HONOLULU — A city measure signed into law last week is meant to give private developers of affordable rental housing greater financial incentives to build on Oahu.
Honolulu Mayor Rick Blangiardi signed Bill 3 to increase post-construction grant amounts for privately financed rental housing projects, deemed a key incentive for developers trying to make projects financially feasible, city officials said.
They said the action is needed amid a challenging construction environment and barriers to development that include high interest rates, supply chain shortages and increased construction costs.
The grant incentives under Bill 3 include $40 a square foot for units under 300 square feet in size, or $12,000 a unit for units that are 300 square feet or larger, according to the Blangiardi administration.
The ordinance, signed Tuesday, took effect immediately.
“This bill will create rental properties on the market that are actually affordable for hard-working people who want their own place to live and the dignity that comes with that,” Blangiardi said in a written statement. “This bill will also help mitigate the exorbitant costs that are forcing too many of our loved ones to leave their homes and families here on Oahu.”
Bill 3 increases incentives initially provided under the Blangiardi administration’s first piece of legislation, Bill 1, introduced in 2021, city officials said.
The City Council voted unanimously Aug. 7 to pass Bill 3. Council member Tyler Dos Santos-Tam introduced the measure in January.
“Every day, housing prices increase. Every day, it becomes more difficult for our residents to live here,” Dos Santos-Tam said in a written statement. “We can’t solve the housing crisis without building more housing that local people can afford. That starts with Bill 3. It creates hundreds of affordable units — for our young people, our workers, our local families.”
Meanwhile, the new law is meant to tap an existing $10 million grant, comprising city general fund money, toward planned construction of over 1,100 homes.
Effectively, the law also bolsters Bill 7, adopted in 2019 by then-Mayor Kirk Caldwell’s administration.
That 2019 legislation relaxed private development standards and provided incentives — such as property tax exemption for 10 years, and no fees for the city application process — for qualifying developers’ projects.
In 2021 the city added a grant program, Bill 1, to the existing Bill 7. The move provided projects with a “completion bonus” of up to $15,000 per unit, while the program was given a $10 million cap, Dos Santos-Tam’s office said.
And on June 1, 2023, Blangiardi signed Bill 8 extending Bill 7, which was scheduled to expire May 21, 2024, for another seven years. But in spite of these actions, the private development of new affordable rental housing on Oahu remains limited.
Previously, the city Department of Planning and Permitting told the Honolulu Star-Advertiser that as of late June, 52 applications for Bill 7 projects were submitted to the city.
Of those, 13 permits were issued, while 39 permits are being processed.
But only one Bill 7 project — Puuhue Apartment LLC’s 25-unit development at 311 Puuhue Place near Liliha Street — has been completed, and its city-issued certificate of occupancy granted, DPP staff said.
