HomeMy WebLinkAbout06-21-2005 HSAC Presentation by Marvin Awaya
Hawaii State Association of Counties
"Government and the Community"
June 21, 2005; 8:30 a.m.
Panel: Affordable Housing
Subject: "Workforce Housing"
One of the biggest challenges we face is providing affordable housing for our growing
workforce. The lack of adequate housing is hurting our local economy by forcing our
residents to other states and hindering retention and recruitment in our service
industries. This inhibits our employers' ability to compete for workers and in turn,
reduces business growth.
Hawaii is currently enjoying our lowest unemployment rate in history and the U.S., we
are at or near full employment. Everyone who wants a job can get a job. Continued
growth of our economy will increasingly depend on holding on to our workers and
recruiting from other areas of the United States and the world. This means that our
businesses and industries will become increasingly dependent on importing our
workforce.
This "perfect storm" of the elements of full employment and the lack of affordable
housing could at some point in the future stall economic growth and lead to Hawaii's
loss of market share in key industries that depend on service workers. If economic
growth is stalled, it would be only a matter of time before the loss of market share leads
to a downward spiral of out economy and loss of jobs.
What is workforce housing?
Housing that is affordable to moderate income households; housing for families that
have at least a single adult member employed.
What is the Workforce Housing problem?
Housing prices are out of control, and that, fueled by a growing population and
historically low interest rates, increasing numbers of families are hard pressed to find
housing in or near where they work.
Among the hardest hit have been working families forced by housing prices to live far
away from where the family breadwinner punches the clock. Too many of these workers
are first responders, those who the public should most want within minutes of their
police station, firehouse, or hospital. It is not sound public policy to force them to live an
hour away from their place of employment.
Hawaii's economy is very dependent on the visitor industry. If the visitor is the fuel to
our economic engine, people who directly service them at the hotels, resorts, and
attractions are the lubricant to ensure that the engine runs smoothly. Add to this are the
employees whose jobs depend on their company being able to furnish goods and
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services to the visitor industry. They may not have direct contract with our visitors but
their impact is just as important.
Then there are those "non-essential" employees who are still vital to our way of life -
teachers (who often have evening meetings, conferences and extra-curricular
responsibilities in addition to their day jobs) janitors, utility, and sanitation workers - the
very people who make our world run. A long commute for these workers, often among
the lower paid of the middle class, adds greatly to their economic burden, increasingly
so with the spiraling cost of fuel, and takes a big toll on their lives and that of their
families.
Affordable Housing:
While the median prices of homes are at astronomical levels; $600,000, the ability of
working families to buy a home is somewhere at the $300,000 to $400,000 range. The
rent range for a working family ranges from about $1,300 to $1,500 a month for a 2
bedroom apartment. IF YOU CAN FIND IT.
There is an incredible LACK of supply and choice at affordable levels. Basically, if you
make less than 100% of median income you can't afford homeownership.
5 Size Oahu Maui Kauai Hawaii
100% $73,170 $67,340 $62,530 $56,700
Median $67,750 $62,350 $57,900 $52,500
Supply:
We need to increase the supply of not only for-sale units but also rental units. Further,
not only lower income rental units but moderate income rental units as well. The new
"Gap Group" renters with incomes of between 80% and 100% of median income are
especially desperate. Even if there were homes available in the $300,000 to $400,000
range, they would be hard pressed to qualify for a mortgage.
General Supply Programs:
To get ahead of the Workforce Housing shortage we need several things:
1. Financing: Low interest rates must be maintained as well as a strong secondary
mortgage market. Programs by Fannie Mae and Freddie Mac are essential to to
assure an ample supply of mortgage credit.
2. Sound land use and regulatory policies: In many communities, there is a shortage
of buildable land, high impact fees, regulatory costs, and excessive permit
processing time.
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3. Cost Containment: We need to cool the construction cost increases we have been
recently been experiencing and are likely to see continue. Increases of 30% within
the first 6 months of 2005 will wipe out profit margins. While increasing the sales
price of a home or rent rate of an apartment is possible, it may place the dwelling
out reach of those we are targeting.
Employer Assisted Supply Programs:
The following supply program subsidies all result in a developer (nonprofit or for profit)
being able to build or rehabilitate units al a reduced cost. As a result of the employer
assistance the firm's employees receive priority access to the units created and a
reduced sales price or rental rate.
1. Housing Site Subsidy - Some firms may have excess land suitable for housing
development, while other firms, or a consortium of firms, may be able to purchase a
site or even a building proximate to corporate facilities. By selling at a discount,
leasing, or donating the parcel to a developer (nonprofit or for profit) housing
affordability and availability can be increased. Land can either be held by the firm or
firms, or leased to a developer or held by a nonprofit or land trust.
2. Construction Financing - Major corporations can borrow short-term at or near the
prime rate. Real estate developers particularly nonprofit developers can borrow only
at much higher rates. Major employers could borrow or guarantee loans for housing
developers and by doing so pass through the firm's borrowing capacity to the
developer. The result of such a program is substantial savings in construction
finance interest charges.
3. Cash - Employers are familiar with providing cash infusions to projects, traditionally
by making charitable contributions. By providing corporate rather than charitable
contributions the firm can access units for their employees. Cash contributions can
be used to write down construction costs or rent rates on apartments, or sales
prices on homes or condominiums, or to purchase shares on behalf of employees
living in mutual housing projects.
By implementing any of these programs employers have the opportunity to address
important recruitment, training and productivity cost issues by providing employees a
permanent valuable benefit. The specific program undertaken will depend on the goals
and problems faced by an employer and the employees, but employer-assisted housing
is a benefit worth consideration.
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