Even with Free Land, 'Affordable Housing' Fails
Hawaii developers are struggling to sell affordable housing units, despite being given plots of state land to build on for free.
In the past five years, at least two major developers set out to offer homes to low- or moderate-income families. Developers Castle & Cooke and CMKLV Inc. each received free land from the state under the premise that they would sell the homes they built only to families that couldn't afford Oahu's $570,000 median home price.
But despite the perk, the projects haven't been financially sustainable. The deals soured, the companies say, due to the state of the economy and affordable housing applicants' credit issues.
As a result, Honolulu will have fewer affordable housing units as developers change course and obtain permission from the state to allow wealthier applicants to scoop the homes up.
By reneging on their earlier promises, are these developers essentially being bailed out by state government?
"I don't know if you would use that term (bailout) necessarily, but it certainly is a change in the contract," said University of Hawaii Associate Professor of Economics Theresa Greaney. "My guess would be that there should have been some kind of contingency in the contract initially for this type of situation."