Aloha Council Members,
I am a local, born and raised resident currently working hard at finding a home for my family to purchase that will NOT require me to feel like I am forced to live there for 20+ years with restrictions. I do NOT agree with putting funds to implement Bills 111 & 107.
Bill 111 will do more harm to us locals than good:
- The deed restriction is way too long and excessive.
- The current AMI does not make sense with the realities of income here in Maui County
- Having a waitlist will create another can of worms including adding extra costs to maintain it, time, and another headache. JUST LOOK AT THE DHHL WAITLIST and how many Native Hawaiians are on there waiting for a home.
- The adjustments in pricing that Bill 107 wants to implement can disincentivize developers as costs and labor have increased tremendously.
- timelines for sale in 111 should be scaled back to the origins of 2.96 as the carry risk is great for developers; time is money
What the funding could potentially be used for:
-Supplement or combat prevailing interest rates
-Buy down points in 100% AFH developments to help bring costs down
To conclude I do not agree with the council moving to fund the implementation of these bills as the policies can cause more harm than do good as stated above and keep residents from purchasing homes.
My name is Tatiana Medeiros and I am the Broker In Charge for Fine Island Properties. I am also currently one of the Realtors that is working on the Hale Kaiola Project.
The current AMI bracket that the County Of Maui is using is broken. The average person that works in Maui County does not qualify for Workforce Housing under the current AMI bracket. First responders, teachers and county workers do not qualify for Workforce Housing under the current AMI bracket being used. I find this heartbreaking.
How can those with respectable careers not afford to buy a home in the County they work in?
Unless Maui County is going to increase pay, the AMI Brackets currently being used will never help the people of Maui.
Having a long term deed restrictions are excessive. No one knows what their life will look like in 15+ years. The long term deed restrictions penalize the hard working people of Maui County and doesn’t help them to thrive. This restriction doesn’t allow for these people to move up or on should their life circumstances change, without them giving up a percentage of their equity that they worked so hard to achieve. Penalizing the people of Maui shouldn’t be a priority. If there is a need for a deed restriction 5-7 years is much more reasonable time frame. Bringing everything back to the basics on 2.96 is a good starting point to the reconfiguration of AFH policies. I do not support the implementation of Bill's 111 & 107.
Dear Chair and Council Members,
Hi, my name is Spencer Lee, Vice President, Sales Manager, for Central Pacific Bank. I oversee our new condo project mortgage lending in Hawaii. I’ve overseen CPB’s mortgage lending on HHFDC affordable, HCDA reserve, and County affordable projects. In this role I’ve directly overseen thousands of new condo project sales, hundreds of which were affordable or reserve housing. At times I’m asked to give my opinion on affordable housing regulations, mortgage loan guidelines, and various other matters regarding new condo project lending.
I am strongly opposed to the language in bill 107 for the following reasons:
1. 31% of HUD AMI when getting a subsidy is too low. City and County of Honolulu uses 33%, which I already feel is low, but better than 31%. By capping the sales prices too low develops won't build, which only worsens the housing shortage.
2. It doesn’t explain what interest rate is used to determine to the housing payment. I recommend you state that you'll use us a 2 year average of the Freddie Mac rate like the City and County of Honolulu.
3. Paragraph 3 states that the department must create a “program” and subsidize qualified buyers in the amount necessary such that they don’t exceed 31%. Since this program doesn’t already exists, thus there are not rules, guidelines, or agreement in place on how this program will be funded, structured, and ran. This lack of clarity will further make developers not want to build as it makes it more unclear who will buy the units, how they will be qualified, and how they will get the funding needed to buy. Clarity and efficiency is needed to incentivize the creation of more housing units, not another initiative that doesn't have clear proof it'll create more housing.
This comment is about the property tax rates and tiers to be considered by the council at its 6pm public hearing on 4/26. There does not appear to be an ecomment set up for that meeting. Here is the text, but the attachment shows the small table lined up better.
Testimony re Real Property Tax adjustments to Mayor’s budget proposed rates and tier thresholds
(4/25/23)
From Michael Williams, immediate past Chair of the Cost of Government Commission, and chief author of its report issued in October 2022 on Real Property Tax Policy Options
MichaelWilliams@PueoFarm.com; 808-264-4884
20 Pulehunui Road, Kula
(For many more details about Maui County’s property tax system, Council members, their staff, and the administration are urged to read the October 2022 COGC report on Real Property Tax Options, available on the COGC website at https://www.mauicounty.gov/DocumentCenter/View/138757/Report-on-Real-Property-Tax-Policy-Options-for-Maui-County-October-2022-62MB.)
--Maui County is the wealthiest municipality (County or city) in the USA as measured by taxable real property value per capita. See COGC October 2022 report on Property Tax Policy Options. Total assessed taxable value of Maui County real property wealth is $70.3 billion (with a “b”). US Census says in 2022 there were 164,000 residents. Dividing 70.3 billion by 164,000 = $429,000 per resident.
-- The county’s tax system is unfair when with all that real estate wealth, it does not provide affordable housing to all residents, and affordable child care to all workers. The county government should not be setting its spending policies at some arbitrary number goal like $1 billion—it should be setting the goal of providing affordable housing and child care, to raise the standard of living for all residents.
--There are approximately 14,000 dwelling units authorized to operate as TVRs (not counting 2500 timeshare units), and another 10,000 dwelling units in the NOO class that are not long term rentals—so about 24,000 housing units not available to residents, owned by wealthy people who own at least one other home, probably 95% of them do not live on Maui and do nit vote here.
--Higher taxes on commercial visitor accommodations will be passed on to, and paid for, by tourists. Higher taxes on non-commercial visitor accommodations (second homes) will be paid by wealthy off-island visitors.
--This additional tax revenue can be generated without raising property taxes on anyone who lives here, not on homeowners, not on landlords who rent homes to residents, not on small locally owned businesses.
--Because Maui County also has the most flexible and progressive property tax system in the country, there is no such thing as the typical county taxpayer—there are many different types of county taxpayers.
Of that $70.3 billion, the following amounts are the total values for real property parcels with dwellings occupied/used only by visitors and which are not occupied by or available to residents:
RPT Class Assessed Value Mayor’s tax rate Projected RPT revenue
TVR-STRH (And B&Bs) $18.2 billion (25%) 11.85 (1.2%) $212 million
Non-Owner-Occupied $16.7 billion (24%) 7.2 (0.8%) $128 million
TOTALS $34.9 billion (49%) $340 million
If these parcels were taxed at a blended rate of 1.5% (15.00/1,000) $523 million
That would generate $183 million more than in the Mayor’s budget proposal.
Looking only at NOO parcels, a blended rate of 1.5% would generate $250 million, which is $122 million more than the mayor’s proposal.
TOTAL VALUE OF HOMES (PARCELS WITH DWELLING UNITS) ONLY FOR VISITORS
$34.9 billion (49%)
49% of all real property value in the county.
Taxing this visitor accommodation real estate wealth at just 1.5% (15.00/$1000) would generate $183 million more than the mayor’s proposed rates.
How the blended RPT rate for the NOO class was calculated:
--Total assessed value for the Non-Owner Occupied class (NOO): $17.7 billion (with a B). There are 16,730 parcels, with an average vlue of 17,674,366,745/16,730 = $1,056,000.
The total RPT revenue at the rates proposed by the mayor is
Tier 1 (12,106 parcels) (72%)—5.85, $62.8 million;
Tier 2 (4,172 parcels) (25%)—8.00, $40 million;
Tier 3 (452 parcels) (3%)—12.50, $25.9 million.
Total revenue for all 3 tiers is $127.6 million.
To fully utilize the progressive structure of the county’s RPT system, so the wealthiest owners who can better afford it, pay a higher share of the total tax, the tier thresholds can be adjusted to more evenly divide these parcels, so roughly 33% are in each tier.
The average tax rate for all three tiers is thus 127.6 million/17.7 billion = 0.072%. A tax rate of even 1% woud generate $177 million, nearly $50 million more than the mayor proposed. A 1% tax rate woukd still be very low compared to what similar propertiest woukd be taxed in other states. A 1.5% tax rate would raise
NOO property owners pay no TAT, pay no state income tax, but they still increase the load on the countyʻs roads,parks, water and sewer, police and fire protection. Of all the classes of real property, this is the one representing only very wealthy owners who don’t live here, don’t vote here, don’t pay TAT or state income tax.
What would be the effect on property values of an increase in property taxes on second homes, or on TVRs? Probably none at tax rates at or below 1.5%--but if there was an effect, it would only be to lower the average price of the property by the tax rate—so the average price of a second home here would drop from $1,056,000 to $1,045,000—not a real problem, and the average price of a TVR condo would behave similarly.
An important caveat: There are likely still several thousand parcels in the NOO class which are genuine long term rentals. The country needs to mount a major publicity effort to warn landlords their taxes will go up substantially in 2024 if they don’t apply for LTR status by 12/31/23.
Marcy Martin thinks most of the genuine LTRs still wrongly classed as NOOs are in the lower value range, say homes worth less than $600,000. For FY 24, the council should set Tier 1 of NOO at $0-600,000, and tax it at a rate about double the LTR rate or same valued parcels. Tier 2 should be $601,000-1,000,000 (the average value of all NOOs is just over $1 million), and tier 3 should be $1,000,000+.
The tax rates on Tiers 2 and 3 should be high enough to generate the extra money needed for affordable housing. RPAD (Marcy Martin) can quickly tell you how many parcels and how much total value would be in each tier using these thresholds, or any others council members would like to try. Then it is easy to set the rates needed to generate the extra money required for full funding of the AH Fund per the CAHP ($58 million instead of $43 million), and any special new AH projects, such as Chair Lee’s Ohana Assistance program, an expansion of the First Time Homebuyers Program, an expansion of the Rental Assistance Program, and money to plan, design, and start implementation of the coming Strategic Plan to End Homelessness.
Testimony re Property tax legislation needed for tax year 2024—to be finalized by 11/30/23
Long Term Rental class
---Amend requirements for Long Term Rental class to allow for tenant turnover, temporary vacancies in ordinary course of operating a rental, such as maintenance between tenants.
---Create a special extra exemption for landlords for each housing unit rented at affordable rates
---Increase fines for property owners who submit false applications (and ask RPAD if it has sufficient personnel and resources to enforce its rules).
---Plan a major public information effort to alert LTR owners still in NOO class to apply by 12/31/23 if NOO rates have been raised per the recommendations in this memo.
---Create a grant program to subsidize OOs to build ‘ohana ADUs dedicated to long term rentals-CM Lee has a bill to do this with $50,000 grants.
General property tax policy
---Give RPAD the tool of possible use of the income approach to assessing value; requires only a one-word amendment to MCC 3.48.290
- “Considerations by director.
“The director must cause the fair market value of all taxable real property to be determined and annually assessed by the market data, income, and cost approaches to value . . .”
---Give RPAD the authority to obtain income and expense records from any owner of an income generating parcel who appeals their parcel’s valuation, and provide that such appeal will be automatically dismissed if such records are not provided
Aloha Council Members,
I am a local, born and raised resident currently working hard at finding a home for my family to purchase that will NOT require me to feel like I am forced to live there for 20+ years with restrictions. I do NOT agree with putting funds to implement Bills 111 & 107.
Bill 111 will do more harm to us locals than good:
- The deed restriction is way too long and excessive.
- The current AMI does not make sense with the realities of income here in Maui County
- Having a waitlist will create another can of worms including adding extra costs to maintain it, time, and another headache. JUST LOOK AT THE DHHL WAITLIST and how many Native Hawaiians are on there waiting for a home.
- The adjustments in pricing that Bill 107 wants to implement can disincentivize developers as costs and labor have increased tremendously.
- timelines for sale in 111 should be scaled back to the origins of 2.96 as the carry risk is great for developers; time is money
What the funding could potentially be used for:
-Supplement or combat prevailing interest rates
-Buy down points in 100% AFH developments to help bring costs down
To conclude I do not agree with the council moving to fund the implementation of these bills as the policies can cause more harm than do good as stated above and keep residents from purchasing homes.
Mahalo!
My name is Tatiana Medeiros and I am the Broker In Charge for Fine Island Properties. I am also currently one of the Realtors that is working on the Hale Kaiola Project.
The current AMI bracket that the County Of Maui is using is broken. The average person that works in Maui County does not qualify for Workforce Housing under the current AMI bracket. First responders, teachers and county workers do not qualify for Workforce Housing under the current AMI bracket being used. I find this heartbreaking.
How can those with respectable careers not afford to buy a home in the County they work in?
Unless Maui County is going to increase pay, the AMI Brackets currently being used will never help the people of Maui.
Having a long term deed restrictions are excessive. No one knows what their life will look like in 15+ years. The long term deed restrictions penalize the hard working people of Maui County and doesn’t help them to thrive. This restriction doesn’t allow for these people to move up or on should their life circumstances change, without them giving up a percentage of their equity that they worked so hard to achieve. Penalizing the people of Maui shouldn’t be a priority. If there is a need for a deed restriction 5-7 years is much more reasonable time frame. Bringing everything back to the basics on 2.96 is a good starting point to the reconfiguration of AFH policies. I do not support the implementation of Bill's 111 & 107.
Mahalo,
Tatiana Medeiros
Dear Chair and Council Members,
Hi, my name is Spencer Lee, Vice President, Sales Manager, for Central Pacific Bank. I oversee our new condo project mortgage lending in Hawaii. I’ve overseen CPB’s mortgage lending on HHFDC affordable, HCDA reserve, and County affordable projects. In this role I’ve directly overseen thousands of new condo project sales, hundreds of which were affordable or reserve housing. At times I’m asked to give my opinion on affordable housing regulations, mortgage loan guidelines, and various other matters regarding new condo project lending.
I am strongly opposed to the language in bill 107 for the following reasons:
1. 31% of HUD AMI when getting a subsidy is too low. City and County of Honolulu uses 33%, which I already feel is low, but better than 31%. By capping the sales prices too low develops won't build, which only worsens the housing shortage.
2. It doesn’t explain what interest rate is used to determine to the housing payment. I recommend you state that you'll use us a 2 year average of the Freddie Mac rate like the City and County of Honolulu.
3. Paragraph 3 states that the department must create a “program” and subsidize qualified buyers in the amount necessary such that they don’t exceed 31%. Since this program doesn’t already exists, thus there are not rules, guidelines, or agreement in place on how this program will be funded, structured, and ran. This lack of clarity will further make developers not want to build as it makes it more unclear who will buy the units, how they will be qualified, and how they will get the funding needed to buy. Clarity and efficiency is needed to incentivize the creation of more housing units, not another initiative that doesn't have clear proof it'll create more housing.
This comment is about the property tax rates and tiers to be considered by the council at its 6pm public hearing on 4/26. There does not appear to be an ecomment set up for that meeting. Here is the text, but the attachment shows the small table lined up better.
Testimony re Real Property Tax adjustments to Mayor’s budget proposed rates and tier thresholds
(4/25/23)
From Michael Williams, immediate past Chair of the Cost of Government Commission, and chief author of its report issued in October 2022 on Real Property Tax Policy Options
MichaelWilliams@PueoFarm.com; 808-264-4884
20 Pulehunui Road, Kula
(For many more details about Maui County’s property tax system, Council members, their staff, and the administration are urged to read the October 2022 COGC report on Real Property Tax Options, available on the COGC website at https://www.mauicounty.gov/DocumentCenter/View/138757/Report-on-Real-Property-Tax-Policy-Options-for-Maui-County-October-2022-62MB.)
--Maui County is the wealthiest municipality (County or city) in the USA as measured by taxable real property value per capita. See COGC October 2022 report on Property Tax Policy Options. Total assessed taxable value of Maui County real property wealth is $70.3 billion (with a “b”). US Census says in 2022 there were 164,000 residents. Dividing 70.3 billion by 164,000 = $429,000 per resident.
-- The county’s tax system is unfair when with all that real estate wealth, it does not provide affordable housing to all residents, and affordable child care to all workers. The county government should not be setting its spending policies at some arbitrary number goal like $1 billion—it should be setting the goal of providing affordable housing and child care, to raise the standard of living for all residents.
--There are approximately 14,000 dwelling units authorized to operate as TVRs (not counting 2500 timeshare units), and another 10,000 dwelling units in the NOO class that are not long term rentals—so about 24,000 housing units not available to residents, owned by wealthy people who own at least one other home, probably 95% of them do not live on Maui and do nit vote here.
--Higher taxes on commercial visitor accommodations will be passed on to, and paid for, by tourists. Higher taxes on non-commercial visitor accommodations (second homes) will be paid by wealthy off-island visitors.
--This additional tax revenue can be generated without raising property taxes on anyone who lives here, not on homeowners, not on landlords who rent homes to residents, not on small locally owned businesses.
--Because Maui County also has the most flexible and progressive property tax system in the country, there is no such thing as the typical county taxpayer—there are many different types of county taxpayers.
Of that $70.3 billion, the following amounts are the total values for real property parcels with dwellings occupied/used only by visitors and which are not occupied by or available to residents:
RPT Class Assessed Value Mayor’s tax rate Projected RPT revenue
TVR-STRH (And B&Bs) $18.2 billion (25%) 11.85 (1.2%) $212 million
Non-Owner-Occupied $16.7 billion (24%) 7.2 (0.8%) $128 million
TOTALS $34.9 billion (49%) $340 million
If these parcels were taxed at a blended rate of 1.5% (15.00/1,000) $523 million
That would generate $183 million more than in the Mayor’s budget proposal.
Looking only at NOO parcels, a blended rate of 1.5% would generate $250 million, which is $122 million more than the mayor’s proposal.
TOTAL VALUE OF HOMES (PARCELS WITH DWELLING UNITS) ONLY FOR VISITORS
$34.9 billion (49%)
49% of all real property value in the county.
Taxing this visitor accommodation real estate wealth at just 1.5% (15.00/$1000) would generate $183 million more than the mayor’s proposed rates.
How the blended RPT rate for the NOO class was calculated:
--Total assessed value for the Non-Owner Occupied class (NOO): $17.7 billion (with a B). There are 16,730 parcels, with an average vlue of 17,674,366,745/16,730 = $1,056,000.
The total RPT revenue at the rates proposed by the mayor is
Tier 1 (12,106 parcels) (72%)—5.85, $62.8 million;
Tier 2 (4,172 parcels) (25%)—8.00, $40 million;
Tier 3 (452 parcels) (3%)—12.50, $25.9 million.
Total revenue for all 3 tiers is $127.6 million.
To fully utilize the progressive structure of the county’s RPT system, so the wealthiest owners who can better afford it, pay a higher share of the total tax, the tier thresholds can be adjusted to more evenly divide these parcels, so roughly 33% are in each tier.
The average tax rate for all three tiers is thus 127.6 million/17.7 billion = 0.072%. A tax rate of even 1% woud generate $177 million, nearly $50 million more than the mayor proposed. A 1% tax rate woukd still be very low compared to what similar propertiest woukd be taxed in other states. A 1.5% tax rate would raise
NOO property owners pay no TAT, pay no state income tax, but they still increase the load on the countyʻs roads,parks, water and sewer, police and fire protection. Of all the classes of real property, this is the one representing only very wealthy owners who don’t live here, don’t vote here, don’t pay TAT or state income tax.
What would be the effect on property values of an increase in property taxes on second homes, or on TVRs? Probably none at tax rates at or below 1.5%--but if there was an effect, it would only be to lower the average price of the property by the tax rate—so the average price of a second home here would drop from $1,056,000 to $1,045,000—not a real problem, and the average price of a TVR condo would behave similarly.
An important caveat: There are likely still several thousand parcels in the NOO class which are genuine long term rentals. The country needs to mount a major publicity effort to warn landlords their taxes will go up substantially in 2024 if they don’t apply for LTR status by 12/31/23.
Marcy Martin thinks most of the genuine LTRs still wrongly classed as NOOs are in the lower value range, say homes worth less than $600,000. For FY 24, the council should set Tier 1 of NOO at $0-600,000, and tax it at a rate about double the LTR rate or same valued parcels. Tier 2 should be $601,000-1,000,000 (the average value of all NOOs is just over $1 million), and tier 3 should be $1,000,000+.
The tax rates on Tiers 2 and 3 should be high enough to generate the extra money needed for affordable housing. RPAD (Marcy Martin) can quickly tell you how many parcels and how much total value would be in each tier using these thresholds, or any others council members would like to try. Then it is easy to set the rates needed to generate the extra money required for full funding of the AH Fund per the CAHP ($58 million instead of $43 million), and any special new AH projects, such as Chair Lee’s Ohana Assistance program, an expansion of the First Time Homebuyers Program, an expansion of the Rental Assistance Program, and money to plan, design, and start implementation of the coming Strategic Plan to End Homelessness.
Testimony re Property tax legislation needed for tax year 2024—to be finalized by 11/30/23
Long Term Rental class
---Amend requirements for Long Term Rental class to allow for tenant turnover, temporary vacancies in ordinary course of operating a rental, such as maintenance between tenants.
---Create a special extra exemption for landlords for each housing unit rented at affordable rates
---Increase fines for property owners who submit false applications (and ask RPAD if it has sufficient personnel and resources to enforce its rules).
---Plan a major public information effort to alert LTR owners still in NOO class to apply by 12/31/23 if NOO rates have been raised per the recommendations in this memo.
---Create a grant program to subsidize OOs to build ‘ohana ADUs dedicated to long term rentals-CM Lee has a bill to do this with $50,000 grants.
General property tax policy
---Give RPAD the tool of possible use of the income approach to assessing value; requires only a one-word amendment to MCC 3.48.290
- “Considerations by director.
“The director must cause the fair market value of all taxable real property to be determined and annually assessed by the market data, income, and cost approaches to value . . .”
---Give RPAD the authority to obtain income and expense records from any owner of an income generating parcel who appeals their parcel’s valuation, and provide that such appeal will be automatically dismissed if such records are not provided
--