The big push in the Legislature to increase the number of affordable housing units is centered on pumping additional funding into the Rental Housing Trust Fund, but an influx of money wouldn't automatically materialize into the thousands of needed units.

As much as $250 million could be placed in the trust fund by 2010 if current legislation is passed and signed by Gov. Linda Lingle, who supports the idea.

But how and when the affordable units would be built remains unclear.

"The reality is thousands of units have to be built," said Sen. Ron Menor, co-chairman of the Joint Legislative Housing and Homeless Task Force. "But I think state government can make a significant dent in addressing the affordable housing problems in our state. The task force is looking at a five-year plan. We would like to see at minimum an additional 10,000 for-purchase and rental units being built within a five year period."

The task force, which issued its report to the Legislature last month, estimates that 44,190 new housing units (32,580 on O'ahu) will be needed in the state by 2009. Of those, 21,890 units (15,590 on O'ahu) will be needed by households earning less than 80 percent of the median income, or $54,250 a year for a family of four.

The Rental Housing Trust Fund sets aside money collected from real estate transactions (through the state's conveyance tax) to build rental housing. The booming real estate market has dramatically increased property sales feeding the fund, but rising home prices and a shrinking rental market have made affordable housing an issue for thousands of Hawai'i residents and pushed more people into homelessness.

Ardith Hoover, 84, knows she is one of the lucky ones. She has a one-bedroom apartment in Kinau Vista, an affordable senior rental project built using a $1.9 million loan through the Rental Housing Trust Fund. Since the fund was established in 1993, 2,270 family, senior and special-needs rental units have been built and more are under construction.

"It has been just so great," said Hoover, who moved into the project when it opened last year. "I'm so close to the market. My church is right on the corner. Everything worked out so good. God was watching over me."

Hoover pays $315 a month for her unit, which was built by the Hawai'i Housing Development Corp., a private, nonprofit agency established in 1993 by community leaders to provide rental housing for people with low incomes in Honolulu's high-priced market. The nonprofit has built eight such buildings, including the 'Ainahau Vista senior rentals in Waikiki, which is expected to open in December.

"I couldn't live (in Hawai'i) if it wasn't for this," Hoover said. "My Social Security isn't that high. I do have a little savings, but not a lot."

PUMPING UP FUND

Senate Bill 2999, an omnibus bill that includes several of the task force's recommendations to increase housing and curb homelessness, was passed by the Senate Committee on Commerce, Consumer Protection and Housing last week. Among other things, the bill would increase the portion of the conveyance tax allocated to the state's Rental Housing Trust Fund from its current 30 percent to 65 percent. That would eliminate the portion of conveyance tax money that now goes into the general fund.

In fiscal year 2005, the trust fund received more than $6 million, when it was at 25 percent of the total conveyance tax. The fund was increased to 30 percent for the current fiscal year, which started July 1, 2005, and ends June 30, and that already has brought in nearly $6.2 million.

Menor said estimates based on the work of Legislature's research office and consulting with the state government's Housing and Community Development Corporation of Hawai'i and the state tax department, indicate that at 65 percent of the conveyance tax more than $46.2 million will be placed into the trust fund in fiscal 2007. The estimates have $55.2 million added to the fund in 2008, $66.4 million in 2009 and $80.3 million in 2010, giving the state more than $258 million to use for rental housing development.

Darren Ueki, finance manager of the Housing and Community Development Corporation of Hawaii, said there currently is about $23 million in uncommitted money in the trust fund. Ueki also said the total amount going into the fund is based on booming real estate sales and that the market could change at any time.

Typically, he said, the trust fund has financed three to five projects a year with 50 to 60 units each. The projects take two to three years to build once financing is approved.

LOANS AND MORE

The trust fund provides loans for about 25 percent of an affordable rental project but is only one part of the financing, Ueki said. State and federal tax credits account for about 60 percent of a project and a conventional mortgage usually picks up the rest.

Ueki said simply putting more money into the fund will not necessarily result in more affordable rental units.

"Not a whole lot of people are pounding at our doors saying they want to do affordable rentals," he said. "The nonprofits we work with willing to develop these properties are in it for the cause."

He said there is a relatively small profit margin for affordable units and that few developers will devote themselves to the task when other projects are more lucrative.

Ueki said it is time-consuming and labor-intensive to plan a project, appropriate properties are hard to find, the booming construction industry makes it hard to find a contractor, labor is limited and the price of materials is going up every day.

"All of these things put together, it is not as simple as give the trust fund $100 million and all your problems will go away," he said.

LOOKING AHEAD

Menor is more optimistic about finding developers to take on affordable housing projects and said that with the upcoming split of the Housing and Community Development Corporation of Hawai'i into two agencies on July 1 — one to administer public housing and the other to finance and develop affordable housing — he is hoping the agency will focus more on construction.

"With the new housing finance agency, we are hoping they will be a lot more aggressive in leveraging the state dollars to attract more private sector investment and involvement in development of more affordable housing," Menor said.

Laura E. Thielen, executive director of the nonprofit Affordable Housing and Homeless Alliance, said the trust fund is the most direct way to get cash into the hands of developers to build affordable homes and that similar funds have been set up across the country.

"The conveyance tax can't do it alone. But it is a huge, significant part of the puzzle," Thielen said. "There are a lot of pieces of legislation this year that will help the overall problem.

"I'm so hopeful. Developments are going to take a while to come on board, but once they do, we are going to see a huge difference in our homeless population and people who are doubling up and things like that."

Reach James Gonser at jgonser@honoluluadvertiser.com.