S.C.R. NO.














requesting the office of planning to convene a task force to REVIEW AFfORDABLE SALES GUIDELINES IN HAWAII AND OTHER HIGH-COST AREAS TO determine a methodology for setting realistic sales prices for affordable housing in the state.



     WHEREAS, there is a severe shortage of affordable homes in Hawaii that residents can reasonably afford on prevailing wages; and


     WHEREAS, to address the shortage of affordable for-sale homes, the State and counties have been trying to expand the inventory of below-market sales through incentives for developers and potential leasehold sales of public lands; and


     WHEREAS, the United States Department of Housing and Urban Development (HUD) defines "affordable housing" as "housing on which the occupant is paying no more than thirty percent of gross income for housing costs, including utilities"; and


     WHEREAS, gross income in relation to housing affordability is generally expressed as a percentage of the area median income (AMI); and


     WHEREAS, the median income is defined as the midpoint of a region's income distribution, where half of the families earn more than the median and half earn less than the median; and


     WHEREAS, housing affordability in Hawaii is most often expressed as the housing price-to-income ratio where the price of an "affordable" home is expressed on a scale where one hundred forty percent AMI or lower is considered a "below market" rate; and


     WHEREAS, the current formula used to set the sales price of "affordable" for-sale homes are outdated and do not take into consideration other factors such as the high cost of living and high market prices of housing in Hawaii; and


     WHEREAS, the housing price guidelines set by HUD are not applicable to developments that do not use federal subsidies; and


     WHEREAS, the outdated formulas are based heavily on mortgage interest rates and, given the current low-interest rate environment, the sales prices may not be affordable to local area residents and, in many locations, often even exceed market prices where, for example, a two-bedroom home in the City and County of Honolulu with a maximum price of $1,026,800 could potentially qualify as "affordable" under current guidelines; and


     WHEREAS, if the State and counties want to provide for-sale homes that local residents can afford on typical wages earned in Hawaii, the definition of "affordable" sales prices needs to more accurately reflect what local households can realistically afford, taking into consideration homeowners association fees, insurance, utilities, transportation, cost of living, access to low-interest rates, and other factors; and


     WHEREAS, the State, counties, and various housing agencies use different methods to define "affordable" sales prices, which creates confusion amongst consumers; and


     WHEREAS, potential homeowners and the public would be more likely to plan and obtain assistance with purchasing a home if there was an alignment of methodology in defining "affordable" housing, even though prices will vary by island and by neighborhood; and


     WHEREAS, a 2015 study by Danny Ben-Shahar, Stuart Gabriel, and Roni Golan found that using unconventional methodology can better define affordability based on more accurate metrics; now, therefore,


     BE IT RESOLVED by the Senate of the Thirty-first Legislature of the State of Hawaii, Regular Session of 2021, the House of Representatives concurring, that the Office of Planning is requested to convene a multi-agency affordable housing task force, exempt from chapter 92, Hawaii Revised Statutes, to review how affordable sales guidelines are calculated in Hawaii and to generate a report compiling and comparing the best practices and policies that other high-cost areas use to determine their affordable sales guidelines; and


     BE IT FURTHER RESOLVED that the study is requested to look at:


     (1)  How maximum sales prices are determined;


     (2)  Any restrictions on re-sale;


     (3)  Any equity sharing provisions; and


     (4)  Any other guidelines or rules that maximize the affordable housing for a high-cost area; and


     BE IT FURTHER RESOLVED that the task force is requested to determine a uniform methodology and definition for setting sales prices for "affordable" housing that can also be used to provide incentives to builders in the State and various counties; and


     BE IT FURTHER RESOLVED that the task force is requested to include the following members, or their designees:


     (1)  The Director of Planning, who is requested to serve as chairperson of the task force;


     (2)  The Executive Director of the Hawaii Housing Finance and Development Corporation;


     (3)  The Executive Director of Hawaii Community Development Authority;


     (4)  The President of the Senate;


     (5)  The Speaker of the House of Representatives;


     (6)  A representative from each county's Department of Planning and Permitting or other department that implements programs providing below-market for-sale homes;


     (7)  A local developer with experience in creating below-market for-sale homes as part of development incentives; and


     (8)  A housing policy analyst from the Hawaii Budget and Policy Center; and


     BE IT FURTHER RESOLVED that the task force may invite representatives from additional organizations or agencies to participate in the task force; and


     BE IT FURTHER RESOLVED that the Office of Planning is requested to provide administrative support for the task force; and


     BE IT FURTHER RESOLVED that the task force is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2022; and


     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of Planning, Executive Director of the Hawaii Housing Finance and Development Corporation, and Executive Director of the Hawaii Community Development Authority.









Report Title: 

Affordable Housing; HHFDC; HCDA; Office of Planning