By CHRIS HAMILTON Staff Writer
reprinted courtesy Maui News 2/8/09
WAILUKU - More than two years ago, the Maui County Council passed a controversial ordinance that says if developers want to build subdivisions, an additional 40 percent to 50 percent of homes must be affordable according to federal guidelines.
Council Chairman Danny Mateo crafted the Residential Workforce Housing legislation, with the idea that the islands' finite space, high home prices and ever-expanding cost of living have been driving Hawaii residents to move to the Mainland, away from their families.
Now, developers have 30 pages of detailed administrative rules that expand on the Residential Workforce Housing Act - which passed unanimously in November 2006 and survived a veto by former Mayor Alan Arakawa.
The task-force-written rules - which arrived 20 months past the ordinance's deadline - fill in some of the gaps about how officials are supposed to carry out the law, said Department of Housing and Human Concerns Deputy Director Jo-Ann Ridao. Ridao noted that county attorneys worked directly with developers until the rules were completed.
But instead of putting the polishing touches on the ordinance, homebuilders said they want the County Council to review and rewrite portions of it to make construction easier, especially during the current economic downturn.
The main concerns expressed by critics are that the permitting process takes too long, and the percentage of affordable homes required is too high. The combination has led to a stagnation in the local housing construction market, they say.
But that's a charge that ordinance proponents say is simply untrue.
The County Council's new Public Services Committee, headed by Council Member Wayne Nishiki, will take up the ordinance's required two-year review at 1:30 p.m. Wednesday in council chambers.
"Everything is on the table," Mateo said. "But at this point, I still would stand firm on the existing 40 to 50 percent numbers, because the numbers work. It's been shown to work with two recently approved developments," he said, referencing last year's approvals of Honua'ula and Makena Resort.
"Does the policy work? I believe it does."
In a written statement, Nishiki said that a lack of affordable housing clearly continues today.
"This shortage, amidst the current economic downturn of our county, makes it vital that we take the time to review the law and determine if amendments are necessary to fulfill the original intent of the policy," Nishiki said.
However, some opponents said that the downturn is lowering home prices and correcting the local market, which witnessed double-digit appraisal increases for several years before leveling off in 2007 and 2008.
Mateo has introduced three ordinance amendments. Two would speed up the application and appeals process, and the third would create an as-of-yet undetermined incentive program for participation.
The administrative rules, which were revealed to the public by the department at three lightly-attended hearings last month, only need Mayor Charmaine Tavares' signature. She said Wednesday that the rules should go into effect within the next two weeks.
The rules might be useful, but critics of the bill continue to say that the law - as is - discourages home construction. Even before the national housing market collapsed, some people blamed the Residential Workforce Housing ordinance for a supposed lack of new building on Maui.
Since the ordinance's inception, two developers have undertaken projects that comply with the ordinance. One of those projects was done by KSD Hawaii and currently consists of 17 affordable housing units in Makawao and the 240-acre, 35-lot, market-rate Pulehu Farm subdivision in Kula.
The second development, Ridao said, is in conjunction with the Makena Resort project. The 800-unit Makena Resort, which the council approved late last year, will have an additional 400 affordable units in yet-to-be-determined sites within the Kihei-Makena district.
As part of those units, Makena Resort's principal partner Everett Dowling has already agreed to finance the Hale Mahaolu Ehiku elderly housing development, Ridao said. A nonprofit developer will construct the Kihei project's 115 units, she said.
Also last year, council members approved the 1,400-unit Honua'ula development down the road from Makena Resort. Seven hundred affordable units will be built on the project's 670 acres.
Charlie Jencks, owner's representative for Honua'ula, said the ordinance is laudable, but the time it takes to get the necessary building, design and other permits from the county is laughable. He said he knows of projects that have been on the shelf awaiting administrative approvals for 2 years.
"It's killing people to have to wait in an economy like this," he said. "We're lucky because we have our financing in place and can get stuff done."
Jencks said Honua'ula's second design phase and environmental impact statement are both under way.
Mateo said Thursday he is working on a plan with Tavares to eliminate the delays, which was a campaign promise of the mayor before she was elected two years ago. Mateo said he expects to unveil more information in about two weeks.
KSD Hawaii President David Goode agreed that the rules provide more guidance, although they were due a long time ago. Goode also said he supports the ordinance - with reservations.
It definitely needs reworking, he said, especially the part that requires a home's deed to keep it affordable for 25 years. That provision is making it extremely difficult to get financing from Hawaii banks, Goode said.
Even if the house goes into foreclosure, which comes with added resale costs, the lender can't resell it for market value, he said. The affordable deed tags and other entitlement problems are why the ordinance was challenged in court, Goode said.
In August 2007, Canadian developers who planned to build two condominiums with a total of 251 units sued the county in federal court, calling the ordinance unconstitutional and a violation of state law. A judge has dismissed the central arguments of the case, but other arguments are still pending, Corporation Counsel Brian Moto said Thursday.
Goode said he was optimistic that some of the developers' issues with the housing requirement can be rectified by the County Council pretty quickly and easily when it takes up the matter.
"With the market the way it is, people are looking for relief," Goode said of the proposed changes. "Otherwise, nothing is going to get built."
Ridao, who calls Goode a partner of Maui County, said the current economy is really dictating what's going on in the housing market.
"We should be proud of this ordinance," Ridao said. "Communities throughout the country are looking at our law as an example."
Chris Hamilton can be reached at chamilton@mauinews.com.
reprinted courtesy Maui News 2/8/09
Fact Box
Residential workforce housing act
Here's how Maui County's Residential Workforce Housing Act currently works:
The policy's housing requirements kick in for any development of five or more residential units, as well as hotel or time-share projects that generate three or more new units.
Projects in which fewer than half the units built are to be sold for more than $600,000 would have to provide an additional 40 percent of their units at affordable prices.
Developments in which half or more of homes are priced above $600,000 would have an additional 50 percent affordable requirement.
Affordable units do not have to be on site but must be within the same community plan area.
Hotel and time-share developments including renovations that increase the number of lodging units or convert a hotel to a time-share property have a 40 percent affordable requirement.
Developers can satisfy the requirements by building affordable homes for sale or rent, providing land, or partnering with a nonprofit organization to build the homes.
Affordable homes have to be priced according to a range set by the policy, running from $204,000 to $454,700.
Developers also have the option of paying fees to fulfill the requirement, which would be 30 percent of the average value of market-priced homes in the development.
Units must remain affordable for 25 years from the initial sale. If it's a rental, the affordable tag stays on the deed for the life of the unit.
It's the developer's responsibility to establish and maintain waiting lists for the affordable units. Those who meet the financial eligibility requirements are then put in a lottery to determine who gets to buy or rent.
Chris Hamilton can be reached at chamilton@mauinews.com.
reprinted courtesy Maui News 2/8/09
original link www. mauinews.com/page/content.detail/id/514620.html
brought to you by Wailea Makena Real Estate Inc.
www.Wailea-Makena-real-estate.com
Peter Gelsey R (PB)
Wailea Makena Real Estate, Inc.
direct (808) 344-8000
Toll free 800-482-5089
fax (808) 442-0946
email peter@petergelsey.com