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Want housing to be more affordable? It starts with subsidies.

This essay is the second of a six-part series. The HousingNOW! Task Force will be reviewing the housing opinion survey distributed to Faith Action members in May 2021. This series is intended to equip members with more knowledge before the next legislative session.


Ninety-eight percent of Faith Action members agreed that housing subsidized by the state should be restricted to Hawaiʻi residents. This essay will explore the word SUBSIDY as it pertains to financing affordable housing. There are two broad categories of subsides. Development subsidies are available to developers to build housing. User subsidies are available to people to help they pay for housing. Both types of subsidies involve a transfer of cash, tax deduction, or tax credit to offset housing costs.


Development Subsidies

An example of a development subsidy offered by State government is the Rental Housing Revolving Fund (RHRF). The RHRF is used to issue low-interest loans to the owners/developers of new construction of affordable rental housing; funds can also be used for acquisition and rehabilitation of existing affordable rental housing. Projects funded with government subsidies are subject to requirements that ensure the housing is priced at rental rates that low-income households can afford.


User Subsidies

An example of a user subsidy is the Section 8 housing choice voucher (HCV) program. Generally, HCV beneficiaries are responsible for paying 30 percent of their household income to their landlords with the HCV being issued directly to the landlords to cover the difference up to fair market rents set by the U.S. Department of Housing and Urban Development. While administered at the state and local level, Section 8 HCVs are a federal subsidy.


Another example of a user subsidy is the federal mortgage interest deduction. The mortgage interest deduction allows homeowners to reduce their tax liability by deducting mortgage interest paid. If you are a homeowner and have claimed the mortgage interest deduction on your taxes, then please humbly consider how your housing has been subsidized too!


Why Are Subsidies Important?

Housing subsidies are important because they promote stable, affordable, adequate housing, which is the basis of healthy families and thriving communities. When not enough of our housing supply is affordable, then people sacrifice other necessities like food and healthcare. In addition, lack of stable, permanent housing makes upward economic and social mobility difficult.

The need for affordable housing continues to grow because housing prices continue to climb, while wages have stagnated. Existing subsidies are not sufficient to fill that gap.


Is There Another Way to Subsidize Housing?

Aside from cash subsidies to developers and residents, another approach to consider is land subsidy. The most significant contributor to high housing costs is the cost of land. If the cost of land is reduced or eliminated from the cost of developing housing, the ultimate prices paid by those who occupy the housing (in rents or mortgages) would be reduced. One approach is through a community land trust (CLT), a type of non-profit organization specifically designed to hold ownership of land in stewardship of community needs. Another approach is for State or county governments to make land that they own available for the development of affordable housing. Having a CLT or government electing to not pass the cost of the land to its residents would reduce housing costs incurred by individual households.


Whether using land or cash assets, we should advocate for the most efficient mix and expenditure of subsidies that increase the availability of affordable housing to ensure an equitable and sustainable community.


Let no one seek their own good, but the good of others. – 1 Corinthians 10:24


This essay was authored by Faith Action HousingNOW! member and Chair, Foo Pham. If you are interested in being more involved with the HousingNOW! Task Force, please e-mail housing@faithactionhawaii.org.


Please note these subsidy programs are individually more complex than this essay presents. The HousingNOW! Task Force encourages you to take a deeper look into the introduced topics as well as other programs. Other examples of subsidies include the Community Development Block Grant, the Dwelling Unit Revolving Fund, low-income housing tax credits, affordable housing funds (at the City and County level), Permanent Supportive Housing Fund, and the Homelessness Prevention and Rapid Re-Housing Program.


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