Some initiatives are already producing homes, and some will deliver over the next few years. Other efforts, including a few taken up by the Legislature this year, have led to disappointment or are more uncertain.

On the whole, state officials and affordable-housing advocates agree that much more needs to be done.

"The issue of affordable housing has reached crisis proportions," Sen. Ron Menor, D-17th (Mililani, Waipi'o), said during a Housing Hawai'i conference this year. "We need to declare the equivalent of war on this problem."

Asoka de Silva, a University of Hawai'i employee, like many in Hawai'i, is troubled by the lack of affordable housing and its impact on his quality of life.

"I have no hope of ever owning a place of my own no matter how much I try, if the current trend continues in this state," he said.

As a Hawai'i resident of more than 30 years and a researcher with UH's Department of Plant and Environmental Protection Sciences, de Silva, 55, rents a "shoebox"-size one-bedroom apartment in a run-down Makiki apartment building where his rent has risen three times in the past three years — from $600 to $800 a month.

"I have an honorable, enjoyable professional job at UH, but I have such a low standard of living due to rising costs, I am embarrassed to even invite anybody to my place," he said. "If the current trend continues, most of us will either have to leave Hawai'i or significantly lower our standard of living."

BIG ISLE NONPROFIT PROJECT AIMS TO AID RESORT WORKERS

Perhaps the biggest planned affordable-housing community in Hawai'i is Kamakoa Vistas in Waikoloa on the Big Island, where 1,200 homes, including 400 rentals, are expected to break ground in September.

Kamakoa is designed to provide homes largely for employees of West Hawai'i's resorts, many of whom commute from East Hawai'i and contribute to nightmare rush-hour traffic.

Home prices at Kamakoa are projected to range from $230,000 to $375,000.

Kamakoa is a community land trust, meaning the land is held in trust and made available to individuals on a long-term lease.

The land was conveyed to the county by the developer of Waikoloa Resort as part of a requirement to provide for workforce housing. It will be managed by the nonprofit Waikoloa Workforce Housing LLC.

Because the land will be held by the nonprofit, prices of homes at Kamakoa will hopefully not escalate as rapidly as fee simple housing. Increasing land values have removed past affordable-housing projects from the affordable inventory.

In spite of the ownership structure, it was still hard to make the Kamakoa homes affordable for moderate-income residents.

Much of the difficulty stems from estimated infrastructure costs of around $90 million for the 268-acre site. To pay for that, Kamakoa homeowners will pay an estimated $300 to $500 a month as a kind of special property tax.

The arrangement, called Community Facilities District financing, reduces the upfront price of a home and the mortgage that buyers need to carry and pay interest on.

Keith Kato, executive director of the nonprofit self-help housing program operator Hawai'i Island Community Development Corp., believes the financing arrangement is a first in Hawai'i and will help make Kamakoa more affordable. "It should lower your cost," he said.

Kamakoa's developer, UniDev LLC, is also offering lower-than-normal interest rates on loans of up to 100 percent of the cost of the home.

The county proposes contributing $40 million to the project, including $25 million for parks and $15 million to subsidize rates on rental units for people earning up to 80 percent of the median income.

To ensure the homes remain affordable in perpetuity, the county and UniDev agreed that there is no annual lease rent after buyers pay a one-time fee of $5,000 to $8,000. When the original home owner sells a house in the project, the new buyer doesn't have to pay a fee.

Ed Taira, Hawai'i County housing administrator, said Kamakoa is the most complicated affordable-housing project ever undertaken by the county because challenges to deliver affordability have risen so high.

"We need to bring down the prices to where workers can afford it, otherwise we're building it for nothing," he said.

John Ray, a trustee for major Big Island landowner Parker Ranch, calls Kamakoa's community land trust arrangement a "radical approach" that, with hope, will become a successful model for future affordable housing in Hawai'i.

CHURCH AFFILIATE TO BUILD UNITS

A local affiliate of The Church of Jesus Christ of Latter-day Saints has wrestled with the need for affordable housing and concluded that working-class families can no longer afford standard-quality fee-simple homes on O'ahu.

Hawai'i Reserves Inc., a land-management arm for the Mormon church, plans to develop several hundred homes mostly as affordable units targeted to workers in La'ie.

The 663-acre development in Malaekahana is under preliminary planning and would create up to 550 homes.

But to make most of the units affordable to those earning 80 percent to 140 percent of the median income, Hawai'i Reserves concluded it would need to lease the land to homebuyers.

No timetable has been set for the project.

IN KONA, PREFAB UNITS SAVE MONEY

Some developers have turned to nontraditional building methods, such as modular construction that's being used to build a 108-unit Big Island condo called Seascape.

Seascape developer Westpro Holdings is selling the 1,010-square-foot Kona condos for $284,600, and held a lottery last year that attracted 300 entrants. The first phase of 40 units is scheduled for completion in the next month or two.

Mikilani Van Osdol, a 36-year-old single mother who manages an office building, drew a high-enough lottery number and qualified to buy one of the initial units.

"I'm thankful," she said. "The demand (for affordable housing) is greater than what's out there. If there wasn't this opportunity, I definitely would not (be able to afford) a market-rate home even with good credit."

Construction costs for Seascape were held down by building components in a factory. Each unit consists of two modules that were installed with nearly everything except a roof and floor coverings before leaving the factory.

At Seascape, modules are connected to make eight-unit buildings. Westpro principal John Stevens said the process reduces construction costs 20 percent.

Westpro also earns affordable-housing credits from the county, and is able to sell the credits to developers that need to provide affordable housing as part of their projects.

"These funds help subsidize and help make (Seascape) feasible," Stevens said, adding that other contributions from appraisers, title services and subcontractors help. "I won't kid you and say it is easy," he said. "It is not."

Westpro plans to use its model to build a 306-unit rental complex on a site next to Seascape. The project is in early planning stages and is also seeking state and federal tax credits to make rents affordable for lower-income tenants.

LAWMAKERS HIT AND MISS ON HOUSING ATTEMPTS

The Legislature this year made several attempts to address affordable-housing needs.

One major accomplishment was appropriating $25 million in general obligation bonds to help preserve the 857-unit Kukui Gardens rental complex in Liliha and extend affordable rents there for 55 more years.

The need arose after private firm Carmel Partners arranged to buy Kukui Gardens from its nonprofit owner last year in a deal that raised uncertainty over whether low rents would continue after 2011 when a federal financing covenant expired.

Under the deal, the state is buying 389 Kukui units on 10 acres for $59 million, and spending $11 million on renovations. The total $70 million project cost will come from the $25 million appropriation plus $45 million in tax credits and revenue bonds sought by California-based EAH, a major affordable-housing developer, which the state selected to manage the project.

Carmel is buying the rest of the property with 468 units on 12 acres. Carmel agreed to maintain rents at existing levels through 2011 and then keep monthly rent under the upper limit of federal affordability guidelines, which today is about $1,900 for a one-bedroom apartment to $2,900 for a four-bedroom apartment based on households earning 140 percent of the median income.

Last year, about 225 Kukui units were close to or above the upper-limit levels.

In another effort, the Legislature was unable to pass a bill proposing that $50 million in state tax credits go to building affordable housing on the Leeward Coast. The expense was already in the state budget as part of $75 million in credits originally earmarked for an aquarium at Ko Olina Resort & Marina, which no longer needs the credits.

But there were other suggestions on how to reuse the tax credit, and lawmakers in conference failed to pass House Bill 1277.

The Legislature also was unsuccessful trying to reduce regulatory barriers that discourage affordable-housing development, an issue elevated by House majority leaders to a high priority early in this year's lawmaking session.

House Bill 1001, among other things, would have expedited permitting and provided exemptions from some land-use and environmental rules for nonprofits developing rental projects for lower-income tenants.

Some observers questioned whether the bill would have resulted in an easy or immediate solution, though others regarded the bill's failure as a significant setback.

"I don't think they understand the problem — the crisis," said James Wong, a retired local real estate developer who convened an ad hoc affordable-housing task force last year to address the issue. "In five more years the patient is going to die already."

LAND TRADE-OFFS BY DEVELOPERS WORK IN SOME AREAS

Most new affordable homes in Hawai'i are built by developers as a public benefit negotiated with counties in exchange for rezoning agriculture land for residential use. Typically under these agreements, developers have had to sell 20 percent to 30 percent of homes at affordable prices.

For example, the largest upcoming requirement is for about 1,500 affordable units as part of the roughly 5,000-home first phase of the planned Waiawa community by Gentry Cos., which expects to begin selling and delivering homes in early 2009.

Affordable-housing contributions also have been mandated for large resort developments, such as the Kamakoa project in Waikoloa. But such deals were not common for other commercial projects.

About three years ago, the state Land Use Commission required A&B Properties Inc. to convey at least 10 acres to Maui County for affordable housing as part of the company's plan to expand Maui Business Park.

The reasoning is that an industrial park will generate a need for affordable housing by creating jobs.

"This is somewhat groundbreaking," said Anthony Ching, executive director of the Land Use Commission.

On the Big Island, an expansion of the Kaloko Industrial Park resulted in developer TSA Corp. offering eight acres of land to address Kona's affordable-housing shortage.

Earlier this month on O'ahu, former Land Use Commission member Steven Lee Montgomery testified before the commission and suggested that dedicating land for affordable housing should be a condition for a James Campbell Co. affiliate developing Kapolei Harborside Center, a planned industrial park expected to create 3,800 jobs.

The commission has yet to make a decision, but the city and Campbell affiliate Kapolei Property Development don't support an affordable-housing requirement.

Henry Eng, city Department of Planning and Permitting director, said such requirements are more appropriate for rural communities with insufficient housing supply near commercial development sites.

In contrast, Honolulu is very urbanized, and Kapolei is designated to be O'ahu's second commercial core. Both areas have lots of housing, including affordable units.

Dave Rae, Kapolei Property Development senior vice president, said the 'Ewa region has a large supply of existing and planned homes, including 10,000 planned homes that will fall within affordable ranges.

"We believe this is more than adequate for the 3,800 high-paying jobs we expect will be generated by the Kapolei Harborside industrial project," he said.

TAX CREDITS TO HELP WITH THOUSANDS OF HOMES

Tax credits and other government financing are some of the biggest sources helping pay for affordable housing in Hawai'i.

The Hawai'i Housing Finance and Development Corp. this year should award $120 million in affordable-home development financing, mainly in the form of federal and state tax credits.

The state agency in April awarded $97 million in mostly tax credits but also state loans, bonds and grants to help nonprofit developers build 486 affordable homes over the next two years. Another $23 million is projected to be awarded later this year and could finance around 200 more units.

Through other HHFDC programs that include providing land to developers, the agency is on course to bring 4,689 homes for rent and sale to market in the next five years — a production rate not seen since the early 1990s.

Still, several efforts to deliver dramatically more money to the agency for financing affordable housing either were scaled back or died at the Legislature this year.

One bill that failed, House Bill 668, would have appropriated roughly $150 million to the agency for affordable-housing construction and a down-payment loan program for first-time homebuyers.

Gov. Linda Lingle's budget request sought $50 million for the agency's rental housing fund over the next two fiscal years, but the Legislature approved just $15 million for one year.

Another bill, Senate Bill 1917, would have increased to 65 percent the share of conveyance taxes going to the agency's rental housing fund through 2012. Lawmakers instead approved only a one-year contribution at 50 percent, which provides no increase from last year, when lawmakers made a one-year increase to the rental fund's share of conveyance taxes from 30 percent to 50 percent.

The difference between a 50 percent contribution and 65 percent contribution is estimated at $11 million.

Many affordable-housing advocates were disappointed that lawmakers didn't do more to bolster production subsidies, especially considering that the Legislature raided various affordable-housing funds to the tune of $212 million between 1995 and 2005.

Kevin Carney, vice president of EAH Housing Hawaii, regards financing as the biggest challenge to building more affordable housing, and said the state doesn't provide enough subsidy for nonprofit projects.

California-based EAH, a major affordable-housing developer, entered the Hawai'i market in 1996 to preserve two affordable rental projects. In 1999, the city selected EAH to build a 192-unit affordable rental complex at 'Ewa Villages, but the project has yet to start, largely because of escalating construction costs and limited state subsidies.

"We haven't put a shovel in the ground yet," said Carney, who is also president of Housing Hawai'i, a 2-year-old coalition of affordable-housing advocates. "It's a pretty big example of what the problem is."

The federal government allocates its tax credits at an annual rate of $1.95 per resident. So although Hawai'i's affordable-housing need is great and development costs are high, a small population limits what can be delivered through federal credits, which draw a 50 percent match from the state.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.