Could church-owned affordable housing be the game changer Hawaii needs?
On the latest episode of “Hawaii Together” on ThinkTech Hawaii, Ted Kefalas, director of strategic campaigns at the Grassroot Institute of Hawaii, hosted the Rev. Joshua Hayashi to discuss how church properties could be leveraged to alleviate Hawaii’s housing shortage.
Hayashi is CEO of Mission Management Co., an organization that helps churches build affordable housing on their land. He said taken together, Hawaii’s religious institutions rank among the top five landholders in the state. And many of their properties are in areas typically considered too expensive for affordable development.
Hayashi, who is also a chaplain at Punahou School, emphasized that the motivation for many churches and nonprofits is addressing community needs for affordable housing, rather than “getting rich.” At the same time, though, adapting their land for housing development ensures the long-term financial sustainability of their organizations..
Hayashi said several projects are already underway, including an 80-unit affordable housing project in Wailuku on Maui. However, he said, regulatory obstacles intended to prevent “predatory behavior” add unnecessary costs and delays, and discourage future development.
Hayashi recommended that Hawaii adopt a “Yes in God’s Backyard” law, which would allow churches and other nonprofits to build housing on their land “by right.” He said such a law would be the “dream situation,” and facilitate the approval of at least a half-dozen projects.
“A lot of our churches are in real financial distress,” he said, “and so their runway is not that long. In order for things to be able to happen, ‘YIGBY’ would be a big help.”
If you would like to hear the entire conversation, please click on the image below. A complete transcript follows.
11-7-23 The Rev. Josh Hayashi with host Ted Kefalas on “Hawaii Together”
Ted Kefalas: Aloha, and welcome to “Hawaii Together” on the ThinkTech broadcast network. My name is Ted Kefales and I work as the director of strategic campaigns at the Grassroot Institute of Hawaii. I’ll be filling in today for our regular host, Dr. Keli’i Akina.
As many of our viewers know, Hawaii is currently dealing with a critical housing shortage. Gov. Josh Green has made it a point of his administration to increase the number of homes that are available to local families. The governor and his administration have also issued several emergency proclamations related to home building and permitting.
But is there a role that our churches, synagogues and other religious institutions can play in all of this?
And if so, what would that really look like?
A few weeks ago, we hosted a guest to discuss California’s “Yes in God’s Backyard” law, which will streamline and relax housing regulations for religious as well as educational groups in order to build housing in the state of California.
Well, today, I’d really like to dig deeper into this topic with someone that knows the ins and outs of building housing for nonprofit religious groups in Hawaii. My guest today is the Reverend Joshua Hayashi, the CEO of Mission Management Co., a group that focuses on helping churches build housing on their land.
Josh is also a middle school chaplain at Punahou School. And in the past, he’s also worked with the YMCA of Honolulu and the First Baptist Church of Vancouver, Canada. He has a Master of Divinity degree from Regent College in Vancouver, Canada.
Good afternoon, Josh. Thank you for joining me on this show. We’re really excited to have you today.
Josh Hayashi: Thank you so much, Ted. It’s great to be here with you folks. And I’m excited we’re going to talk about this really important, and I think maybe unknown or underutilized, topic of these properties that these churches and nonprofits own.
And I think that if people knew how strategic these properties were, and really, I think the game could change about how we talk about affordable housing. We’re going to utilize some of that.
Kefalas: Yeah, so, before we start, could you kind of tell me the story behind Mission Management and how you guys got started?
Hayashi: So, a couple of things. So, I’m ordained to the United Church of Christ, which is, you know, a large denomination here in Hawaii. So, it’s churches like Kawaiaha’o Church, Central Union Church, Makiki Christian Church, and Wai’ola Church in Lahaina, and Lihue. There’s churches in Lihue and Kapa’a in every little town that was, that’s part of our legacy and our world here.
And the reality is that there are about 150, 160 churches in our denomination across the state — across the islands. And there are only four ordained ministers under the age of 60 who are from Hawaii.
Hayashi: And so, there’s one thing there, that the need to think about doing things a little bit differently is pretty significant.
And that’s just one denomination. That’s not the Lutherans and Presbyterians and the Catholic church. But also, it’s also the knowledge that there are so many church properties that are out there.
And so, if you just kind of thinking about it, if you were to add up all the church properties across the state — from the Mormons to the Catholics to the United Church of Christ — and you put them all into one lump, it would be in the top five of individual landholders in the state.
So, it’s quite a significant amount, and what’s also important is that most of our churches, especially in the UCC, are in populated areas. They’re at the center of every little town, whether it’s Laupahoehoe, or it’s Kapa’a, or Waimea, or Kaunakakai. It’s at the center of all of these places. And so, it has very strategic, it has a lot of strategic importance as well.
And so, for me, I was in the process of getting ordained at a church called Makiki Christian Church, right across from McKinley High School in Honolulu. And it is in the shape of a Japanese castle. It’s the only Japanese castle outside of Japan.
And they have this huge, incredible, beautiful property that’s on the state historic register, and they’re trying to figure out how do, what do we do with this? Our insurance bill continues to go up. We have termites. We have all of these deferred maintenance issues. And it’s also simultaneously, they ask that question when everything in Kaka’ako is going up.
So, that question of what could possibly happen, Makiki was open to a discussion. And so, we started to give them options about … How about we had a partnership with these developers or in this kind of a way, and really helping the churches see that there could be something different about their properties themselves?
And so, that has kind of gone on to be able to kind of look at different properties bringing partnerships together. We’re doing about 80 units of affordable housing in Wailuku town, across from City Hall. So, it would be the equivalent of the old Mission Houses Museum property in Honolulu. It would be the equivalent of that in Wailuku.
And, we’re in permitting right now, and we have a partnership between the church landowner, between a developer, the county gave a million dollars, the state gave $350,000. So, people are really excited about the types of potential in these partnerships.
Kefalas: Sure, that’s absolutely, that’s very exciting. You know, you obviously work in a unique part of this building industry. And, you know, I would expect there aren’t many other companies that focus on doing what you guys are doing and helping churches and religious institutions, putting housing on their land.
How did you get from being a reverend, pastor, to now being a CEO in your part life in helping this Mission Management Co.? And how did you get involved in the development, home building side of things?
Hayashi: Well, I mean, I think it’s funny. I don’t consider myself part of the building industry, but I do feel like a lot of the work that I have to do is kind of build these bridges mentally and emotionally and theologically, right, and helping us rethink what do we do with our space?
And this is the hardest part here is that the building world — whether it’s at, you know, the construction side, whether it’s on the lending side, whether it’s on the real estate and commercial and residential, on the large funding end — they only operate on a single value and that value is called highest and best use. The highest and best use. That’s really maximizing value, the financial value out of a property.
Now, churches and nonprofits do not operate on that value system. And so, oftentimes, the challenge is really on the front end, the philosophical end, about “why.” Why should these landowners that are not driven by profit, why should they develop? And what is that, whatever that happens next, how is it connected to their mission?
So, what I’m really excited about is being able to connect mission to future projects. And so, churches can have mission and they can have some form of sustainability. And if they are able to bring those two things together, then something special can happen.
One of the things I’m really excited about is that because churches don’t necessarily need the same return on investment on these projects [as] a private landowner, and so the ability to do something with that extra value becomes highly, highly valuable and important.
So, that’s what is really interesting here. They don’t need the same amount on the backend like everybody else. And so, we can use that little extra to be able to kind of share that with the community, to make the prices little lower, to negotiate more with different partners.
And so, I think something special can happen in that way.
But for me personally, I think it was really seeing several things. Churches get taken advantage of by developers because a lot of the churches don’t have the bandwidth anymore to be able to kind of make these decisions. And I think because they aren’t able to make those kind of connections between value and cash and look at the long-term effects of that.
And so, I saw churches getting taken advantage of in one end, but also, I saw the needs in Hawaii on the other end increase. And it just makes sense, right?
Like, if the churches have the ability to be able to connect their values, their mission, to real needs, then something can happen.
Kefalas: Yeah, and we are absolutely glad that you are taking the reins there and helping some of these nonprofit religious organizations just try to navigate some of the difficulties that comes with, whether it’s working with homebuilders and getting projects up or working with the government bureaucratic officials to get permits and whatnot.
But let’s just say I’m, let’s pretend I’m on the board for a religious group that’s interested in putting housing on its land. What’s kind of your sales pitch for Mission Management to get me to build more units on my property?
Hayashi: So, first and foremost, we have a thing called an audit. And so, churches can go and put in some of their financial information, put in some of their property information, and put in some of their organizational information. And it can really give them a handle on what can actually happen.
And so, because there’s so much conversations about like, so many conversations right now about like, “Oh, all these churches should build affordable housing,” but do they really understand the zoning? Do they really understand what they are financially capable of doing? Can they take on a construction loan? What kind of partners should they have?
And so, what we ask, first and foremost, is the conversation about values has to happen first. What’s more important? The long-term needs? Is it the short-term needs? Is it mission? Is it preserving Sunday morning? Is it making sure that you’re able to kind of keep the roof over your heads? Is it fixing up this property?
But we don’t even talk about cash and the value part until we have these much more important conversations about what is the long-term goal for this place. Is it about that we continue to have this Sunday morning service?
Those are the kinds of questions we get through first because then it gives the churches what they’re really good at, which is talking about values. And if they can identify their values, then we can say, “Well, let’s try and find a partner that shares those values, but can follow this, these financial guidelines to make those values happen.”
So, we need to have the data first, and then we take them through a process. And then they have the upper hand on negotiating instead of the developer telling them, “I’m going to give you this X for this amount.” The churches don’t have a way to kind of actually take that through a system or structure of decision making.
Kefalas: Right, and that is definitely something that is well-needed. As I mentioned earlier, it’s great to have a group that’s kind of helping these organizations out and just helping hold their hand a little bit and getting through some of these difficulties because it is inherently confusing.
But as we talk more about Mission Management, I am, I’d love to hear more about your company’s success stories and what are maybe one or two of the projects that you’ve worked on that have really addressed that critical community need in terms of housing.
Hayashi: Yeah, so, well, housing, we’re working, the Wailuku project is the one we are most excited about. And so, we are very, very close to getting through the State Historic Preservation Department.
But one of the other things that we’ve been doing was not so much housing, but we were able to create a partnership that allowed — Soto Academy was a private school in the Soto Mission on Nuuanu Avenue, and for some reason, they were, they, they’re having to exit out of their home. They were out of Soto Mission, the Buddhist temple there on Nuuanu. And so, we found them a temporary home, so they didn’t have to close, at Makiki Christian Church, which ended up being a win for everybody. So that’s one.
Another one was a preschool that was looking to expand in Kalihi — Love a Keiki. And they were meeting at another, I think it was a Shinto church, right off the freeway. But they were growing and expanding, and they were looking for another forever home. And then we were able to find a place where they can grow and they can continue in Kalihi, Moanalua.
So, a lot of the work in some ways is like matchmaking these nonprofits or other organizations that need the space with the entities that do have the spaces themselves.
So, those are two success stories that we have that are immediate. The rest of it, as you know, is a lot of these really long games on development, development partners. And we’ve been having groups, now, contact us from all over the country.
I had a group in Cincinnati, Ohio — a church in Cincinnati, Ohio. We helped them start, get their commercial kitchen going, and be able to get multiple partners in this, have a separate income stream coming.
A church in Keanae, which is the, I think the one we’re really excited about, on the road to Hana, this little Hawaiian village, with this church right in the center of it. They were down to their last three members, and the roof in their church started to fall.
And so, we were able to kind of create some momentum within the church by having the granddaughters of these last three aunties come back and through working with them and coming up with the financial performance, you know, what they need.
What they did was one of them created a business that’s a farmers market that’s capturing the tourist traffic in Keanae. And from one day of that farmers market —so in farmers market, once a month — they are able to pay, to be able to make money, but also to pay for all the church’s expenses.
And so, like, that’s what the and keep bringing business into the local town, because most of the vendors were all members of the community as well.
So, it’s really helping these churches think of creative solutions, mission-focused creative solutions, and using their properties in all different kinds of ways.
Kefalas: Yeah, that’s fascinating. And it truly seems like it’s creating a community-based form of housing where you have people that are creating almost like these businesses where they live and work and play. So, that is amazing.
You know, I touched on it earlier and about the governmental regulations, and I’d be curious to get your thoughts, and just characterizing some of the state and city regulatory environment. But then also, going through and just touching on, you know, how many city and state approvals do you typically need to get housing built on a typical church property?
Hayashi: So, we’ll start with that one first. You know, there are some challenges with a lot of our churches in building. First of all, most of them are historic, right? They would fall under the State Historic Preservation Department’s rules that are anything built before 1965 or something. I forget the exact year. It requires specific work. So, that’s a big hurdle that we have to hit. A lot of our properties have graves on them, so we will never be able to touch any of those.
And so, those are two kind of inherent challenges in that. But not all the properties are like that, however.
But I think the biggest challenge, it’s the mental model. And I think, and the first mental model is that it’s the “highest and best use” thing. The county and state are not, they are really geared towards protecting these properties and the land against these developers that will just max value out and have historically taken advantage of our communities.
This is not like that at all. These are nonprofits that have been part of the community for like 200 years. One of the things that has been wonderful is that our, you know, the aunties can go out and talk to their Congress people or talk to their representatives and say, “This is what we want to do. This is to help the community.”
It’s not like some guy coming from California with a suit and say, “Hey, we’re here to build housing for all of you folks.” And everyone kind of winks about that. But I think it’s a very different thing. It’s really from individual members of the community that’s driving it.
And so, the mental model is different. So, we’re not doing this — no one is getting rich off of this. And I think that’s one of the big challenges for a lot of our, for the regulatory system is set up to prevent that kind of predatory behavior, but it’s making it impossible for everybody because we can’t pay those exorbitant fees that like BlackSand can, or like, you know, Kobayashi Group can. Like, we don’t have the time to take these things.
A lot of our churches are in real financial distress, and so their runway is not that long. And so, in order for things to be able to happen, “YIGBY” would be a big help.
And so, like, for example, to get through state historic preservation, to get past some of these, you know — we would never build on graves, but it will take time, if not years, to get through that.
And then the other mental model that’s the challenge is that, and this is probably the more important one — affordable housing. What we typically do with affordable housing, we put that outside of the center, right? Kalihi, we put it out in, you know, out by Wahiawa, we put that out in Iwilei, right?
Our churches are in the most prime places, and we think actually that’s a gift. Something special could happen, not like putting poor people, but we make this a community again, that everybody deserves to have a place here, and that includes those who need the most support.
And so, that’s the bigger challenge is a lot of people — we’re giving our most prime properties to affordable housing if the church is allowed to do that. And I think that’s going to be part of the hurdle that we get over. That already is, actually.
Kefalas: Yeah, definitely. And, you know, I know you touched on it a little bit, but a lot of times we hear from folks about the lengthy delays in the permitting process and how, oftentimes, any kind of delays, quite frankly, will add to costs when it comes to home building and developing.
Can you speak to your experience with the Honolulu permitting process? Have you guys faced any sort of delays when you’re working on projects that something like a “Yes in God’s Backyard” bill might be able to fix?
Hayashi: Oh yeah. I mean, I can think of like five or six projects right now that would be, you know, would be able to kind of sail through because of that.
Now, the one that we’re most furthest along is in Maui — so, it’s Maui County. And so, it’s similar. But yes, so the State Historic Preservation Department, the Cultural Resources Commission. Those are two of the regulatory entities that we’ve had to get through on the county council.
We have full support from the, from Maui County Council, or at least from our folks who’ve had a ton of support. But it is — I mean, obviously, COVID, and now with the fires, it has affected quite a bit. But just by the county, Maui County, willing to give us a million dollars, to a church, to build affordable housing — that has been helpful.
But at the same time, it’s taken us four years to get to this point, because the Preservation Department and planning does not want these churches to do, to change because it is so key for it to look the same.
The reality is that if they, if we — on the other side of it, if they don’t allow churches to kind of figure out what to do with these properties and be willing to do different things, some of these properties will be abandoned like churches on the mainland and become blight.
And that, I know it seems hard to think of that, but there are six to seven thousand churches closing their doors every single year on the mainland. And that’s going to be happening to us more and more.
Kefalas: Certainly. I mean, as we see more and more churches throughout the state are seeing declines in membership, you know, a lot of them don’t have a lot of the cash available to build housing. And we’ve already talked about some of these regulatory delays that increase costs.
But have any of your clients, any kind of these religious organizations, decided against building these affordable housing units because of the uncertainty associated with the permitting process or the lengthy delays?
Hayashi: Yes, yes, for sure. So, we had, we have one project in Waipahu that, because the church wants to retain ownership of the property and not do a lease, then our partners through the LIHTC [Low-Income Housing Tax Credit] process and how they raised capital would have taken six or seven years to go through the regulatory process.
Then, most of the churches said, we can’t do that because we won’t live, due to their age, to be able to see it happen. And so, to think six or seven, and these are large, multibillion-dollar national entities that have the bandwidth to do it, maxing out. And six or seven was a conservative number of years. So, the church said we can’t do it because we won’t last.
And there’s another one in Kailua similar to that.
Kefalas: Yeah, that’s certainly understandable. I mean, it’s six to seven years, I don’t know any kind of organization that can wait that long.
You know, we’ve kind of now, Josh, we’ve skirted around and we’ve briefly touched on California’s new “Yes in God’s Backyard” law. We actually discussed it here on the show quite recently. In Hawaii, there was a similar bill; I believe it was HB 814 proposed earlier this year that would have allowed nonprofit, religious, educational and healthcare organizations to build housing on their property “by right.” And essentially, that means without discretionary state or city approvals.
Do you think that kind of approach is going to help companies like yours
Hayashi: Yes, I think it would significantly. And I think it would be helpful — It’s also, I mean, it also makes it a little bit — we don’t want it to be these other predatory groups to be there as well.
But I think it would help a lot because it would allow these churches — like I said, time is really of the essence for them. They are running out of time quickly. And unless we are able to mobilize on some of these properties in less than six or seven years, then they will be abandoned or sold.
And what I tell churches is that we don’t want to sell because it does three things: One, it jacks up the property values. Number two, it makes a public space into a private one. And number three, like, real estate is at the heart of all injustice on the planet in the way that we currently think about real estate.
And so, this is a way for us to make a move to make Hawaii equal. And I think we have the opportunity to really bring some change.
And we would say, like, there’s some spiritual values that we want to drive of everybody coming together.
Kefalas: Sure, sure. And, you know, in order to kind of expedite that process and just help to navigate it, do you guys coordinate with state or city housing officials on any kind of specialized projects that you’re proposing, just to expedite the process, as I mentioned?
Hayashi: Yeah, yeah. So, one of the things, the million dollars that we’ve got from Maui County was attached to the experimental housing ordinance. I forget what state bills or state law it is right off the top of my head. But it was with the express intent that this would be an example for other churches to make these kinds of partnerships.
Because let’s say, you know, like, Wailuku, there are five churches within 500 yards of each other, five church properties. Honolulu, it’s a significant amount, right? Like, Kapa’a is like that. Lihue is like that.
And I think that the bigger challenge that we have often thought that housing and always going to be like one big fix, right? Like going to build these huge 5,000 unit entities. But it really, we think that it’s going to be the smaller boutique things that create community, walking, multi-use. And that’s what we’re hoping for is that the smaller boutique properties can really create something special.
Kefalas: Sure. Definitely. You know, we’ve done a lot of talking about a “Yes in God’s Backyard” bill or a YIGBY bill. But are there any other sorts of reforms that could help religious or other nonprofit organizations to build on their land?
Hayashi: I think that would be, the YIGBY is, to me, is the best place to start because it gives us hope because we can’t compete with those folks.
But I think being able to have, to create ways for OCS [Office of Community Services], for grants from the state to be able to go to these properties, into these churches, and with the right controls, obviously, then I think that could help. We had to create some separate legal stuff so that one of our churches could receive OCS grants or state-level grants.
But also, this is a way for the communities to come together. I can’t think anything offhand about any other type of bill specifically, but the YIGBY is going to be the is it, to me, it’s the dream situation. If we could do that, something could really happen.
Kefalas: That’s great. That’s great. Anything else that you’d like to add today?
Hayashi: I think the big part is that Hawaii is changing at a fundamental level. I mean, it always has been, but it’s important for us to kind of have to work together to be able to keep us moving forward together, and doing some of these things that may seem challenging or hard because we have to do it. We have to do it to make Hawaii livable for the next generation. If we don’t, it’s going to be impossible.
Kefalas: That certainly resonates with us here at the Grassroot Institute. Our motto is “E hana kākou,” which, as many people know, means “Let’s work together.” So, that is a fantastic note to end on. Josh, I really appreciate you taking the time to join us today.
Again, Rev. Josh Hayashi with Mission Management Co. We thank you for your time and until next time here on the ThinkTech broadcast network, my name is Ted Kefalas, signing off. Take care.