Council Housing and Land Use Committee advances bill to preserve workforce housing

Members of the Maui County Council’s Housing and Land Use Committee recommended passage of Bill 40 on Wednesday to maintain affordable housing through extended deed restrictions while giving the county more options to preserve workforce units.

The measure made it through committee by a vote of 8-0, with one excused, Council Chair Alice Lee.

The bill says the county’s Workforce Residential Housing Policy “is not meeting the needs of Maui County residents.”

And, it proposes to adjust the policy to promote retention of units available for owner-occupancy; expedite the County’s acquisition of residential workforce housing units by exempting their purchase from the requirement of Council approval; and to increase the deed-restricted period for ownership to preserve units to benefit the community.

Now, as revised and headed to the full Council for first reading, the bill’s provisions include:

• Priority based on length of residency: Applicants will be ranked by lottery based on their total length of time as county residents, giving longtime residents priority for workforce housing units.
• Eligibility requirements: Housing applicants will be categorized in specific income levels with area median income percentages, not something vague like “moderate income.”
• Income distribution for units: For ownership of units, 30% would be for below-moderate income (80-100% area median income), 50% for moderate income (100-120% AMI) and 20% for above moderate income (100-120% AMI). The main focus will continue to be on helping lower-income residents who are closest to being homeless.

Put another way: Units would first be offered to residents. Then, if there are none qualifying, then “going down the line of resident income groups.” When that list is exhausted, the units would be offered to Maui County, and if the county doesn’t purchase them for a period of 90 days, then they could be offered to nonresidents.

Also, when housing is developed on county-owned land, affordable units will have deed restrictions “in perpetuity,” or forever, rather than time limits. However, the committee dropped a “restart” provision for deed restrictions upon resale.

Maui County also will get the first right to purchase units in foreclosure situations and the right to purchase any unsold units at the original sales price.

The committee agreed that the bill would enhance county oversight by including an annual reporting requirement for the director of the Department of Housing on discretionary exemptions; and for better tracking and transparency in the workforce housing program.

After hearing concerns from Department of Housing Deputy Director Saumalu Mataafa, the committee removed a proposed 2050 year deadline for housing credits.

Council Member Nohelani U’u-Hodgins asked about the provision that “residential workforce housing credits may not be used or issued after Jan. 1, 2050.”

Mataafa said the department doesn’t necessarily know what would happen. “We’d have to put together guidelines on how to implement that policy if it’s adopted by the Council,” he added.

When asked about the timeline for addressing housing credit-related policies, Mataafa indicated the complexity of the issue:

“Well, if I had all the time in the world, I mean, this one’s tricky,” he said. “We both have to work together on this and have a more robust discussion on if we were to phase this out, what does it do? Does it freeze development in the future? Does it enable? And how can we make it so it’s not a shock to the system that goes the opposite direction of what we’re trying to achieve and not creating housing? So I’m not equipped to answer on the spot right now what the impacts of these are gonna be if we adopt these policies.”

Ultimately, Mataafa asked that the housing credits discussion be separated from the deed restriction bill.

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“I think generally, if we could carve out the discussion on credits, I think the rest of the bill, the department doesn’t have any objection to moving forward,” he said. “So if that credit discussion would be carved out, I think the discussion on the deed restrictions will become a lot more clear, and we can move forward.”

Lee said deed restrictions “is not my favorite topic.”

“I tend to prefer to give people more options because that’s the only way they can improve their lifestyles,” she said. “And, to have too many burdens or restrictions on a homeowner, defeats the purpose of homeownership.”

Committee Chair Tasha Kama said her understanding was that the deed restrictions would apply only to county-owned lands, “because you couldn’t do it in a private project.”

In a May 30 letter, Housing Director Richard Mitchell expressed concerns about phasing-out deed restrictions.”Phasing out credits may have a significant impact on disrupting a 20-year-old marketplace by escalating the value of existing credits and incentivizing tactical accumulation and use with addressing issues noted above,” he said. “As a result, it is the department’s position that there may be other issues and solutions that warrant a larger discussion.”

In written public testimony, Joe Kent, executive Vice President of the Grassroots Institute of Hawaii, pointed out that current Maui County deed restrictions of 10 years for below-moderate-income buyers; eight years for moderate-income buyers and five years for above-moderate-income buyers.

Kent said the institute believes that any increases in the deed-restriction periods could lower the desirability of new affordable housing units. Also, “if residents are less likely to purchase deed-restricted housing, this could result in fewer homes being constructed,” he said.

“History bears this out,” he said. “Project builders in Honolulu with 30-year deed restrictions have had trouble selling their units. On Maui, units in the Hale Kaiola project took much longer to sell than expected because many potential buyers were not interested in the accompanying 20-year restrictions.”

Families that may want to trade up to a larger home to accommodate a growing family would face a barrier with deed restrictions, he said. “With the sales price limited, moving might be impossible. Likewise, using your home to take out a loan to start a business could mean jumping through a number of legal hoops.”