The city housing sale has failed. Now what?

After years of complaining about the City losing money on its twelve affordable housing properties because housing is not its core competence, (1) successive City administrations did nothing to increase City competence to own/manage these valuable assets, opting to sell them instead, and (2) that long awaited sale just failed. Hoping to get the right buyer, willing and able to preserve our affordable homes, residents never opposed selling. However, this sale was extremely disappointing for residents, though not for the same reasons as for the City.

Of course the sale failed. The City administration rushed approval through City Council in 2012 without understanding the invalid assumptions about residents and rents or the unrealistic math of now-failed financing for a large bid based on those invalid assumptions. Those failed assumptions included, e.g., low-incomes can afford gap-rate rents, gap-incomes can afford market-rate rents (so all gap units can be eliminated from these properties with no resident or community consequences), all residents can afford 10% per year rent increases for 5-10 years, and no residents will be displaced by these rent increases. This sale has failed – now what?

Honolulu now has the following two broad options:

1) The City can stop complaining and raise its competence to own/manage valuable City assets, i.e., to manage City contracts, stakeholder communications, and housing funding; or

2) The City can reboot the sale, this time with realistic assumptions, fully understood math done in full public view, honest communication and partnership with residents, and genuine accountability ensured by effective City Council check and balance.

Merely swapping buyers to continue trying to finance failed but unexamined assumptions is NOT an option. Surely, we cannot afford to rush to failure again!

In fact, area legislators, both City and State, sought answers for over eight months to questions about the impact of the sale on residents, as evidenced by stacks of correspondence with City agencies, HHFDC, the Department of Health, and others. Area legislators are also hosting a series of Talk Stories with residents, because resident and legislator questions and our mutual inability to get satisfactory answers closely align.  No one can say that together we have not been persistent in our efforts to hold the City administration accountable!

In hopes that this failed sale contributes positively to a City learning curve, appropriate next steps for resident/legislator partnership would include the following:

– Support Senator Chun Oakland’s Housing-Homeless Task Force package of measures in the current session, which would greatly expand affordable housing choices;

– Redress legally-qualified rental applications that may have been illegally denied as early as 2012 in favor of uniformly low-income applications, in a now failed effort to boost the low-income resident numbers to enhance the buyer’s public financing;

– Openly examine Costs/Benefits for all state-of-the-art or best-practice affordable housing models and options for these properties, including considering the following:

– Raising city competence rather than selling off valuable assets, as competence is probably the most genuinely cost effective solution in the long run;

– Ensuring that we know the true appraisal value of these properties;

– Ensuring that we know the true state of affordability to residents, for the sake of valid assumptions about rent increases and resident displacements in all twelve properties.  The City apparently looked deeply into only one property, but that situation completely contradicted their resident/rent assumptions!  If invalid assumptions about current and prospective residents are the primary reason why financing for this sale failed in the first place, then we certainly will repeat this fiasco if we don’t fix those assumptions; and

– In the event that rebooting the RFP process is genuinely the best option that honestly benefits all stakeholders (show us the math!), then legislators and residents must join together in seeking an RFP process designed to preserve the mixed-income affordable housing deliberately established by the original Environmental Impact Statement (EIS) process in these properties.

In conclusion, we all need to appreciate the weight of the City’s responsibility for these twelve valuable affordable housing properties. At the same time, we need for the City to exercise that responsibility effectively. We need for City administration to recognize that it adds to its own burden when it adds to resident/citizen/voter/taxpayer burdens through avoidably poor decisions. To quote a former mayor, the now-failed buyer selection was a “no brainer” because of the large bid. Clearly, no-brainer governance is a problem, not a solution. As clearly and patiently as we know how, residents are calling for yes-brainer governance now!

Steve Lohse is the chair of Chinatown Gateway Plaza Tenant Association (CGPTA) and co-chair of the Social Justice Council of the First Unitarian Church of Honolulu