For policy wonks working on affordable housing. While the below piece is Kauai specific, I think the principles are important and universal.

Hooser – Policy and Politics
Title: Affordable Housing – Which side are you on?

The affordable housing conversation happening now at the County Council is an interesting one. As is the case for most complex “omnibus” type legislative proposals, there are both good and bad changes being proposed, depending on your perspective.

Rather than attempt to debate or dissect the numerous moving parts of the measure, it seems appropriate and important to step back and focus on the big picture for a moment.

Is the primary intent of the Council to increase the availability of truly affordable housing for local residents? Or is their main intent to generate development and “revitalize” the town core in Lihue and other areas?

Or to rephrase the question: Whose interests are being served? Is the Council most concerned with serving low to middle income working residents, or are they primarily focused on helping landowners, developers, and local business owners to increase their profits?

The answer no doubt from some proponents on the Council will be: “If we help the landowners and developers make increased profits, then low to middle income working residents will benefit as well.” The trickle-down theory at work, or not, once again.

Others on the Council will of course believe that both interests can be served, concurrently. It’s true I believe that both interests can be served, but it all comes down to money.

This should not be a surprise to anyone, as money does in fact make the wheels go round.

Developers and landowners will not develop affordable housing unless the costs of doing so are subsidized. Either those costs are subsidized by the private “market units” developed within the project, and/or the subsidy is provided by government in the form of infrastructure, density, or tax credits.

Without a subsidy, there will be no affordable housing built, period. Increasing the inventory of market-priced units will not result in an increased supply of affordable units. While this theory might be taught in an introductory economics class or in an ALEC “how to help developers” seminar, it is not the reality here on this island in the middle of the Pacific.

Prior to entering the world of policy and politics, I was active in the real estate business for over 10 years. I know first hand that the long term demand for Kauai real estate is insatiable. Certainly the demand for affordable homes which by definition are “below market,” is beyond insatiable.

No affordable housing will be built without a subsidy. By removing the requirement for developers to subsidize the 30% affordable unit requirement via their “market priced” homes, the Council will ensure that no affordable homes at all will be provided in the Lihue, Koloa, or Kalaheo town cores.

Rather than remove the requirement for the developer to subsidize the affordable units, the County could “add to the subsidy” by absorbing certain off-site infrastructure costs and/or via tax credits tied to the increased property tax value that would result from the development.

Unfortunately, the Council in the past already more than doubled the density in the Lihue town core, but got nothing in return from the property owners, who themselves received a windfall in the form of increased property values. Consequently, the “increased density subsidy” card has already been given away for free, in Lihue anyway.

If the goal of the Council is to both support the revitalization of the various town cores and to ensure that those local people who actually work in those towns can afford to live there, they must not remove the 30% affordability requirement. Invest more public funds in infrastructure or tax credits if needed to further support or incentivize the construction, but please, do not remove that 30% requirement.

First published on August 26th in The Garden Island Newspaper