be presented to the Hawaii Community Development Authority (HCDA) at a public hearing on Saturday, November 16 at 10 am at the HCDA offices at 461 Cooke Street.   Ariel Salinas, an engineer and Kaka`ako resident, has studied the financial assumptions provided to the HCDA by Downtown Capitol, the 801 South developers.  He concluded that very few units would be affordable to families making less than 140% of Honolulu’s median annual income ($118,440).  The developers claim that 75% of the 410-units in Tower B would be set at prices affordable to people earning between 100% and 140% of Area Median Income (AMI).

Salinas said the developers made some exceedingly generous assumptions, such as owners being able to qualify for mortgages at a 2.9% interest rate, when the general rate being quoted for Tower B is 5.5%.  He said “The developers make numerous dubious assumptions, errors and omissions in their analysis, which concludes that a family of four can buy a $715,443 two bedroom apartment with a yearly income of   $118, 440.  If you use realistic assumptions, I calculate that same family can not afford a unit that costs over $450,000. All of the two bedrooms in Tower B are more expensive than that.”

HCDA’s rules allow developers of workforce housing to build at double the density normally permitted.  That permits Tower B to be 410 units, instead of the 205 units that would be allowed according to the size of its lot.  Also under the workforce category the developer can ask for other modifications.  Downtown Capital wants to avoid the requirement for parking lots to be located on the lower floors of a residential building, with a 65 foot height limit.  Instead, they are proposing a 10 story, stand alone parking garage that would be 107 feet high.  HCDA has no rules for stand alone garages, so the 10-story garage doesn’t have to comply with other existing building requirements such a distance between buildings.

Downtown Capital’s Tower A, a 635-unit residential tower and 11-story stand along parking garage, are already under construction on the makai side of the project’s property.  The developer has indicated that all but a few units have been sold.  The HCDA claims it will conduct an audit as to the buyer qualification process at the closing of the units.  However they are unclear which rules will apply to the buyers.  Current rules prohibit the sale of workforce units to anyone who has been a majority owner of a principal residence or is a beneficiary in a residential trust.   Rules on buy back and equity sharing which apply to affordable housing were eliminated for the workforce housing rules.  Salinas added “This building is targeting is a very exclusive workforce, not the type of service workers targeted for housing on the mainland.  This is market –priced housing hiding behind the skirts of workforce affordability”

Another hearing on the 801 South Street project will be held on Tuesday November 19 at 5:30 pm and a final hearing and decision making follows on Tuesday December 4.   All meetings take place at the HCDA offices.

UPDATE: Ethics complaint: HCDA Falsifies Kakaako Workforce Housing Affordability Formulas

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