EDMONDS: Is ‘affordable housing’ a sick joke?

In this month’s column we are going to try to “de-mystify” the affordable-housing industry! This is not easy, for it is truly a mystery. I’ve been in this business, full time, for about 5 years, and I’m just starting to figure it out. Consequently, this column is sort of ghost-written by Larry Graff, executive director of PAL Kaua‘i (Permanently Affordable Living).

Strap on your seatbelts. We are going to try to clarify WHAT “Affordable” means; HOW affordability is determined by government; WHY “Affordable housing” is sooo unaffordable for most of us on Kaua‘i; and HOW you can penetrate this maze and actually buy a home! LARRY — WE MAY NEED TO WRITE THIS PART AND USE OUR “IT’S A WRAP” IN THE RADIO SHOW TO ADDRESS THIS! As usual, you can learn a lot more about this from the experts on our PAL KKCR radio show tomorrow afternoon at 4! We recall when “Affordable housing” was listed for sale at ½ a million dollars (waaay back in 2018!) for a project on the Eastside, and everyone said “Are you kidding?” Now, for the bad news … the federal standards, which they base on the median income on Kaua‘i, have risen, so affordable developers actually have the right to charge MORE, and still call it “Affordable.” You’re not going to believe this, but — in fact — a three-bedroom house on Kaua‘i can now be sold for more than $624,000 and still be officially called “Affordable.” Say whuuuut!? So, the answer to our question, “Is this just a sick joke?” might be “Yes!”

The first and most-important fact to understand is that the word “affordable” is determined by statistics. I always say: Figures don’t lie, but liars can figure! Mark Twain once said that, in order of magnitude, “there are lies, damn lies, and statistics!”

In “Affordable housing,” these may be the truest statements of all. But why?

All “Affordability” in the United States is determined each year by taking ALL the incomes (according to the number of people in a household) for each area (such as Kaua‘i County) and choosing the exact, MIDDLE NUMBER. This number is called the “Area Median Income (AMI).” That number has been defined by the federal government as “100% of the Area Median Income” for this county — based on how many people are in a given household. “Affordability” is then measured based on the percentage of AMI. So, for example, the most “Financially challenged families” might be under 30% of AMI. But those who don’t qualify for financial aid in most situations, but who also cannot qualify for a home mortgage, are probably below 120% of AMI. Clear as mud? OK. Let us try to explain.

As an example, 100% of the AMI for a family of four in Kaua‘i County is $97,400. Today. Actually, this year. The feds re-set this number every year, usually in April. So, half the families of four on Kaua‘i make more than $97,400 and half of us make less than that. This number is generated by the U.S. Department of Housing and Urban Development. ALL funding for affordable housing is based on these income statistics. Everybody, even states and counties, use these “Statistics” to determine and enforce affordable requirements for rental and for-sale housing. How many four-person households do you know on Kaua‘i making $97,000? Most families have members working two or more jobs and they don’t come close to this income. So what’s up with these statistics?

In most locations in the states, most people are gathered around the middle-income number. So if you think of this as a graph, this looks like, and is usually called, a “bell-shaped curve.” I’m sure you will be shocked to hear that we are different on Kaua‘i! As in many resort-destination areas, we have a lot of people at the low- and high-income ranges — with fewer in the middle. So, if you think about it, this looks more like a double-bell-shaped curve! Maybe envision that it looks like a double-humped camel. This is how our AMI gets skewed! If anybody tries to use this “middle” number as a guideline for the affordability of for-sale and/or rental housing, it actually serves fewer people, drives the prices waaay up and makes most properties mostly unaffordable for those who need help.

All “Affordable Housing Funding” comes to state and county governments through the federal government. And all are regulated by the code of federal regulations, and so are tied to AMI. Housing-assistance programs for homes for rent and for sale are administered by the County of Kaua‘i, and they essentially must use AMI as a measure of affordability! Pardon our “dad joke,” but on Kaua‘i AMI could literally stand for “A Miserable Index” instead of “Area Median Income!”

So, family-income levels are determined by the number of people in a household, but the affordability of for-rent and for-sale housing is determined by the number of bedrooms. This is based on the assumption that a one-person household would occupy a studio and a two-person household would occupy a one-bedroom house, and so on.

In for-sale housing, the rate of affordability is determined by the AMI, number of bedrooms and interest rate. Basically, if the interest rate is lower, the price can go higher within a percentage of the AMI. The County of Kaua‘i recently reduced what is considered affordable from 140% AMI to 120% AMI. They began to realize that prices based on 140% of AMI are essentially what the market rate is. Unfortunately, with the current precipitous rise in home prices, that’s not true, so, based on the income distribution (more people at high and low ends), even 120% of AMI won’t actually allow most of us to afford to buy a home. At 4.25% interest, a four-bedroom, fee-simple home can sell as affordable housing at $703,300! WOW! We call this “Sick-joke affordability!” This assumes a 5% down payment and a 30-year, fixed-rate mortgage. At a lower interest rate, this amount goes up!

Affordable rents fair no better. At 120% AMI, a three-bedroom with utilities included can rent for $3,178, and without utilities $2,801! Holy guacamole! How many four-person households can afford that? Not most of our residents who are working two and three jobs.

Is there a solution? YES!!! Affordable-housing developers are tied to using AMI to select renters and home buyers (based on their actual income and where that income falls under the AMI index) but THEY DO NOT HAVE TO CHARGE THE MAXIMUM AMOUNT!!! This means that they will still need to qualify households according to the rules but, as an example, they can qualify a family at 120% AMI for that four-bedroom home but only charge $232,000 instead of $703,300! That’s what Habitat for Humanity does. That’s what we at PAL are trying to do! AND, counties CANNOT change the income qualifications of households set by HUD, but CAN set policies that subsidize or reduce the cost of affordable housing.

For affordable-housing developers to truly serve the people of Kaua‘i, they need to build housing people can actually afford. It ain’t easy, but it is possible. Currently, Habitat for Humanity builds home for households earning no more than 80% of AMI. We, PAL, are committed to sell homes at prices our people can actually afford. We are committed to developing housing projects that are not only truly affordable, but also provide solutions to energy, food and transportation costs to reduce the cost of living, which is waaay to high on Kaua‘i.

There are things you can do right now to buy or rent a home affordably. We encourage you to get on waiting lists for rent and homebuyer programs. You might say “I am not in a position to buy a home right now.” However, it can take a while, even years, for your name to come up on the lists, so it’s important to get your name on the lists now. Many of these programs have eligibility based on income. To check your income based on affordability tables, visit county of County Housing Agency website, kauai.gov/housing, and click on Housing and Community Development, and/or visit the state Housing Finance Development Corporation website, dbedt.hawaii.gov/hhfdc/2020-hud-income-rents-and-sales-price-by-counties.

The County of Kaua‘i has several programs that help people in buying and renting, including the First Time Homebuyer Program, Tenant-Based Rental Assistance, and Housing Choice Vouchers (also referred to as Section 8 or HUD housing). Under these types of programs, the household will pay no more than about 30% of their income towards their housing. For more information about county programs, go to kauai.gov/housing and click on Housing and Community Development. The county also has lists of affordable-housing rental apartments. If you need an affordable rental, we encourage you to get on the waiting lists for these apartment complexes.

In addition to opportunities at the county, Habitat for Humanity has a waiting list. See the website, kauaihabitat.org or call 335-0296 to find out about their programs. You can also get on PAL Kaua‘i’s waiting list as well as finding other opportunities through Hawaiian Community Assets (HCA). HCA provides individualized counseling to assist individuals and families create a financial-action plan to build savings, pay down debt and improve credit, with the goal of securing and sustaining permanent affordable housing. You can reach HCA at 632-2070 or find them on the web at hawaiiancommunity.net.

At the beginning of this column we asked if affordable housing is a sick joke. The answer is yes, But it doesn’t have to be that way, and we are pulling out all of the stops to fix it. You can find out more about PAL Kaua‘i, and even help us, by visiting our website at PAL-Kauai.org.


Jim Edmonds, president of PAL (Permanently Affordable Living) Kaua‘i, can be reached at Jim@PAL-Kaua‘i.org. The PAL Kaua‘i mission is to provide homes and sustainable-living solutions, within reach, restoring hope for the people of Kaua‘i.

  1. Rev Dr Malama March 21, 2021 4:57 am Reply

    5 years as a nonprofit, inquiring minds want to know how many people are now in affordable housing thanks to pals or is it really a sick joke?

  2. Richard Fukushima March 21, 2021 6:07 am Reply

    Thank you for shedding the “Light” on Affordable housing. It always have been a mystery to me as to how “Affordable Housing” was determined. I do agree with your comments about the housing situation on Kauai. Years ago, when affordable housing was in the $200,000 range, I thought it was impossible for the people on Kauai to afford. Now the range is nearing $1 Million dollars as affordable, is just too much to swallow, it’s way beyond being a “Joke”.
    Keep on doing your honorable and blessed work for the “Normal” people of Kauai to call Kauai their “Home”.

  3. Imua44 March 21, 2021 6:50 am Reply

    Thank you Mr Edmonds for your efforts.
    Costs could be reduced by streamlined permit process, lower water fees and redtape.
    No housing will be built until the county embraces houses for the people.
    You are the exceptional person. Not one of the many builders or developers who have been in business on Kauai would attempt to help. The County bureaucrats have a builder in a circle jerk for years. Their attitude and policy stop a reasonable person from helping.
    And we can still build at 150 per foot. It can be done. The county only wants the rich or fed funded housing that the county can control.

  4. james March 21, 2021 6:53 am Reply

    Affordable housing is fine if the artificially reduced price is subsidized by non-profits like Habitat for Humanity and others. However, when we taxpayers are forced to subsidize those that can’t afford to live here, that’s where things get dicey. Should our tax dollars go to benefit a select few or be better spent on roads, bridges, river maintenance, waste-water infrastructure and other public works projects that benefit the majority of Kauai residents? Using federal funds earmarked for low income housing is fine, but when County tax dollars come into play, I believe we have a fundamental problem with using those tax dollars to benefit a select few and that’s what irks me.

  5. randy kansas March 21, 2021 7:27 am Reply

    supply and demand, determine housing and affordability, not government programs;

    affordable housing is a myth;

  6. kauaiboy March 21, 2021 8:09 am Reply

    Mr. Edmonds writes:

    “We, PAL, are committed to sell homes at prices our people can actually afford. We are committed to developing housing projects that are not only truly affordable, but also provide solutions to energy, food and transportation costs to reduce the cost of living, which is waaay to high on Kaua‘i.

    There are things you can do right now to buy or rent a home affordably. We encourage you to get on waiting lists for rent and homebuyer programs.”

    I did not understand that “PAL” sells homes. Which homes? Where? For how much?

    When you write that you are committed to sell affordable homes, but only suggest that those seeking affordable housing get on waiting lists for rent and home buyers programs, your arguments come off as somewhat disingenuous.

    1. Doug March 21, 2021 11:48 am Reply

      I don’t think that PAL sells homes. If you go to their website, nothing is listed that I can see, either past or present. On the other hand, Habitat for Humanity, while showing no past projects on their website, does show two current projects being developed and has worked with Hawaiian Homelands in the past on 3 builds. Not large scale, but at least they are building.

    2. Rev Dr Malama March 22, 2021 2:10 am Reply

      Yes and opportunistic to be making (non)profit housing and paychecks for themselves when the wolf disguised as your friend is really involved in skimming the cream of the federal government programs off the top leaving the most needy people with sour milk…..
      Housing should be a right, not an asset and privilege reserved for the few unscrupulous who control the puppet political theater!

  7. Numilalocal March 21, 2021 12:48 pm Reply

    Isn’t MR Edwards one of those realtors who’s made a career of selling houses? How many of them have been sold to transplants at inflated prices that have kept local people from buying houses I. Their own home? A bit of guilt coming on here Jim?

  8. Colin McCleod March 22, 2021 7:45 am Reply

    Edmonds completely misses the point by focusing on the results-high housing prices-rather than the causes. The real cause of “unaffordable” or simply a lack of supply in the housing market in general can be laid on the door-step of government.
    The county and state obstruction in the form of overly restrictive zoning & land-use laws, over regulation in general and a permitting system that is disgraceful and clumsy.
    All of this government meddling in the market is the primary cause of a glaring lack of building lots and housing inventory. All the discussion of definition of affordable is window dressing and does NOTHING to solve the problem. The county and state just need to get the h_ll out of the way and let market forces solve the problem.
    Colin McCleod

    1. james March 23, 2021 6:40 am Reply

      I start with the premise that most Kauaians don’t want to see unbridled growth like Oahu. Lack of roadways and other key infrastructure provides the County with legitimate concerns about granting every developer free reign to build massive subdivisions and create urban spread, thus destroying the essence of Kauai. In the case of our Island, less is more so kudos to the County for limiting growth. Let’s elect those officials who limit unbridled building and strive to keep Kauai small and rural.

      1. Colin McCleod March 23, 2021 2:04 pm Reply

        “Let’s elect those officials who limit unbridled building and strive to keep Kauai small and rural.”
        What an irrational response. If you don’t want more housing development because of your irrationality….well, then just QUIT WHINING about no “affordable” housing. YOU CAN’T HAVE IT BOTH WAYS. Hard to fathom the complete ignorance of the simple fact that adding to the housing inventory will stem the the upwards pressure on housing prices. Even a mid-level double digit IQ should be able to grasp the concept of supply and demand.
        Colin McCleod

        1. james March 24, 2021 7:19 am Reply

          So, because there is a demand for more housing on Kauai, as many houses as are required to met that demand should be built? Is that your point? Like I said, they do that in Honolulu and look at how dense and crowded it is. Look at the traffic on their freeways. Look at their quality of life. Even a single digit IQ person can see most Kauaians don’t want that kind of urban spread. I think I was pretty clear that I don’t favor more housing development of any kind, but if the powers that be want to build low income housing, which I oppose, don’t use our tax dollars to do so.

  9. RGLadder37 March 23, 2021 9:42 pm Reply

    My classmate moved from one house in the same town, to another house in the same town. Affordable housing means the payment plan is a default. He stays at the home providing he makes electricity, water, and other bills. But no mortgage or rent. This was in Kekaha, Kaua’i. He moved about 2 blocks to 3 blocks down. And it was a plantation style house. That is affordable housing. And they sign up with a bank to make payments.

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