New AARP Study on Affordable Housing Looks at Expiration Dates for Federal, State Funding

A new AARP Hawai`i/Smart Growth America report estimates that 1,442 affordable rental and home ownership covenants will expire by 2030, and more than 10,000 units could be in danger of losing their affordable status between 2030 and 2045 unless funding and/or incentives can be found to keep the units affordable.

The initial report looked at publicly available data to estimate the number of affordable units – both rental and affordable home ownership programs – and when the requirements to keep them affordable expire. The report also looked at the sources of funding for affordable housing, ownership, and location and what other jurisdictions are doing to provide incentives to keep housing affordable. A follow-up report will go into more detail.

“We commissioned these reports from Smart Growth America to help us and the public better understand affordable housing in Hawai`i,” said Keali`i Lopez, AARP Hawai`i State Director. “One of the findings that stood out to us is that we know, years in advance, when and which projects may lose affordability and so we shouldn’t be surprised when it happens and tenants in affordable rental projects need to find new places to live. We want to start the discussion about planning now to develop strategies to encourage owners to keep affordable housing affordable or find alternative ways to keep the residents housed.”

A joint Senate and House Housing Committee informational briefing was held on Tuesday, Feb. 27 at 1 p.m. to hear from Smart Growth America and the Hawai`i Housing Finance and Development Corporation in conference room 225 at the State Capitol.

Smart Growth America looked at about 33 state and federal affordable housing funding programs. Many projects are funded using a mix of program monies. The report found that more than half of the affordable housing units in Hawai`i (57 percent) have some form of state funding and 43 percent use federal funding.

“Funding for affordable housing ebbs and flows depending on political tides and the construction economy and the affordable housing timeline reflects that,” said Michael Rodriguez, Director of Housing Research at Smart Growth America. “The housing boom in the 60s through 80s resulted in more affordable housing during that time. The housing market hasn’t had a similar period since then. We’re still relying heavily on subsidies initiated in the 80s, 90s and pre-2009 recession area.”

Nearly three-quarters (71%)of the state’s affordable housing are in Honolulu, 11% are in Maui, 5% in Kauai, and the remaining 12% are in Molokai, Lanai and other rural areas.

 

Ownership of Hawaii’s affordable housing stock is relatively concentrated with 26 owners accounting for half of all affordable housing stock. Nonprofit and public sector (state and counties) own a little less than half of the affordable housing while private owners have slightly more than half. The largest owner is the Hawaii Housing Development Corporation with 836 units (5.6 percent of the state’s total). No other entity owns more than 5 percent.

“We know that government, nonprofits and some private owners of affordable rental projects are committed to keeping their units affordable and will extend affordability even after the requirements expire,” Lopez said. “But as buildings age, the cost of repair, maintenance and upkeep rises. So, funds – whether they be public appropriations, additional tax credits or private donations -- must keep pace with the needs.”

“Tax credits and state and federal affordable housing funds can and are used to extend affordability of projects that need renovation. Further discussion and planning may help us find the right balance of using funds to build new affordable housing and maintain the housing that we have,” Lopez continued. “We should also be looking at what other states and jurisdictions are doing to incentivize keeping housing affordable, including consideration of how developers hope to keep housing affordable and/or transition to market as part of the process to grant tax credits and funds to developers building new affordable housing.”

“Hawai‘i should work to preserve housing affordability through direct housing development, incentivizing affordability protection renewals, and pursuing Hope VI, HCV, and tenant-based assistance programs. Tax abatements, bonuses, and transfer of development rights programs can all nudge property owners to renewing protections and constructing public housing directly can bring new units online even during market downturn,” Rodriguez said. “The state should also consider approaches that lift up nonprofit housing providers and public-private partnerships that can increase capacity in the nonprofit sector to pursue more complex funding and development projects.”

Note: Since this report was initially put together about 276 subsidized affordable housing units in Lahaina may have been impacted by the disaster; of these, 30 were designated for seniors and 112 for people with disabilities.