Bill on residential workforce housing deed restrictions and resale surfaces for review

A bill relating to residential workforce housing deed restrictions and resale, will be reconsidered at the Maui County Council meeting on Jan. 27.

Bill 103, CD1, FD1 (2022) seeks to protect the housing supply for Maui County residents, according to Councilmember Gabe Johnson of Lānaʻi.

Johnson said passage of the bill, which was approved by the County Council last term, may be reconsidered by the council after the bill was vetoed by former Mayor Michael Victorino on Dec. 30, 2022. The council would need at least six votes in favor to override the veto.

“We spent two years defining what affordable housing is, who gets in those units and how county subsidies can be used to bring housing costs down,” said Johnson in a press release. Johnson, who chaired the 2021-2022 Affordable Housing Committee said, “The time and resources that will go into making these units truly affordable for locals are substantial, and the council agreed last term that it makes sense to keep these homes affordable for longer rather than allowing them to flip out to the open market after a few years.”

Bill 103, CD1, FD1 (2022) would require that homes developed under workforce housing agreements—currently targeted at households earning 80% to 140% of the annual area median income ($80,880 to $141,540 for Maui except Hāna)—to remain owner-occupied in perpetuity. The bill, which was introduced by Councilmember Tamara Paltin, would also establish a 30-year period during which profits from the sale of these subsidized workforce units are subject to managed appreciation.

“This bill creates rules that limit the likelihood that workforce housing units, which are constructed with the intention of creating financially attainable housing for Maui County’s workers, could become speculative investments,” Johnson said. “We want to ensure that the county’s investment in our workforce actually builds and increases the affordable housing stock for residents in the long run.”

Johnson said this legislation is the final piece of the first half of the housing reform package that came out of the Maui County Comprehensive Affordable Housing Plan.

The plan lays out a strategy to develop 5,000 units for local households earning below 120% of the annual area median income ($121,320 for Maui except Hāna).

Johnson said Bill 103 ensures that the County’s subsidies don’t result in a single windfall, but have impact from generation to generation. “This bill still allows homeowners to build equity and make a portion of the home’s value appreciation if sold within 30 years of ownership. After 30 years, the homeowner may claim the home’s entire appreciation,” he said.

Kaua‘i County has a 50-year period during which appreciation is managed, allowing them to implement a sales restricted period that is longer, according to Johnson’s release.

Johnson said Bill 103, CD1, FD1 (2022) dovetails with other legislation passed by the Affordable Housing Committee of 2021-2022, including:

• Bill 111 (2021), codified as Ordinance 5315, which ensures public management of countywide workforce housing and rental lists and allows the county to rank housing lottery winners by length of residence in the county, giving preference to long-term residents;
• Bill 107 (2022), codified as Ordinance 5441, which enables subsidies and reduces the cost of workforce housing by an estimated 22 percent through requiring county sales guidelines to consider total housing costs;
• Bill 61 (2022), codified as Ordinance 5369, which broadens the uses of the county’s Affordable Housing Fund to further support the development of affordable housing; and
• The fiscal year 2023 budget, which increased the Affordable Housing Fund total to $58 million to expand affordable housing investment.

The second half of the housing package focuses on streamlining the planning, permitting and building processes in ways that respect environment and culture, while bringing development costs down.

“Our long and inefficient permitting process makes costs go up, which are passed down to home buyers,” said Johnson. “I’m hopeful the council can work together as a body, and across government with Mayor Bissen’s administration, to override the veto of Bill 103 so that we can move forward toward improving the process and taking care of our local residents long term.”