by Andrew Walden

With protesters unleashing their fury on Abercrombie’s Public Lands Development Corporation, political insiders have been scheming.  And on December 28, they quietly announced their plan.   

Their report, “Leveraging transit-oriented development for economic growth, better living in Hawaii”, proposes to make the State Office of Planning “lead agency (which) should take charge of implementing Transit Oriented Development (TOD) and coordinating with agencies responsible for functions critical to implementation, such as the Hawaii Community Development Authority, (and) Public Land Development Corporation….”  

According to the news release from Smart Growth America, “The report’s recommendations come after a series of meetings between state government officials, private sector leaders and non-profit representatives….convened by Governor Abercrombie.”

No community organizations were included.  The list of 40-odd participants reads like a who's-who of State, land owner, and developer interests such as:

• Office of Hawaii State Governor Neil Abercrombie
• Office of Hawaii House of Representatives Speaker Calvin K.Y. Say
• Office of Hawaii State Senate President Shan S. Tsutsui
• Office of Hawaii State Senator Donovan Dela Cruz
• Office of Councilmember Breene Harimoto, City and County of Honolulu
• Honolulu Authority for Rapid Transportation, City and County of Honolulu
• Building Industry Association of Hawaii
• Hawaii Business Roundtable
• Hawaiian Electric Industries
• Kamehameha Schools
• Land Use Research Foundation of Hawaii
• The Pacific Resource Partnership
• Hawaii Institute for Public Affairs

The only environmental organizations included were governmental: EPA Region 9 and the Land Division of the State DLNR.

According to the American Planning Association, Smart Growth “can be a powerful tool for farmland, open space and habitat preservation.”  But Abercrombie’s TOD scheme targets Kapolei and the sister islands for “…development throughout the islands, including but not limited to The Bus and rail transit on Oahu, but also the Hele-On Bus on the Big Island and the Maui Bus and Kauai Bus.”  

TOD would be authorized anywhere within a half-mile of a bus or rail stop.  This includes much of Honolulu’s urban core—but it also hijacks the Smart Growth label to cover Kapolei where Honolulu Rail starts with three stations located in empty farm fields.  According to the report: “The University of Hawaii has opened a new West Oahu campus in Kapolei … is envisioned as a university village with a mix of uses….”  UHWO is currently surrounded by open space and farmland.  Leeward Community College and Honolulu Community College are also targeted for development.  Taking aim at K-12 schools statewide, the report takes aim at “Inadequate financing mechanisms to fund new educational facilities or expand the capacity of existing schools in infill locations.” (pg 10)

The plan is to balance TOD on the back of the people.  Land cost is the largest factor in the high cost of housing, but instead of contributing land to make affordable housing possible, the report proposes four tax increases which will drive the cost of housing and the costs borne by small businesses even higher:

1. Community Facilities District (CFD): “Special property tax levied within properties in a specific area for infrastructure improvement and capital facilities construction bonds, and/or ongoing funding for construction and maintenance. Property owners vote for formation. Use of funds must have reasonable direct/indirect relationship to assessed properties.  (The) Counties (are) authorized to create CFDs. First CFD in state was formed in 2005 for Waiawa project infrastructure.”
2. Special Improvement District (SID): “Special bill levied on property owners in a specific area for public improvements and maintenance, including bond issuance/repayment for improvements. Affected property owners vote for formation. Assessment rates can be customized as appropriate. Use of funds must be specific and have a direct benefit to paying property owners. (The) Counties (are) authorized to enact legislation creating SIDs.  Examples include Waikiki Business Improvement District Association and the Fort Street Mall Business Improvement District Association.”
3. Tax Increment Financing District: “Captures property tax increases above the existing baseline in a district at the time of creation; some portion of captured value is returned to ordinary taxing agency.  Remainder can be used as payment of bond debt financing for capital improvements, services costs, and development assistance.  Formation of ‘Tax Increment Districts’ is permitted under existing legislation, but none have been created due partly to unclear constitutional authority to issue bonds solely funded by tax increment.”
4. Developer Fees: “Fees collected by local government upon approval of final site plan or issuance of building permits to property developers. Must have a direct nexus between cost of fee and the impact of the development on local or regional needs. Used to construct/maintain relevant public infrastructure and facilities.  A variety of impact fee districts have been established in Hawaii, primarily in areas experiencing high levels of new development.”

The Hawaii Admission Act (Sec 5f) mandates use of State lands “for the development of farm and home ownership on as widespread a basis as possible.”  Local residents clamor for affordable housing.  But the foremost TOD project, the $500M 690 Pohukaina tower planned for Kakaako, was rushed through during the holidays over the objections of legislators and councilmembers.  Winning bidder Forest City plans an all-rental development with an underlying land-lease from the State, meaning that residents will live in debt peonage to the State and landlord.  The Star-Advertiser December 16, 2012 explains how the State and the developer get theirs:  

Under the proposal, Forest City would pay $14 million to the state for leasing the land for 65 years but is asking for exemption from the state's general excise tax — from construction spending — estimated at $10.6 million.

In the cost-versus-benefit analysis, the state also stands to incur pre-development and permit costs estimated up to $10.2 million; a $6.3 million cost to buy civic space in the tower; and essentially, affordable housing credits valued at $40.4 million that Forest City gains for producing affordable units beyond HCDA requirements.

And after the State and developer get paid, what will the so-called “affordable” rents look like?

 “$1,736 for a studio to $2,580 for a three-bedroom unit for those with incomes up to $69,470 for a single person and $99,240 for a family of four.”

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News Release: Leveraging transit-oriented development for economic growth, better living in Hawaii

Full Text: sga-hawaii-dot_12-13-12