AFFORDABLE HOUSING COMMITTEE Thursday August 18 2022, 1:30 p.m.
Testimony in support of AH-14(6), AH-4(5), AH31 Bill 103, AH14(7).
Good afternoon affordable housing committee members, My name is David Dorn and I am here to testify in support of these affordable housing guideline improvements.
These measures before you today will greatly improve the neediest family's chances of achieving home-ownership. These measures help make affordable housing prices tied to wages and not to market values. And will give the truly needy Maui families the chance to own a home in our over-inflated housing market. These measures also create a fair system that will help more people actually achieve home ownership. Supporting home ownership is essential for keeping our long-time residents here in the islands, and will help to reduce one of the most fundamental economic pressures that force many families to move to the mainland.
I support Bill 103 relating to Workforce housing deed restrictions and resale because this is one of the most critical steps that we can take. These deed restrictions will allow us to build up our inventory of affordable homes. So we can make enough affordable homes available for all those who need them. This also helps us to direct our affordable homes into the hands of those who truly need housing and intend to live in it long-term. It might also dissuade the people motivated by investing and flipping these homes, which has been the problem with affordable housing until now. Creating these “affordable-in-perpetuity” deed restrictions also gives our community a greater incentive to invest in these programs because we will realize the benefits long-term.
I also support expanding the use of the affordable housing fund so that it can be better utilized in flexible and creative ways to better incentivize workforce home-building and home-buying in more types of situations.
I believe that supporting these Affordable Housing measures is one of the best ways that we can support our community in a lasting and meaningful way.
Mahalo,
David Dorn
The changes made in this bill are good but not strong enough to KEEP the deed-restricted property TRULY AFFORDABLE in perpetuity. This bill needs a few more stipulations:
1. some type of formula placed tied to the Maui Counties' medium income level. For example: the resale price is set for future sales by original purchase of affordable housing. There should be deed restrictions that prescribe a formula that sets a ceiling on the subsequent sales price of the home. This formula will balance the goals of building wealth for the homeowner and maintaining affordability for future homebuyers. For example, the resale formula may be tied to changes in the area median income such as: the price might be set at the original purchase price plus an increment reflecting the increase in the area median income during the owner’s tenure. For example, if the homeowners purchased the home for $200,000 and the area median income increased by 15 percent during the owner’s residence in the home, the maximum sales price would be $230,000. This approach ensures that, once the home is made affordable, the home remains generally affordable to households based on that same income standard in the future, unless interest rates change.
a. An alternative formula could limit the percentage of any appreciation in the market value of comparable homes which the owner can realize, requiring the homeowner to sell the home for no more than the original purchase price plus a specified percentage of the appreciation, such as 25 percent.
2. Further suggested language of the bill to protect the subject affordable home to include:
A. The property may be conveyed only to a household who has been approved in advance and in writing by the administrative agent appointed under the Regulations (hereinafter, the “Administrative Agent”).
B. No sale of the Property shall be lawful, unless approved in advance and in writing by the Administrative Agent, and no sale shall be for a consideration greater than maximum permitted price (“Maximum Resale Price”, or “MRP”) as determined by the Administrative Agent.
C. No refinancing, equity loan, secured letter of credit, or any other mortgage obligation or other debt (collectively, “Debt”) secured by the Property, may be incurred except as approved in advance and in writing by the Administrative Agent. At no time shall the Administrative Agent approve any such Debt, if incurring the Debt would make the total of all such Debt exceed Ninety-Five Percent (95%) of the applicable MRP.
D. The owner of the Property shall at all times maintain the Property as his or her principal place of residence.
E. At no time shall the owner of the Property lease or rent the Property to any person or persons, except on a short-term hardship basis as approved in advance and in writing by the Administrative Agent.
F. No improvements may be made to the Property that would affect its bedroom configuration, and in any event, no improvement made to the Property will be taken into consideration to increase the MRP, except for improvements approved in advance and in writing by the Administrative Agent.
G. Owners may not transfer, add to, subtract from, or modify the ownership interest of the Property, except as outlined above, or as may otherwise be provided by regulation as “exempt transaction”, i.e., “…transfer of ownership between husband and wife; the transfer of ownership between former spouses ordered as a result of a judicial decree of divorce or judicial separation, but not including sales to third parties; the transfer of ownership between family members as a result of inheritance; the transfer of ownership through an executor’s deed to a class A beneficiary; and the transfer of ownership by court order.”
H. The Owner may be responsible to pay all costs associated with the services provided by the Administrative Agent at the time of sale, said costs being regulated by the municipality and/or state.
These are some suggestions. The bill is a good start. It needs stronger teeth. Mahalo for your consideration.
AFFORDABLE HOUSING COMMITTEE Thursday August 18 2022, 1:30 p.m.
Testimony in support of AH-14(6), AH-4(5), AH31 Bill 103, AH14(7).
Good afternoon affordable housing committee members, My name is David Dorn and I am here to testify in support of these affordable housing guideline improvements.
These measures before you today will greatly improve the neediest family's chances of achieving home-ownership. These measures help make affordable housing prices tied to wages and not to market values. And will give the truly needy Maui families the chance to own a home in our over-inflated housing market. These measures also create a fair system that will help more people actually achieve home ownership. Supporting home ownership is essential for keeping our long-time residents here in the islands, and will help to reduce one of the most fundamental economic pressures that force many families to move to the mainland.
I support Bill 103 relating to Workforce housing deed restrictions and resale because this is one of the most critical steps that we can take. These deed restrictions will allow us to build up our inventory of affordable homes. So we can make enough affordable homes available for all those who need them. This also helps us to direct our affordable homes into the hands of those who truly need housing and intend to live in it long-term. It might also dissuade the people motivated by investing and flipping these homes, which has been the problem with affordable housing until now. Creating these “affordable-in-perpetuity” deed restrictions also gives our community a greater incentive to invest in these programs because we will realize the benefits long-term.
I also support expanding the use of the affordable housing fund so that it can be better utilized in flexible and creative ways to better incentivize workforce home-building and home-buying in more types of situations.
I believe that supporting these Affordable Housing measures is one of the best ways that we can support our community in a lasting and meaningful way.
Mahalo,
David Dorn
The changes made in this bill are good but not strong enough to KEEP the deed-restricted property TRULY AFFORDABLE in perpetuity. This bill needs a few more stipulations:
1. some type of formula placed tied to the Maui Counties' medium income level. For example: the resale price is set for future sales by original purchase of affordable housing. There should be deed restrictions that prescribe a formula that sets a ceiling on the subsequent sales price of the home. This formula will balance the goals of building wealth for the homeowner and maintaining affordability for future homebuyers. For example, the resale formula may be tied to changes in the area median income such as: the price might be set at the original purchase price plus an increment reflecting the increase in the area median income during the owner’s tenure. For example, if the homeowners purchased the home for $200,000 and the area median income increased by 15 percent during the owner’s residence in the home, the maximum sales price would be $230,000. This approach ensures that, once the home is made affordable, the home remains generally affordable to households based on that same income standard in the future, unless interest rates change.
a. An alternative formula could limit the percentage of any appreciation in the market value of comparable homes which the owner can realize, requiring the homeowner to sell the home for no more than the original purchase price plus a specified percentage of the appreciation, such as 25 percent.
2. Further suggested language of the bill to protect the subject affordable home to include:
A. The property may be conveyed only to a household who has been approved in advance and in writing by the administrative agent appointed under the Regulations (hereinafter, the “Administrative Agent”).
B. No sale of the Property shall be lawful, unless approved in advance and in writing by the Administrative Agent, and no sale shall be for a consideration greater than maximum permitted price (“Maximum Resale Price”, or “MRP”) as determined by the Administrative Agent.
C. No refinancing, equity loan, secured letter of credit, or any other mortgage obligation or other debt (collectively, “Debt”) secured by the Property, may be incurred except as approved in advance and in writing by the Administrative Agent. At no time shall the Administrative Agent approve any such Debt, if incurring the Debt would make the total of all such Debt exceed Ninety-Five Percent (95%) of the applicable MRP.
D. The owner of the Property shall at all times maintain the Property as his or her principal place of residence.
E. At no time shall the owner of the Property lease or rent the Property to any person or persons, except on a short-term hardship basis as approved in advance and in writing by the Administrative Agent.
F. No improvements may be made to the Property that would affect its bedroom configuration, and in any event, no improvement made to the Property will be taken into consideration to increase the MRP, except for improvements approved in advance and in writing by the Administrative Agent.
G. Owners may not transfer, add to, subtract from, or modify the ownership interest of the Property, except as outlined above, or as may otherwise be provided by regulation as “exempt transaction”, i.e., “…transfer of ownership between husband and wife; the transfer of ownership between former spouses ordered as a result of a judicial decree of divorce or judicial separation, but not including sales to third parties; the transfer of ownership between family members as a result of inheritance; the transfer of ownership through an executor’s deed to a class A beneficiary; and the transfer of ownership by court order.”
H. The Owner may be responsible to pay all costs associated with the services provided by the Administrative Agent at the time of sale, said costs being regulated by the municipality and/or state.
These are some suggestions. The bill is a good start. It needs stronger teeth. Mahalo for your consideration.