Affordable Housing

The DPP is among several City agencies tasked with growing and maintaining the number of affordable homes on O’ahu. While some agencies directly provide affordable housing (AH) units or financial help to households, the DPP leverages its land use permitting authority to require or incentivize private developers to include affordable units in market-driven residential projects.
Who Qualifies for Affordable Housing?
Each year the City publishes its affordable housing Income Guidelines and Maximum Rents which are based on figures released by the U.S. Department of Housing and Urban Development. Typically, households qualify for AH rental units if they earn no more than 80 percent of the area median income (AMI) for Oahu, and qualify for AH for-sale units if they earn no more than 120 percent of the AMI.
Requirements for Affordable Housing in Private Projects
The City requires developers to designate a portion of planned housing units as affordable housing via one of two programs:
- Unilateral Agreements are conditions imposed by the City when land is rezoned. If the rezoning is for housing, the landowner is typically required to set aside 10-30% of the homes to be rented or sold at below-market rates. Here are some resources:
- The Unilateral Agreement (UA) process.
- Resolution 09-241 specifies target income groups and the number of affordable units in UA projects.
- City rules governing affordable units in UA projects.
- Ordinance 18-10 (Bill 58 (2017), CD2), enacted in 2018, broadens the affordable housing requirement to a wider range of projects, not just those resulting from a zone change. It requires AH units in for-sale projects of 10 or more homes.
- City rules governing AH units subject to ROH Chapter 29 and other City approvals, as amended in 2024.
Fee Waivers and Incentives for Affordable Housing
The City offers financial benefits such as fee waivers and grants, and may relax certain development rules such as height and floor area limits, to encourage developers to voluntarily build affordable housing. Here are some resources:
- Ordinance 18-1 (Bill 59 (2017), CD1, FD1) provides fee waivers and tax reductions for AH units built under Ordinance 18-10. Benefits include waivers of fees for building permits, plan review, sewer hookup and park space dedication, plus property tax waivers and a property tax freeze while the AH units are being built.
- Ordinance 19-8 (Bill 7 (2019), CD2, FD1) provides property tax exemptions, allows greater building density and relaxes other building standards for affordable rental projects on lots no larger than 20,000 square feet.
- Ordinance 21-12 (Bill 1 (2021), CD1, FD1) gives cash grants to developers who build AH rentals under Ordinance 19-8.
- The Honolulu Board of Water Supply may provide fee waivers for water systems facilities charges and new meter costs for qualified AH projects that are certified by DPP.
Affordable Rental Housing Projects under ROH Chapter 32
ROH Chapter 32 provides relaxed development standards and financial incentives for Affordable Rental Housing (ARH) Projects as long as a minimum of 80% of the dwelling units are rented to those earning no more than 100% of Honolulu’s Area Median Income (AMI) for a minimum of 15 years.
These projects (sometimes referred to as “Bill 7” projects because of the original bill for an ordinance) proceed directly to the building permit process; no prior discretionary approval is required in most cases. However, an executed Declaration of Restrictive Covenants must be included with the building permit application.
ARH projects are permitted in apartment, apartment mixed-use, and business mixed-use zoning districts, as well as the apartment precinct and apartment mixed-use sub-precinct of the Waikiki Special District, on lots up to 20,000 square feet. See eligibility map.
Project Considerations
- The maximum number of affordable rental housing units for each zoning lot is determined by dividing the square footage equivalent of the maximum allowable floor area ratio (FAR) for that zoning lot, excluding any public open space bonus FAR, by a factor of 800, and rounding down to the nearest whole number.
- The maximum size of an affordable rental housing unit in an affordable rental housing project ranges from 500 square feet for a studio unit with one bathroom to 1,350 square feet for a four-bedroom unit with 2.5 bathrooms.
- Refer to Articles 2 and 3 of ROH Chapter 32 for specific development and building construction standards, including examples provided in §32-2.6 and §32-2.7
- See building construction development standards in §32-3.2
Financial Incentives
ARH projects are eligible for the following fee waivers, tax exemptions, and cash grants:
- Waiver of Building Permit and Plan Review fees (ROH 18-6.5(i)(opens in a new tab)).
- Waiver of Water Systems Facilities Charge and New Meter Cost (Request Form).
- Waiver of Wastewater System Facility Charges, Waiver of Water Systems Facilities Charge, and New Meter Cost (ROH 43-10.8(opens in a new tab)).
- Waiver of Park Dedication requirements (ROH 22-7.3(j)(opens in a new tab)).
- Real Property Tax Exemption (10 years) (ROH 8-10.33(opens in a new tab)).
- Property Tax Freeze during construction (ROH 8-10.34(opens in a new tab)).
- Cash Grants (Ordinance 24-23(opens in a new tab)).
Restrictions
- No more than 20% of the total units may be occupied by the property owners or individuals who are related by blood, marriage, or adoption to the property owners.
- For a period of at least 15 years, the affordable units must be rented at or below the maximum rent established by the U.S. Department of Housing and Urban Development (HUD) as applicable by household size. The current Affordable Rent Guidelines published annually by the State Hawaii Housing Finance and Development Corporation (HHFDC) provides a useful guideline.
- Units may not be used as short-term rentals (units require a minimum six month lease).
- If the use of an ARH project is abandoned or in violation of any of the permitted uses, development standards, and other requirements of the program, the violator will be subject to enforcement, including potential civil fines.
§32-2.3 Development Standards
Development Standard | Requirement |
Maximum lot area | 20,000 square feet |
Minimum front yard | 10 feet, or the minimum front yard required by the underlying zoning, whichever is less. |
Minimum side and rear yards | 5 feet, or the minimum side and rear yards required by the underlying zoning, whichever is less. |
Maximum building area | 80% of the zoning lot |
Maximum building height | 60 feet |
Maximum density | 4.0 FAR |
Height setbacks | None |
Off-street parking | None |
Bicycle parking | None |
Off-street loading | None, provided that loading and garbage storage must be accommodated on site. |
Yard encroachments | Parking, including bicycle parking, is allowed in the side and rear yards. One loading space may encroach a maximum of 5 feet.Required fire exit stairwells and fire corridors may encroach into the front yard by a maximum of 5 feet. |
Multi-Family Rental Housing Program and Private Activity Bonds
The DPP’s Multi-Family Rental Housing Program (“Program”) will issue tax-exempt private activity bonds (PABs) to facilitate increasing and preserving the supply of affordable rental housing, maintaining a quality living environment, leveraging private sector funds to the greatest extent possible, and advancing the City’s affordable housing goals.
The Program will provide interim and permanent financing through the sale of tax-exempt bonds for the development or rehabilitation of rental housing by private developers and owners. To qualify, projects must reserve at least 20% of their dwelling units for tenants whose incomes are 50% or less of the Area Median Gross Income (AMGI) or at least 40% of the units for tenants whose incomes are 60% or less of the AMGI. The developer/owner must agree to keep the project as an affordable rental for a minimum of 15 years.
In addition to the City’s Administrative Rules on the Multi-Family Rental Housing Program, the DPP will utilize the Hawaii Housing Finance and Development Corporation’s (HHFDC’s) consolidated application and low income housing tax credit qualified allocation plan (QAP) selection criteria to evaluate applications for the City’s carry-forward 2020 approximately $120,000,000 PAB volume cap. Further, in order to avoid the expiration of the carry-forward 2020 volume cap at the end of calendar year 2023, in addition to evaluating applications pursuant to the rules, consolidated application, and QAP referenced above, the DPP will prioritize projects for the development or rehabilitation of rental housing that can demonstrate to the DPP the ability to close on the bond by November 1, 2023.
The completed application and all necessary documents will be accepted beginning October 6, 2022 through 4:30 p.m. Wednesday, December 7, 2022.
How to Apply:
- Download the Application.
- Fill out all parts of the application, including but not limited to financial worksheets, certifications, and questionnaires as indicated in the instruction tab and provide all necessary documentation.
- Send completed documents to: DPP.PAB.Program@honolulu.gov
Relevant Documents:
General Excise Tax (GET) Exemption
How to Apply:
The DPP may approve and certify for exemption from GET any qualified person or firm involved with a newly constructed or moderately or substantially rehabilitated affordable housing project. Please read the Administrative Rules on General Excise Tax Exemption (Title 20, Chapter 26), regarding general excise tax exemptions for qualified persons and firms involved in providing low and moderate income housing.
Please note that the application for the GET Exemption must be filed annually.
GET Frequently Asked Questions
Who may apply for a General Excise Tax (GET) exemption under the Rules?
Qualified persons or firms involved in eligible housing projects are eligible to apply for the GET Exemptions.
Who are considered as qualified persons or firms?
“Qualified person or firm” means an individual, partnership, joint venture, corporation, association, limited liability partnership, limited liability company, business, trust, or any organized group of persons or legal entities, or any combination thereof, which possesses all professional or vocational licenses necessary to do business in the State and the City in conjunction with planning, design, financing construction (including materials and supplies for new construction, moderate rehabilitation, and substantial rehabilitation), sale, or rental of eligible housing projects.
What is considered an eligible projects?
Under the rules, “eligible housing project” covers the following:
- A rental housing project by a qualified person or firm where at least 50% of the available units are for households with income at or below 80% of the AMI, of which at least 20% of the available units are for households with incomes at or below 60% of the AMI;
- A rental or for-sale housing project which is developed under a housing development program pursuant to part II chapter 201H, HRS, including the DPP’s rules implementing the same;
- A rental or for-sale housing project which is developed or acquired for the provision of affordable housing under a government assistance program approved by the DPP or;
- A rental or for-sale housing project developed under the sponsorship of a private nonprofit corporation.
It may also include “de minimis non-residential uses” that are intended to directly benefit the residents of the housing project. Notwithstanding any of the provisions herein, no project shall be an ‘eligible housing project’ unless that project is a “low- and moderate-income housing project” as defined by section 39A-281, HRS.
What will be exempted under the rules?
- All gross income received by any qualified person or firm as allowable development costs, allowable construction costs, or allowable financing cost for planning, design, financing, construction, sale, or lease in the City of an eligible housing project that has been certified pursuant to the rules; or
- All gross income received by nonprofit corporation or a limited distribution mortgagor as allowable development costs, allowable construction costs, or allowable financing costs for low- or moderate-income eligible housing project that has been certified pursuant to the rules.
What are the two types of exemption?
Exemption for New Construction or Rehabilitation and the Exemption on Rental of Affordable Rental Housing.
How can I apply for the GET exemption?
Download the application forms for a Certification of Newly Constructed or Rehabilitated Housing Projects or Certification of Rents Received in Affordable Rental Housing Projects, whichever is applicable, online at the Affordable Housing page.
What are the requirements for the GET Exemption for New Construction or Rehabilitation?
- Cover letter requesting for exemption and containing the following: company’s letterhead, address letter to DPP, project information (i.e., project name, TMK, address, etc.), description of eligible housing project (i.e., number of housing units/income criteria), source of financing from government assistance, construction update, authorization to inspect, list of licensed supplier and subcontractor with contract amount, contact information, and all other information deemed necessary;
- Form G-37 of the Developer/Main Contractor; and
- For Construction/Rehabilitation Exemptions with subcontractors/other entities:
- Form G-37 Schedule A – List of Unlicensed Suppliers and Subcontractors
- Master log of Companies that Provide Goods and Services to the developer/main contractor
- Form G-37 of the subcontractors and other entities
What are the requirements for the GET Exemption on Rental of Affordable Rental Housing?
- Cover letter requesting for exemption and containing the following: company’s letterhead, address letter to DPP, project information (i.e., project name, TMK, address, etc.), description of eligible housing project (i.e., number of housing units/income criteria), source of financing from government assistance, construction update, authorization to inspect, list of licensed supplier and subcontractor with contract amount, contact information, and all other information deemed necessary;
- Form G-37 of the Developer/Main Contractor;
- Schedule showing rents charged on all housing units providing verification that the lower income household tenants meet the income criteria necessary for the tax exemption; and
- Audited income statement or reconciliation of the form G-49 for the claimant’s project if provided for in the regulatory agreement.
I do not know how to fill in my Form G-37, what do I do?
Please refer to the Tax Facts 99-3 issued by the State of Hawaii, Department of Taxation on “General Excise and Use Tax Information for Construction Contractors”, which can be found in this link https://files.hawaii.gov/tax/legal/taxfacts/tf99-3.pdf.
If I have already filed my G-37 and there are changes in the contract amount, can I amend my G-37?
If there are substantial changes, file an amended Form G-37. Otherwise, you only need to file for an additional Form G-37 covering the difference in the amount.
What is considered to be a substantial change in the Form G-37?
If a contract for work on a certified project experiences substantial changes (i.e., changes of more than 20% of the original contract amount, or more than $200,000.00), the claimant must submit a revised, or amended, Department of Taxation form G-37 for certification by the DPP.
An existing affordable rental housing project was conveyed/transferred to us. Can we also apply for the exemption?
Yes, provided that you comply with the following conditions:
- Rental project was previously certified or approved for exemption from GET by the city;
- Rental project will continue to meet the income criteria of an existing eligible housing project;
- Claimant shall reapply for certification of the existing rental project.
How long does the entire process take?
Determination of eligibility for the GET exemption be done within 30 calendar days from the receipt of the application.
How will I know if I am eligible?
The DPP will issue a Notice of Eligibility or Non-Eligibility in writing to the applicant.
Is the notice sufficient to receive the exemption?
No, a separate issuance for a Certification for Exemption is required before being entitled to the GET Exemption.
Contact Information
For questions on ROH Chapter 32 Affordable Rental Housing, Multi-Family Rental Housing Program and Private Activity Bonds, and the GET Exemption Program, please contact a member of the program staff at (808) 768-3118.
Frequently Asked Questions (FAQs)
What does the City mean by "affordable housing"?
While many types of low- to moderate-cost housing can be considered affordable, the term formally refers to government-regulated houses and apartments that are reserved for households of a certain income, at a certain price, for a specified period of time. For example, the City may require that 20 apartments in a 100-unit building be rented to families earning 80 percent of the area median income (AMI), and remain at that price level for 30 years.
What is the DPP's role in affordable housing?
DPP regulates affordable housing units built as part of market-driven developments (as opposed to government-planned and -funded housing). In some cases DPP requires affordable housing as part of a private project. In others, DPP offers financial incentives and relaxes rules to encourage developers to voluntarily produce affordable units.
What affordable housing projects regulated by the DPP?
What income groups is DPP trying to help?
City-regulated affordable rentals typically are meant to serve households earning 80 percent of AMI ($96,640 for a family of four in 2021). City-regulated for-sale homes typically target households at the 100 percent and 120 percent AMI levels.
What are the DPP programs that mandate affordable housing?
There are two main programs: One mandates a certain number of affordable units as a condition of rezoning. These conditions are known as unilateral agreements. The second is a 2018 ordinance that expanded the types of projects in which affordable units are required. This program, known as the City’s Affordable Housing Requirement, requires affordable housing in for-sale residential developments of 10 or more units, with some exceptions.
What DPP programs offer incentives to encorage voluntary provision of affordable housing?
The Affordable Rental Housing Project program, enacted in 2019, waives certain City fees, allows extra building height and density, and relaxes other development standards for small-lot rental projects aimed at 100% AMI households. City grants of up to $15,000 per affordable apartment developed under the 2019 program were enacted in 2021. Fee waivers are also granted to projects that are mandated to provide affordable housing.