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Breaking ground in Makiki, Paul Lam commenced the construction of a 26-unit, three-story walk-up for low-income renters in December.
Lam Capital LLC, led by Lam as the principal developer, utilized a city program aimed at increasing the availability of affordable housing on Oahu.
Lam has announced plans to use the same program for another similar project located just a few blocks away from the first.
This Saturday, a groundbreaking ceremony will be hosted by the developer at 9 a.m. Honolulu Mayor Rick Blangiardi and City Council member Calvin Say, representing the Makiki district, will be in attendance. The event celebrates the construction of 25 affordable rental units at 1226 Kinau St., opposite the Beretania Street Safeway supermarket.
“Just like the other one, it’s a three-story walk-up,” said Lam. “However, this one consists of three one-bedroom units and 22 studios.”
Both projects were inspired by the introduction of Bill 7 by the city, which aims to facilitate the construction of more affordable housing units on Oahu. The bill provides tax incentives, real property tax exemptions for a decade, and expedites the planning and permitting process for developers without any fees.
“We believe that private investment in affordable housing through the Bill 7 project is one solution to the ongoing housing crisis,” Lam stated. He emphasized the importance of affordable housing in urban Honolulu, allowing people to find reasonably priced housing closer to their workplaces.
Lam also revealed that his company has several other affordable housing projects in the works, situated in and around the downtown area.
Bill 7 was approved in 2019 and signed into law by former Mayor Kirk Caldwell. Its purpose is to “create a temporary program to accelerate the construction of affordable rental housing” on properties zoned for apartments and mixed-use businesses. The bill relaxes zoning and building code standards and offers financial incentives to developers. The city expects the program to redevelop 3,204 smaller lots and create up to 21,000 additional affordable housing units.
In exchange for allowing more apartments to be built on a property, the apartment rents must be affordable to tenants who earn up to 100% of the area median income.
Lam mentioned that the company’s first project at 1427 Ernest St., which commenced construction in January, is almost complete. It comprises 24 studios and two one-bedroom units.
“Construction is finished,” Lam stated. However, the project must receive a certificate of occupancy from the city’s Department of Planning and Permitting before tenants can move in. Lam expects to obtain the certificate by the end of the month. The Ernest Street project has received significant interest in terms of leasing, with three-quarters of the units already having applications submitted.
Lam also noted that potential renters earning up to 80% of the area median income, equivalent to an annual income of $104,800 for a family of four, have applied. Renting a studio unit in the project costs about $1,500 per month, including utilities like electricity, gas, water, and trash pickup.
Furthermore, Lam disclosed that the company’s upcoming affordable rentals on Pensacola Street (90 units) and Alapai Street (53 units) are coming soon. These projects are expected to be completed in the next two years, providing an additional 143 affordable housing units in urban Honolulu.
Despite the city’s promotion of affordable housing development under Bill 7, progress has been slow. The bill, which aimed to produce 500 affordable rental units annually, has only resulted in nine projects with a total of 229 units since its passage over four years ago.
According to DPP Director Dawn Takeuchi Apuna, the slow progress is partly due to challenges posed by Bill 7 itself. She stated, “Bill 7 is not the easiest law to work with because it tries to strike a balance between life/safety issues and providing more flexibility for cost-savings for these smaller developments.” The city also faces challenges related to coordination and design completeness by developers, as well as conflicts over plans and unit layouts.
Takeuchi Apuna affirmed the city’s commitment to Bill 7 and its affordable housing projects, which was solidified by the extension of waivers and incentives for another seven years through Bill 8, signed by Mayor Blangiardi on June 1.
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