November 29, 2023

Housing Finance Development

It's Your Housing Finance Development

Blueprint For Hawaii Housing? UH Project For Students And Faculty Is Going Up At Relatively Little Cost

On an island where the median price of a condominium hovers around $500,000, it may come as a surprise that a private developer is planning to build up to 400 units in verdant Manoa for as little as $212,500 each. But that’s exactly what’s happening on the University of Hawaii campus.

The planned project, generically called the “Mixed-Use Affordable Housing Project at the University of Hawaii at Manoa Campus” in a draft environmental assessment is designed for university students and junior faculty — not the general public. But one prominent housing advocate said the affordable rental housing project could be a model for public-private partnerships to address Hawaii’s housing shortage.

The multi-family complex will include a mix of studio, one-, two- and three-bedroom apartments.

If UH can do it, asked Hawaii Sen. Stanley Chang, why can’t other government entities?

“And why can’t we do it 100 times?” he added.

Senator Stanley Chang stands fronting the Atherton YMCA located along the University Avenue.
Hawaii Sen. Stanley Chang stands in front the future site of University of Hawaii’s Residences for Innovative Student Entrepreneurs, being developed through a public-private partnership that Chang says can be one model to help alleviate Hawaii’s housing needs. Cory Lum/Civil Beat/2022

He specifically pointed to the Hawaii Housing Finance and Development Corp., a state agency that has the power to develop housing “to be leased or rented, at the lowest possible price to qualified residents.”

“HHFDC should be building 50 or 100 of these things” for the public, he said.

“And they could do it without taxpayer subsidies, as these projects show,” Chang said.

HHFDC’s executive director, Denise Iseri-Matsubara, did not return a call for comment.

The mixed-use project will be located on UH’s main Manoa campus at the former site of a building used by the National Oceanic and Atmospheric Administration. It will include a daycare center and space for retail.

One thing it won’t have is parking – residents with cars will park in permitted lots around the campus – which also lowers construction costs. The development partner is Greystar, one of the world’s largest apartment builders, which a draft environmental assessment of the project says, “will hold the sole-responsibility to design, build, finance, operate and maintain” the project.

Although dubbed “affordable,” the renters won’t need to meet a certain percentage of the area’s median income, which is typically the case with affordable housing. Instead, according to the draft environmental assessment, UH uses other criteria, such as whether professors are on a track for tenure and whether they work on campus.

Dan Meisenzahl, a UH spokesman, said housing for students naturally must be less expensive than market rate housing. But he couldn’t quote prices.

“They’re meant for our graduate students, who are not known to be making a lot of money, and also for students with kids,” he said.

UH Mixed-Use development
The planned project, shown in an artist’s rendering, could provide up to 400 units for a building cost of as little as $212,500 each. University of Hawaii

While construction of the project hasn’t started, another housing development at the corner of University Avenue and Metcalf Street is well underway. A yellow crane towers over the gutted pink Charles Atherton House and a hive of construction workers at what will be a building of dorms, co-working spaces and classrooms across from the UH campus.

Although the so-called Residences for Innovative Student Entrepreneurs are more like typical student housing with things like community kitchens, the RISE project has something in common with the apartment complex planned for campus: it’s another public-private partnership – this one between UH, the UH Foundation and Hunt Cos.

And like the apartment project, the RISE project will pose no direct costs to the public: according to UH, the $70 million construction cost is being funded primarily by tax-exempt bonds, which will be repaid with student housing fees.

Not all agree with Chang that such public private partnerships are the answer to Hawaii’s housing shortage.

Kenna StormoGipson is director of housing policy for the Hawaii Appleseed Center for Law and Economic Justice. She said projects like the UH mixed-use project can “definitely be a good example of what’s possible.”

But she also said it’s important to note that there are public costs associated with the UH housing projects, and public subsidies help keep development costs low.

For example, she said that in addition to public land, there’s already infrastructure in place, which the public has paid for as well. In addition, financing the project with public, tax-exempt bonds is another big boost.

UH Mixed-Use Housing
Working in partnership with UH, one of the the world’s largest apartment builders is developing a mixed-use affordable housing development, shown in an artist’s rendering above, at the University of Hawaii’s Manoa campus. University of Hawaii

In this context, StormoGipson said, it’s not accurate for Chang to say the projects show affordable housing can be built without taxpayer subsidies.

“His magic words are ‘revenue neutral,’” she said. “My magic words are ‘not true.’”

In addition, she said, it’s hard to find state lands that are not “ceded lands,” property held in trust for the Native Hawaiian people that can’t be subject to long-term leases generally needed for housing projects.

“The state does not have all these magical lands that are not ceded, with the infrastructure that’s ready to go,” she said.

Maui Teacher Housing Could Cost $937,000 Per Duplex

Regardless, development costs for the UH mixed-use project are a fraction of those for another, recently announced state housing project on Maui. Last week Gov. David Ige announced he was releasing $15 million for design and construction of teacher housing across from Lahaina Intermediate School.

Details of the project are scant. Nanea Kalani, a spokeswoman for the Hawaii Department of Education, said the project involves eight subdivision lots that the department is in the process of taking over from the Department of Transportation. The land would be used for affordable rentals for teachers, she said. Some of the money would likely be used for infrastructure improvements, she said.

It’s not clear how many homes the DOE will build on the lots. Kalani said it’s possible the lots could be used for duplexes, which would place 16 units on the land. That would put the cost to taxpayers at $937,500 per duplex unit – about 22% lower than Maui’s median single-family home price of $1.2 million in July.

In a letter, Ige gave credit for the project to Hawaii Rep. Angus McKelvey, who said in an interview that it’s important for housing advocates to avoid “turf wars over ideas” when deciding which public housing projects to invest in.

The project is meant to recruit and retain teachers, McKelvey said.

“Whatever gets us to Hana – by road, by air or by water – we should pursue,” he said.

Chang agreed to a point. In light of UH’s project, he questioned the $15 million hit to taxpayers for an estimated 16 homes, asking, “What is the money for?”

He also said Hawaii needs a large-scale, systematic approach to building affordable homes.

“One-off projects like this are not going to solve our housing problem,” he said.

Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.