In 2019, the Honolulu City Council passed a bill for a pilot program to build affordable housing units in underdeveloped areas of Honolulu. But after nine months, only two developers had applied to the program. Neither application progressed and zero units were built.
“We found that there were certain provisions within the bill that discouraged small landowners and lenders from participating in the pilot program,” District 9 Councilmember Ron Menor said. “And one of the bigger problems was the rent caps.”
To try and fix the program, Menor introduced Bill 60, which was signed into law by Mayor Kirk Caldwell on June 4. The new bill removes some of the more “problematic” portions of the earlier bill.
Councilmember Ron Menor introduced the bill to address issues in the affordable housing pilot program.
Cory Lum/Civil Beat
The biggest change is switching from rent caps that lasted indefinitely, to limits on rental prices for 15 years.
According to Menor, many were concerned about the rent caps and felt that the market should determine rent. Rent caps place limits on what landowners and lenders can charge for rent in their developments. But by removing the rent caps, the property value of the housing development is allowed to rise in tandem with the value of surrounding properties.
“We made these revisions because we really wanted to give this law a chance to work,” Menor said.
The program is set to sunset after four years, and the city council will review the program, specifically the number of units developed since the program went into effect. Based on the numbers reported, suggestions will be made as to whether the program was effective, if the program should be revised or if it should be shut down entirely.
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