A Transit-Oriented Housing Strategy

Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

Housing Mosaic

Materials Capital Wage Market Income Demand Labor Public Policy Job Growth Land

Regional Approach

Goal: Increase Workforce Housing near Transit

Creating A Transit-Oriented Workforce Housing Strategy for Honolulu Source: The Center for Transit-Oriented Development

Breaking the Cycle of Unintended Consequences in Transit-Rich Neighborhoods

Market Trends

Construction Costs Comparison

Source: Rider Levitt Bucknall

Workforce Housing

Source: Center for Housing Policy, 2009 Housing, Rents, and Income Data

35,00 30,00 25,00 20,00 15,00 10,00 5,00 0,00

Average Hourly Earnings, Selected Industries

2005 2006 2007 2008 2009 Source: Hawaii State Data Book, 2009

Distribution of Honolulu Household Demand vs. Supply by HUD AMI Levels 100.0% 80.0% 60.0% 40.0% 20.0% 0.0%

23.6% 7.4% 13.8% 13.1% 20.3% 58.7% 18.0% 3.7%

Single Family Demand

20.9% 10.5% 7.4% 1.9%

Single Family Supply

12.3% 11.7% 10.0% 25.6% 21.8% 8.5% 10.2%

Multi Family Demand

9.6% 8.5% 8.9% 30.3% 31.4% 8.5% 2.9%

Multi Family Supply

> 180% AMI 141 - 180% AMI 121 - 140% AMI 81 - 120% AMI 51 - 80% AMI 30 - 50% AMI < 30% AMI

Combined Housing and Transportation Costs % of Household Income

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0%

18.6% 20.4% 21.5% 21.0% 22.6% 21.3% 21.4% 15.0% 32.0% 35.0% 28.6% 26.3% 27.0% 33.0% 29.2% 32.2%

0.0% H on ol ul u Lo s An ge le s Po rtl an d Sa lt La ke C ity Ph oe ni x Sa n D ie go Se at tle Sa n Fra nci sco Source: http://htaindex.cnt.org

Transportation Housing

Definitions

• • • • • •

Affordability – Pay no more than 30% of Gross Monthly Income. Housing meets needs of households Area Median Income – At 100% of AMI, half residents earn below that amount and half above Very Low Income - <30% of AMI Low Income – 30% to 59% of AMI Moderate Income – 60% to 79% AMI Middle Income – 80% to 120% of AMI

Market Trends

•

New real estate development in Honolulu is challenged by high construction costs which result from:

–

Strong labor unions and associated high cost of labor

• Although recent declines in construction activity have reduced labor rates military construction projects continue to support Oahu’s relatively high construction wages – –

High cost of land

• • Approximately 1% of Hawaii’s land is developable; The supply of developable land is constrained by: – Mountains – Military owned lands – State of Hawaii owned lands – Privately-owned lands –

Premium cost of materials which usually must be imported

• Hawaii does not have plentiful natural resources that are generally used in traditional building materials –

Other factors

• Expectation that developers pay for infrastructure upgrades • • Length of time required for permit and entitlement review timeline Zoning considerations (i.e. green space and parking requirements)

Factors That Affect the Amount of Travel & Modal Choice Automobile Transit Cycling & Walking Out-of-Pocket Costs Time Costs Service Attributes

Fuel & Maintenance Roadway Tolls Parking Fees Driving Parking Search Walking Effort Safety Comfort Transit Fare Walking Waiting Riding Effort Safety Comfort Maintenance Riding Walking Effort Safety Comfort

Short & Long-term Effects of Transportation System Improvements

Work and non-work travel (frequency, destination, mode) Short-term decisions Transportation improvement Automobile ownership Mode to Work Medium-term decisions Employment location Residential location Infrastructure investment Long-term decisions

Potential Livability Benefit Outcomes associated w/TOD

Downtown & Neighborhood Rejuvenation Metropolitan Sustainability & VMT Reduction Social Equity for Jobs & Housing Economic Growth with Environmental Quality

TOD 3.0

1. Route Alignment 2. Station Location 3. Station Area 4. Land Assemblage 5. Infrastructure 6. Vertical Development

7. Livability Benefits

Challenge: TOD Housing Difficult, Time-Consuming, and Expensive

 

Land Prices

 Land prices around station are likely to increase because of speculation when a new transit line is planned  Affordable and workforce housing developers lack the capital to acquire land before the prices go up and hold it until ready to be developed

Financing

 Funding for workforce housing is limited or too restrictive  Mixed-income and mixed-use projects require complex financing structures involving multiple sources of funding 

Timeline

 Sites often require land assembly and rezoning, leading to lengthy acquisition and permitting process  Community opposition to density and affordable housing can be challenging  Development near transit requires collaboration among the public, private, and non-profit sectors , which can be difficult to coordinate given the different needs, constraints, and schedules Creating A Transit-Oriented Workforce Housing Strategy for Honolulu Source: Center for Transit-Oriented Development

Housing Challenges

1.

2.

3.

4.

Affordable housing and rental housing, both have negative connotation – NIMBY’s. Typically, projected market rents do not support new multi-family (rental )construction; Hawaii is dominated by service-sector industries, whose average employee wage scales do not support the purchase of housing (for-sale) The majority of employer assisted housing programs focus heavily on demand-side (for-sale) programs.

PARTNERSHIP APPROACH: Collective, long-term, sustained, and strategic investments are needed in order to produce important community development outcomes. In addition to brokering a common agenda, these partnerships are building the capacity of community-based groups and other stakeholders to ensure strong local leadership. These coalitions help increase the flow of resources into neighborhoods, define and execute market-based strategies, and develop new approaches to creating and seizing neighborhood

development opportunities.

aggressive land assembly regional connections housing development/ rehab tools partnership approach targeted neighborhood planning marketing neighborhoods economic development sophisticated market analysis procedures that measure impact

Community Challenge Planning Grant

$40 million total – Honolulu receieved $2.3m max grant + 20% match)

to:

Foster reform and reduce barriers

to achieving affordable, economically vital, and sustainable communities. •

Development of master plans or comprehensive plans

that promote affordable housing co-located and/or well connected w/retail, businesses..aligned w/..transportation plans; •

Development & implementation of plans and strategies

livability and sustainability; that promote •

Revisions to zoning codes

, ordinances, building standards, or other laws to

remove barriers …..;

•

Revisions to building codes to promote …energy efficiency

….; •

Strategies for creating or preserving affordable housing

and extremely low families or individuals….; for low, very-low, •

Strategies to bring additional affordable housing

housing opportunities….; to areas that have few •

Planning, establishing, and maintaining acquisition funds and/or land banks for development, redevelopment, and revitalization for the development of affordable housing

Goal: Increase Workforce Housing Along the Rail Corridor

1. Truly Affordable Housing

– Pairing lower housing costs with lower transportation

costs 2. Broadening Access To Opportunity

– Producing better economic and social outcomes

3. Increasing Employers’ Access To Metro Workforce

– Improving economic competitiveness and productivity

4. Stabilizing “High-Percentage” Riders

– Increasing transit access to populations who will use it

the most 5. Alleviating Gentrification Pressures Near Transit Stations

– Counterbalance the potential displacement of existing

workforce housing

Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

Build On Multiple State, Local Housing Studies

 2008 Comprehensive Housing Strategy for the C&C of Honolulu, Mayor’s Affordable Housing Advisor Group

State-level Recommendations

 

Change purpose of the Land Use Commission to long-term planning Modify Low Income Housing Tax Credit allocation and requirements County-level Recommendations

 2008 Report of the Governor’s Affordable Housing Regulatory Barriers Task Force  

Establish county-level Office of Housing and provide a single government point-of-contact for housing development (Ongoing) Increase long-range housing planning capability at DPP

 Nine additional studies and reports conducted between 1991 and 2006 by federal, state, and local agencies  

Streamline the entitlement process to reduce length, cost Revise rules for Unilateral Agreements to 140% of AMI, transfer/sale of housing credits, and enhancement credits. (Complete)



Fee-based expedited third-party review by private consultants (Complete)



Plan/budget for infrastructure investment with Honolulu High-Capacity Transit Corridor Project and

Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

TOD

Strategies

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2.

3.

4.

Focus on creating mixed-income workforce housing opportunities near transit .

Engage employers and employee unions to expand employer assisted rental housing programs; Focus on preservation of existing housing units and; opportunities for acquisition and rehabilitation/adaption of existing structures; Actively pursue modifications to state and local regulatory policies to reduce impediments to create more affordable, energy-efficient housing.

Integrated, Targeted Approach for TOD Housing

Planning and Zoning

Inclusionary Zoning Expedited Permitting Reduced Parking Requirements Modify Unilateral Agreements

Incentives

Density Bonus Impact Fee Waivers Property Tax Waiver Tax Abatement

Financing

Land Acquisition/Banking Fund Pre-development Financing Gap Financing Preservation/Rehabilitation Financing Modify LIHTC criteria

Coordination

TOD Housing Coordinator Public-Private Partnerships Value Capture Tools For Infrastructure Programming Capacity Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

TOD Fund Structure and Activities

•

Enhance impact, funding through collaboration

– Use HUD funding for “top loss” or lead equity capital – Identify fund manager and define transactional role – Provide start-up support while structuring the fund – Create governance agreement to guide fund mission and

mechanics

– Solicit partners to build “capital stack” and mitigate risk Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

Land Acquisition/Banking Fund for TOD

• • • •

Buy and hold strategic parcels before the real estate market heats up to control development later and ensure it meets community development goals Do catalytic projects to help “jumpstart” markets and help transition auto-oriented places into compact, walkable, transit-oriented places Ensure that existing affordable housing is preserved and new affordable housing is created—along with other important amenities—in valuable transit-rich locations Target small projects where preservation/development of affordable housing units is possible

Source: Center for Transit-Oriented Development

Land Acquisition/Banking Fund for TOD

Case Study: Denver Transit-Oriented Development Fund

    $15m credit facility focused on preserving and creating affordable housing with access to transit Public-private partnership with Enterprise Community Partners and the Urban Land Conservancy Provides capital for non-profits to leverage for purchase, operation, and rehabilitation of affordable housing 100% Loan to Value Ratio, 5-year hold on property, and risk mitigation with “top loss” pool Creating A Transit-Oriented Workforce Housing Strategy for Honolulu

Case Study: Portland TOD Property Tax Abatement

 Supports TOD by reducing operating costs through a 10-year maximum property tax exemption  Applies to newly-constructed structures, additions or conversions within ¼ mile of transit  Minimum of 10 units, 20% at 60 percent of AMI, 10% at 30 percent of AMI  Sponsor must own or have site control and demonstrate exemption necessary for financial feasibility  Annual cap of $20m for 3 years

Denver Transit-Oriented Development Fund

City & County Of Denver Enterprise Communities

Housing Finance Authority & Foundations Capital Sources

Commercial Lenders Bridging the Gap

Foundations

Local Government Fund Manager

Enterprise Communities

Borrowers

Urban Land Conservatory

CHFA DURA

Take-out Financing Senior Debt CDFI

DHA Capital Stack or Waterfall

Joint Venture Structure

CDC

• Affordable Housing Operator/ Manager •Workforce Placement •Social Services

Private developer

•Land owner •Conceptualization •Financing •Entitlements •Construction •Operations, Leasing & Management

City & County of Honolulu

•Planning & Zoning •Permitting •Community Outreach •Affordable housing •Transportation •Infrastructure Financing

Private Developer

Market-driven Infill Mixed-use Proximity to transit

• Return on Investment • Minimize risk • Create long-term value

City & County of Honolulu

Maximize community benefits Minimize environmental impacts Provide services Protect public health & safety

GAP Community Needs

•Mixed-income, •affordable housing •Neighborhood services •Job creation •Social & economic equity •Infrastructure

• • •

Creating the Implementing Entity – a local CDC

The term CDC refers to a type of non-profit entity known as a "community development corporation". CDC’s are characterized by their community-based leadership and their work primarily in housing production and/or job creation. This is what differentiates them from other types of non-profit groups.

CDC’s are formed by residents, small business owners, congregations and other local stakeholders to revitalize a low- and/or moderate income community. CDC’s typically produce affordable housing and create jobs for community residents. Jobs are often created through small or micro business lending or commercial development projects. Some CDC’s also provide a variety of social services to their target area.

A CDC is organized under section 501 (c) (3) of the Internal Revenue Code like any other non-profit entity . Local residents form the CDC getting together and developing a set of by-laws, file for incorporation with the state government and apply to the federal Internal Revenue Service (IRS) for designation as a tax exempt non-profit organization. The IRS designation is necessary in order for the organization to obtain grants and gifts from any government, corporate, or foundation sources or from individuals.

Roles & Responsibilities

EDA SBA US Treasury

•LIHTC •NMTC

HUD

• HOME • CDBG • Sec 108

Private Lenders

•Banks •REIT’s

Consultants

•Organization •Development •Financing

City & County of Honolulu

• Community Services •Economic Development •Planning & Permitting

Private Entities/ Foundations

•LISC •Enterprise Foundation •NeighborWorks •Living Cities

CDC

• Affordable Housing •Wealth Building •Community Transformation •Asset Management

Roles & Responsibilities

Consultants

•Organization •Development •Financing

City & County of Honolulu

• Community Services •Economic Development •Planning & Permitting Expertise Oversight

CDC

Limited Liability Partnership Vision Management Investment partners Shareholders

Neighbor - hood residents Private Entities/ Foundations

•LISC •Enterprise Foundation •NeighborWorks •Living Cities