Legislation to set up a “Government Employee Housing Revolving Fund Program,” along with dedicated taxpayer money to fill it, is a bad idea for one major reason: The state has no business setting up a housing program that serves up preferred benefits to state employees, distributing access to limited resources — the state’s money and land — on the general assertion that recruiting state employees can be difficult.
The how-to concepts at play with House Bill 1298 start promisingly enough: Develop condominium buildings on state-owned land within a transit-oriented development (TOD) site that can be sold at more affordable prices because the state retains land ownership. To make ownership even more accessible, prospective tenants could rent to own: move in to the home as a renter, with an agreed-upon sale price, with a portion of each month’s rent set aside toward a purchase.
The bill specifies that rent-to-own residents must buy their condos within 10 years of moving in, or vacate. At least 60% of units would need to be provided to households with incomes at or below 140% of the median family income for the area. Site and pre-development planning for at least one government employee housing project would be required in each county.
But here’s the big sticking point: all this would be for a targeted, virtually exclusive clientele — state or county workers, including retired employees. Restricting this housing to solely this cohort, defined so broadly, defies public interest.
As it’s currently drafted, the bill states the state “may” require that the monies appropriated to a revolving fund be used to provide loans or grants supporting a stand-alone 99-year leasehold project, rental housing project or rental units as part of a mixed-use project, with this priority: (1) newly hired, permanent full-time state employees; (2) other permanent full-time state employees; (3) permanent full-time county employees; (4) permanent part-time state and county employees; (5) temporary state and county employees; (6) retired state and county employees; and (7) the general public. That’s a lot of preference for public employees.
The idea for state-sponsored leasehold housing on public lands was first raised in 2019, when it was proposed by state Sen. Stanley Chang. In 2022, legislation classified properties purchased by the Hawaii Housing Finance and Development Corp. (HHFDC) as “public,” setting the stage for HHFDC to issue 99-year leases for lands purchased for this purpose.
Lawmakers stepped up further in 2023 with the ALOHA Homes Act (Act 97), authorizing the Hawaii Community Development Authority (HCDA) to sell 99-year leasehold interests in condos developed near public transit stations on state lands. HCDA’s proposed rules were issued just over a month ago, on March 5. A fledgling Act 97 project led by Ko Laila LLC is progressing, and the developer is expected to solicit nonbinding reservations from prospective buyers for a 99-year leasehold condo this summer. These recent developments also make for a good argument that establishing a separate fund for public employee housing would be jumping the gun, at the very least.
There are other issues. HB 1298 doesn’t require recouping loans or grants made from the revolving fund if a rental housing project or a unit developed is refinanced or sold later; as with many other sections of the proposed legislation, it allows for the practice without making it mandatory. This can drain a revolving fund — and in last year’s session, Chang successfully pushed through a bill prohibiting the waiver of “revolving” funds to developers, whether for-profit or nonprofit.
It’s most prudent to step back from this legislation until some of these vagaries can be better explored, and to observe the progress of HCDA’s leasehold condominium effort over the next year.
The turmoil presented by mass terminations of federal workers should serve to remind islanders of the value provided by public workers, whom we rely on to maintain public infrastructure and provide necessary services. Difficulty recruiting good state workers — or government itself slogging to hire them in a timely manner — lengthens the time required to get projects done or leaves necessary work undone at residents’ peril, and there’s no question that workers should be respected and fairly compensated.
However, valuing our state workers shouldn’t result in public spending that favors these employees at the expense of private-sector workers — who in Hawaii are even more likely to live in precarious circumstances, struggling to feed and house their families. Indications are that a good half of Hawaii’s working population, whether in the public or private sectors, will find it difficult to buy a home.
The need is great — and it will be most fairly addressed by providing workforce housing to all workers, public or private, who meet wage requirements.
