Many local government employees in Hawaii may be able to rent or buy taxpayer-subsidized housing if a bill pending at the Legislature becomes law.
The bill proposes to provide grants and loans to develop leasehold condominiums on state land in transit-oriented development areas predominantly for state workers with moderate incomes as a way to help recruit and retain employees.
Under the legislation, the homes, with extendable 99-year leases, would initially be rental apartments where tenants could have part of their rent credited toward purchasing their unit within 10 years.
A few concerns have been raised over the plan, though the bill has sailed through five public hearings at the Legislature with backing from public worker unions and remains subject to a Senate-House compromise draft after unanimous passage Tuesday by the 25-member Senate and a 48-1 vote in the House of Representatives March 4.
“Having affordable rental and homeownership opportunities for state employees will reduce the resignation and outmigration of state employees and fill critical labor needs throughout state government, ” the bill states.
House Bill 1298 would give priority for the envisioned leasehold housing to certain groups of people, all of whom would have to meet household income conditions and not already own a home.
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The highest priority is for newly hired permanent full-time state employees, followed by other permanent full-time state employees.
Then continued priorities, in order, are permanent full-time county employees, permanent part-time state and county employees, temporary state and county employees, retired state and county employees, and last, the general public.
According to the bill, if a state or county employee renting one of the homes ceases to be employed by the state or a county, then the tenant must vacate the unit within 12 months.
All units would be rent-to-own housing that allows a tenant to buy their apartment within 10 years at a price set at the beginning of the rental term, possibly with a portion of rental payments being credited toward a purchase.
If a renter declines to purchase their apartment within 10 years, then they forfeit the right to continue living in the unit, which would then be made available to another qualified applicant, according to the bill.
The income limit to qualify for housing under the bill is 140 % of the annual median household income for the county in which the homes are developed.
For Honolulu, this limit equates to $136, 500 for a single person, $155, 960 for a couple and $194, 250 for a family of four.
HB 1298 was introduced by House Finance Committee Chair Rep. Kyle Yamashita (D, Pukalani-Makawao-Ulupalakua ). There wasn’t much public testimony on the bill, but nearly all of it was favorable.
“We think this is a great bill, ” Kamakana Kaimuloa, government affairs manager for the United Public Workers union, told the House Committee on Labor during a Feb. 11 hearing. “We don’t say that a lot.”
Randy Perreira, executive director of the Hawaii Government Employees Association, said in written testimony that the state has a 24 % workforce vacancy rate and that many HGEA members struggle with rent or mortgage payments.
“Our organization recognizes that our state and counties must explore new and alternative ways to recruit and retain a qualified workforce, especially at a time when government salary and benefits alone may not be enough to be considered an attractive career, ” Perreira said. “We appreciate the intent of this measure as it aims to begin a conversation about government workforce housing, which can be a unique public sector benefit that the state and counties can use to recruit and retain the next generation of public employees.”
Pamela Tumpap, president of the Maui Chamber of Commerce, called the plan another essential tool in addressing Hawaii housing challenges, and encouraged that it be fast-tracked.
The Tax Foundation of Hawaii raised an objection to the bill because it proposes to establish a revolving fund to pay for development that the organization said appears to subvert state law for appropriations.
The only negative testimony on the intent of the plan was from Gregory Misakian, who submitted written comments on a Senate companion bill to HB 1298 that stalled in February.
Misakian said prioritizing housing assistance for state workers is unfair. “Why should ALL residents of Hawaii subsidize costs for SOME residents of Hawaii ?” he wrote. “ALL residents of Hawaii are facing the same real estate and rental market, and legislators (need ) to focus their energy on lowering the cost of living and making it more affordable to purchase a home and rent a home in Hawaii.”
Rep. Elijah Pierick (R, Royal Kunia-Waipahu-Honouliuli ) expressed a similar sentiment during a Jan. 29 committee hearing on HB 1298 before voting against the measure with Rep. Christopher Muraoka (R, Waianae-Makaha ).
“Let’s reduce regulation to help the cost of housing (not ) go up, versus let’s spend more taxes so that government workers can have some housing, ” Pierick said.
The bill calls for the Hawaii Housing Finance and Development Corp. to provide grants and loans to for-profit companies or state entities to develop the envisioned housing, which would require that 60 % of units in a project be reserved for qualified applicants at affordable prices. The other 40 % could be market-rate housing.
HHFDC is a state agency that helps private developers finance affordable-housing projects mainly using low-interest loans, bonds and tax credits. The agency has worked with for-profit and nonprofit developers to produce for-rent and for-sale housing on state land for Hawaii residents with low to moderate incomes.
Such projects include the 320-unit complex Keahumoa Place in Kapolei, the 201-unit Hale Kalele tower in Pawaa and Plantation Town Apartments with 330 units in two towers in Waipahu.
Dean Minakami, HHFDC executive director, said in written testimony that he supports HB 1298 so long as it doesn’t adversely affect the agency’s requested funding priorities.
“HHFDC shares the Legislature’s concerns about the outmigration of state employees, and the lack of affordable rental and homeownership opportunities, ” Minakami said in written testimony.
Minakami is asking lawmakers to appropriate $450, 000 for HHFDC to hire the equivalent of two full-time employees to help administer the new program proposed in the bill if it becomes law.