Thank you for taking my testimony on this essential matter. I am opposing Bill 12 and 74 for many reasons.
According to the US Census, we have 164,351 residents with 72,927 homes. We are severely under-developed for the population. The Realtors Association of Maui approximately 10 years ago informed the Maui County Council at the current rate of permitting and development, we would be 14k homes short for local residents by 2021 beyond. This is to the heart of the matter why we aren’t in good position at this point. Options for development and the infrastructure needed have not come into existence. Some bills like allowing additional ohanas under 7500sf lots are a step in the right direction, but we can do more.
The biggest reasons for homeownership and the benefits of that are:
Have shelter and a stable place to live where you know what your payment will be for the term of your loan.
To build generational stability and quality of life (ie send your children to college, have funds for medical emergencies, downsize and use equity for retirement) All things that lessen the burden on society, create generational stability and growth.
To build community.
The rationale that people live in homes for 20 years in not realistic nor proven by statistics. The housing ladder needs many types of housing, and the strength of a community’s housing is determined by the different types and prices of those homes. We have traditionally had a lack of affordable rentals to allow folks to save for a down payment/closing costs, then the next condo/townhome type structures have also been in scarce supply. People traditionally start in starter homes and when their family grows, they step into mid-range homes, and perhaps up once more until retirement when they may consider downsizing.
To penalize the folks of Maui county with a 20-year lock before they achieve the goals of homeownership is not equitable or fair. This longer restriction is going against the poorest who have the most to gain by being homeowners. Why would the council even consider doing this to the poorest AMI category? To target different AMI groups with different rules is also unfair. All subsidies go toward helping a developer build a community. At the end of the day the developer makes their profit based on the total build. At Hale Kai Ola the most needed category were starter homes of 2 bedrooms. The 3 bedroom homes the developers could build for the most part were too small for families to live in long term. To make 20 years for any category isn’t what homeownership entails. You should not be calling this homeownership but perpetual rentals so at least people will understand this is not really homeownership, it is a rental in disguise. I personally think the subsidies that can be paid back when a homeowner chooses to sell is fairer. Then the subsidy paybacks can in turn go to help buy down rates or provide down payment assistance.
After the waitlist sales at Hale Kai Ola at least ½ of the people that came to our open houses that were desperate for homes turned us down due to the 20-year deed restriction. One woman commented that her 8 year old would be 28 by the time she could realize any real equity for all those years of upkeep on the home and making the loan payments. If the county isn’t serving ½ of the people that need or want homes, why are they making rules that are discouraging people?
The county is turning itself into developers and lenders by having rules restricting these two trades from fulfilling our housing needs. Less restrictions, including streamlining permitting - is what's needed. Hale Kai Ola, a Maui County Streamlined 100% affordable housing project, still took over 5 years. Why can permitting problems elsewhere be solved but we can’t do it here? Why are we proposing more deed restrictions instead of getting to the heart of the matter outlined by the County’s paid-for research paper? More homes need to be built!
I do not support these two Bill’s. Why is precious, valuable time being used to further disadvantage the working class with these extreme changes? These Bill’s appear to be fear-driven on a nonexistent issue. As someone who has been stuck renting my entire adult life due to unaffordability in my own hometown, I look forward to the next opportunity for WorkForce housing but having to wait 20-years for access to my own equity on what is supposed to be my biggest asset is not realistic. Google says the average age of a First Time Homebuyer is 33, and often cases older – it’s ridiculous to image having to wait 20-years from whenever the next WorkForce Housing project presents itself and if I got my name chosen in the lottery how old I’d be just to be able to pull out equity to pay for new appliances or whatever other unexpected damages or repairs are needed in that time span.
WorkForce Housing is already over-regulated, let’s not add to it and spoil what was supposed to be intended for good. People are so misinformed by “WorkForce Housing” and the difficulty to even get these types of projects approved by the County is shocking since we have been in a housing affordability crisis for so long. Let’s house our local workforce community without the aggressive overreach.
Your constituents oppose both BILL 12 (2023) & BILL 74 (2023). The reason there isn’t more testimony is because no one is even aware of these Bill’s and more importantly how they specifically hurt our kaiāulu as future homeowners. *In this written testimony I only reference the 10-20 year because it’s the largest majority category. Please know that I understand all the tiers, read both Bill’s entirely, and have ‘Ohana in WorkForce Housing.
WorkForce housing has become the only (affordable) way for the majority of your constituents to even make the dream of homeownership a reality. The entire purpose of WorkForce housing is to force the “affordability” within an otherwise unaffordable marketplace to accommodate our qualified local working class. And since there’s never enough inventory to satisfy the demand, their dream only comes true if their name happens to be drawn in the lottery!
It’s truly confusing why this Council would believe 10-years — an entire decade — isn’t already a long enough deed restriction. WorkForce Housing is not DHHL or leasehold lands, should not be compared to or have Bills drafted as such, and opposition to these two proposed Bills has nothing to do with people potentially wanting to sell or rent out their property after X amount of years. “Flipping” WorkForce housing is NOT a thing. These two Bill’s are an unnecessary overreach that’s extremely concerning — on what is supposed to be an incentive into fee simple homeownership and helping our people get into the freedoms of homeownership.
More importantly, for the vast majority of WorkForce housing homeowners who never even intend to sell, they still cannot touch their own home equity for those 10-years regardless if it’s for home repairs, home improvements, putting keiki through college, paying off student loans, have for an emergency — and it’s being proposed to double this to 20-years?! That’s inexcusably cruel and unnecessary.
It’s especially hurtful when drafted by and if-passed by Councilmembers who they themselves have the luxury of homeownership without these excessive deed restrictions. Additionally, the public is seeing you approve $50+M of their tax dollars to developers (with YukiLei being the one exception on that vote); yet this Council is going out of the way to create even more disadvantages for your own people with these two Bill’s.. It’s a slap in the face to your working class constituents who deserve the perks of homeownership, just like you.
The question is why is this Council trying to make homeownership even more difficult for their working class constituents during an emergency housing crisis? These Bills make WorkForce housing less desirable, but maybe that was the intent?! Why though? When only our working class even qualifies for these homes.
We see how each of you vote. Please vote these two Bill’s down today. For our everyday workforce people. The existing 10-years deed restrictions are long enough to earn access to their own equity. It’s rare if ever that a WorkForce Housing owner has to vacate prior to the current timelines and if they ever needed to there’s an existing process in place — let’s not forget the developer has that long waitlist of everyone who didn’t get their names pulled in the original lottery.
Mahalo for your time & serious consideration!
God Bless,
Lifelong Lahaina Resident
PS: I had every intention to testify live during this committee meeting; however I have been sick and cannot speak louder than a whisper. I really hope our HLU Chair + Councilmembers take the time to actually read this and seriously consider voting these two Bills down — they truly over regulate and directly negatively impact our very own local working class.
Tasha Kama, Chair
and Members of the Housing and Land Use Committee
County Council
200 South High Street
Wailuku, Hawaii 96793
Dear Chair Kama and Committee Members,
I am speaking as a private citizen today and I would like to offer comments on Items HLU 6 and 16.
Bill 12, connected with item HLU 6 seeks to increase the deed restriction time periods for each of the Below-Moderate, Moderate and above-moderate income levels.
The goals of deed restrictions are to allow home owners to build some level of equity while remaining affordable to subsequent owners. If deed restrictions were not in place the benefit of affordability would be to a single household.
In this scenario the goal of building equity could be problematic because of the restrictions on resale to maintain affordability to others. Balancing the goals of maintaining affordability with the goal of building equity is challenging at best.
HARVARD’s JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS performed a FELLOWS’ DISCUSSION PAPER SERIES on DEED RESTRICTIONS AND AFFORDABLE HOME OWNERSHIP, dated June 2023.
The paper surveyed a number of projects in Massachusetts over the last three decades, and outlines the main components of deed restrictions and how they affect the incentives and payoffs of property ownership compared to unencumbered title.
The paper touts itself as “the first to address deed restrictions in affordable housing.”
The paper looked at various components of deed restrictions such as: length, resale, capitol improvement, financing, just to name a few. I will focus on the length since that is more relative to the proposed bill.
The paper makes the following observations:
1. In the 1990 properties surveyed in Boston were typically set at 30 to 50 year restrictions;
2. However, after the year 2000 the trend is to move toward shorter lengths such as 15 to 30 years.
3. The Paper observed that shorter term restrictions incentivized longer term ownership so they can sell their property at market rate.
4. Deed restricted homes may build wealth, provide stabilized benefits and the owners tend to move less than traditional homeowners
5. Another observation the paper makes is that traditional home owners make improvements to either:
a. Boost property value; or
b. For personal enjoyment.
c. The paper suggested that deed restricted owners typically do not make improvements to boost property values because resale restrictions
6. The provisions ensuring affordability directly inhibit equity building, reduce the current owner’s return in the hopes of ensuring that future affordability.
Unfortunately, the paper doesn’t provide the golden ticket for balancing affordability and building equity. It does conclude that longer terms may maximize the number of beneficiaries, while short terms are trending for the communities surveyed, which thus favors equity building.
In conclusion the paper notes: “careful tailoring of specific provisions within deed restrictions can strike a fine balance based on individual programs and sites.”
Therefore, with that being said, I offer the following in an attempt to balance maintaining affordability with building equity.
The proposed bill seeks to increase the restricted term to 20, 16 and 10 years respectively. Accordingly, if the Committee chooses to increase the deed restriction terms, may I offer that an annual percentage increase be incorporated into the proposed bill as an incentive, for each year the home owner stays in the unit above the current limits of 10, 8 and 5 years, respectively.
For example, the resale provision sets the price at 25% between the initial appraised value and the appraisal at the time of resale. If the homeowner wishes to sell at year 11, under my suggestion the percent the seller would realize increases by an annual amount of let’s say 2.5% per year for purposes of this discussion.
If the home is sold in year 11 the seller will receive 27.5% between the two appraisals instead of the 25%. Accordingly, if you set the annual percentage increase at 2.5% per year, at year 15, the seller will receive 40% between the two appraisals.
The 2.5% annual increase is just an example, the actual average annual increase in the median price of a single-family home in Maui has been 8.68% since 2014.
Another item worth pondering, is that the resale price is based on two appraisals, the value of the appraisal is going to be established through comparable properties, such as below moderate, moderate or above moderate units. The other factor is location, so the appraisal will base its valuation on neighboring lower income properties. The point being the appraisal will be well below the median sales price of a market rate home, thus reinforcing the provision of affordability. Therefore, by establishing an annual percent increase after the initial 10, 8 or 5th year, respectively, you are:
1. Allowing the owner to build greater equity,
2. Giving them the incentive to stay in the home longer;
3. Providing them the ability to buy their next home at market rate, while enhancing our tax base, and
4. Maintaining affordability by allowing the home to be resold at below market rate
This suggestion is an opportunity to try as the Havard study suggests, “attempt to do the impossible” keep property affordable and profitable at the same time.
Aloha Council Members
Thank you for taking my testimony on this essential matter. I am opposing Bill 12 and 74 for many reasons.
According to the US Census, we have 164,351 residents with 72,927 homes. We are severely under-developed for the population. The Realtors Association of Maui approximately 10 years ago informed the Maui County Council at the current rate of permitting and development, we would be 14k homes short for local residents by 2021 beyond. This is to the heart of the matter why we aren’t in good position at this point. Options for development and the infrastructure needed have not come into existence. Some bills like allowing additional ohanas under 7500sf lots are a step in the right direction, but we can do more.
The biggest reasons for homeownership and the benefits of that are:
Have shelter and a stable place to live where you know what your payment will be for the term of your loan.
To build generational stability and quality of life (ie send your children to college, have funds for medical emergencies, downsize and use equity for retirement) All things that lessen the burden on society, create generational stability and growth.
To build community.
The rationale that people live in homes for 20 years in not realistic nor proven by statistics. The housing ladder needs many types of housing, and the strength of a community’s housing is determined by the different types and prices of those homes. We have traditionally had a lack of affordable rentals to allow folks to save for a down payment/closing costs, then the next condo/townhome type structures have also been in scarce supply. People traditionally start in starter homes and when their family grows, they step into mid-range homes, and perhaps up once more until retirement when they may consider downsizing.
To penalize the folks of Maui county with a 20-year lock before they achieve the goals of homeownership is not equitable or fair. This longer restriction is going against the poorest who have the most to gain by being homeowners. Why would the council even consider doing this to the poorest AMI category? To target different AMI groups with different rules is also unfair. All subsidies go toward helping a developer build a community. At the end of the day the developer makes their profit based on the total build. At Hale Kai Ola the most needed category were starter homes of 2 bedrooms. The 3 bedroom homes the developers could build for the most part were too small for families to live in long term. To make 20 years for any category isn’t what homeownership entails. You should not be calling this homeownership but perpetual rentals so at least people will understand this is not really homeownership, it is a rental in disguise. I personally think the subsidies that can be paid back when a homeowner chooses to sell is fairer. Then the subsidy paybacks can in turn go to help buy down rates or provide down payment assistance.
After the waitlist sales at Hale Kai Ola at least ½ of the people that came to our open houses that were desperate for homes turned us down due to the 20-year deed restriction. One woman commented that her 8 year old would be 28 by the time she could realize any real equity for all those years of upkeep on the home and making the loan payments. If the county isn’t serving ½ of the people that need or want homes, why are they making rules that are discouraging people?
The county is turning itself into developers and lenders by having rules restricting these two trades from fulfilling our housing needs. Less restrictions, including streamlining permitting - is what's needed. Hale Kai Ola, a Maui County Streamlined 100% affordable housing project, still took over 5 years. Why can permitting problems elsewhere be solved but we can’t do it here? Why are we proposing more deed restrictions instead of getting to the heart of the matter outlined by the County’s paid-for research paper? More homes need to be built!
Sincerely,
Regina “Gina” Duncan
I do not support these two Bill’s. Why is precious, valuable time being used to further disadvantage the working class with these extreme changes? These Bill’s appear to be fear-driven on a nonexistent issue. As someone who has been stuck renting my entire adult life due to unaffordability in my own hometown, I look forward to the next opportunity for WorkForce housing but having to wait 20-years for access to my own equity on what is supposed to be my biggest asset is not realistic. Google says the average age of a First Time Homebuyer is 33, and often cases older – it’s ridiculous to image having to wait 20-years from whenever the next WorkForce Housing project presents itself and if I got my name chosen in the lottery how old I’d be just to be able to pull out equity to pay for new appliances or whatever other unexpected damages or repairs are needed in that time span.
WorkForce Housing is already over-regulated, let’s not add to it and spoil what was supposed to be intended for good. People are so misinformed by “WorkForce Housing” and the difficulty to even get these types of projects approved by the County is shocking since we have been in a housing affordability crisis for so long. Let’s house our local workforce community without the aggressive overreach.
Aloha HLU Committee,
Your constituents oppose both BILL 12 (2023) & BILL 74 (2023). The reason there isn’t more testimony is because no one is even aware of these Bill’s and more importantly how they specifically hurt our kaiāulu as future homeowners. *In this written testimony I only reference the 10-20 year because it’s the largest majority category. Please know that I understand all the tiers, read both Bill’s entirely, and have ‘Ohana in WorkForce Housing.
WorkForce housing has become the only (affordable) way for the majority of your constituents to even make the dream of homeownership a reality. The entire purpose of WorkForce housing is to force the “affordability” within an otherwise unaffordable marketplace to accommodate our qualified local working class. And since there’s never enough inventory to satisfy the demand, their dream only comes true if their name happens to be drawn in the lottery!
It’s truly confusing why this Council would believe 10-years — an entire decade — isn’t already a long enough deed restriction. WorkForce Housing is not DHHL or leasehold lands, should not be compared to or have Bills drafted as such, and opposition to these two proposed Bills has nothing to do with people potentially wanting to sell or rent out their property after X amount of years. “Flipping” WorkForce housing is NOT a thing. These two Bill’s are an unnecessary overreach that’s extremely concerning — on what is supposed to be an incentive into fee simple homeownership and helping our people get into the freedoms of homeownership.
More importantly, for the vast majority of WorkForce housing homeowners who never even intend to sell, they still cannot touch their own home equity for those 10-years regardless if it’s for home repairs, home improvements, putting keiki through college, paying off student loans, have for an emergency — and it’s being proposed to double this to 20-years?! That’s inexcusably cruel and unnecessary.
It’s especially hurtful when drafted by and if-passed by Councilmembers who they themselves have the luxury of homeownership without these excessive deed restrictions. Additionally, the public is seeing you approve $50+M of their tax dollars to developers (with YukiLei being the one exception on that vote); yet this Council is going out of the way to create even more disadvantages for your own people with these two Bill’s.. It’s a slap in the face to your working class constituents who deserve the perks of homeownership, just like you.
The question is why is this Council trying to make homeownership even more difficult for their working class constituents during an emergency housing crisis? These Bills make WorkForce housing less desirable, but maybe that was the intent?! Why though? When only our working class even qualifies for these homes.
We see how each of you vote. Please vote these two Bill’s down today. For our everyday workforce people. The existing 10-years deed restrictions are long enough to earn access to their own equity. It’s rare if ever that a WorkForce Housing owner has to vacate prior to the current timelines and if they ever needed to there’s an existing process in place — let’s not forget the developer has that long waitlist of everyone who didn’t get their names pulled in the original lottery.
Mahalo for your time & serious consideration!
God Bless,
Lifelong Lahaina Resident
PS: I had every intention to testify live during this committee meeting; however I have been sick and cannot speak louder than a whisper. I really hope our HLU Chair + Councilmembers take the time to actually read this and seriously consider voting these two Bills down — they truly over regulate and directly negatively impact our very own local working class.
January 24, 2024
Tasha Kama, Chair
and Members of the Housing and Land Use Committee
County Council
200 South High Street
Wailuku, Hawaii 96793
Dear Chair Kama and Committee Members,
I am speaking as a private citizen today and I would like to offer comments on Items HLU 6 and 16.
Bill 12, connected with item HLU 6 seeks to increase the deed restriction time periods for each of the Below-Moderate, Moderate and above-moderate income levels.
The goals of deed restrictions are to allow home owners to build some level of equity while remaining affordable to subsequent owners. If deed restrictions were not in place the benefit of affordability would be to a single household.
In this scenario the goal of building equity could be problematic because of the restrictions on resale to maintain affordability to others. Balancing the goals of maintaining affordability with the goal of building equity is challenging at best.
HARVARD’s JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS performed a FELLOWS’ DISCUSSION PAPER SERIES on DEED RESTRICTIONS AND AFFORDABLE HOME OWNERSHIP, dated June 2023.
The paper surveyed a number of projects in Massachusetts over the last three decades, and outlines the main components of deed restrictions and how they affect the incentives and payoffs of property ownership compared to unencumbered title.
The paper touts itself as “the first to address deed restrictions in affordable housing.”
The paper looked at various components of deed restrictions such as: length, resale, capitol improvement, financing, just to name a few. I will focus on the length since that is more relative to the proposed bill.
The paper makes the following observations:
1. In the 1990 properties surveyed in Boston were typically set at 30 to 50 year restrictions;
2. However, after the year 2000 the trend is to move toward shorter lengths such as 15 to 30 years.
3. The Paper observed that shorter term restrictions incentivized longer term ownership so they can sell their property at market rate.
4. Deed restricted homes may build wealth, provide stabilized benefits and the owners tend to move less than traditional homeowners
5. Another observation the paper makes is that traditional home owners make improvements to either:
a. Boost property value; or
b. For personal enjoyment.
c. The paper suggested that deed restricted owners typically do not make improvements to boost property values because resale restrictions
6. The provisions ensuring affordability directly inhibit equity building, reduce the current owner’s return in the hopes of ensuring that future affordability.
Unfortunately, the paper doesn’t provide the golden ticket for balancing affordability and building equity. It does conclude that longer terms may maximize the number of beneficiaries, while short terms are trending for the communities surveyed, which thus favors equity building.
In conclusion the paper notes: “careful tailoring of specific provisions within deed restrictions can strike a fine balance based on individual programs and sites.”
Therefore, with that being said, I offer the following in an attempt to balance maintaining affordability with building equity.
The proposed bill seeks to increase the restricted term to 20, 16 and 10 years respectively. Accordingly, if the Committee chooses to increase the deed restriction terms, may I offer that an annual percentage increase be incorporated into the proposed bill as an incentive, for each year the home owner stays in the unit above the current limits of 10, 8 and 5 years, respectively.
For example, the resale provision sets the price at 25% between the initial appraised value and the appraisal at the time of resale. If the homeowner wishes to sell at year 11, under my suggestion the percent the seller would realize increases by an annual amount of let’s say 2.5% per year for purposes of this discussion.
If the home is sold in year 11 the seller will receive 27.5% between the two appraisals instead of the 25%. Accordingly, if you set the annual percentage increase at 2.5% per year, at year 15, the seller will receive 40% between the two appraisals.
The 2.5% annual increase is just an example, the actual average annual increase in the median price of a single-family home in Maui has been 8.68% since 2014.
Another item worth pondering, is that the resale price is based on two appraisals, the value of the appraisal is going to be established through comparable properties, such as below moderate, moderate or above moderate units. The other factor is location, so the appraisal will base its valuation on neighboring lower income properties. The point being the appraisal will be well below the median sales price of a market rate home, thus reinforcing the provision of affordability. Therefore, by establishing an annual percent increase after the initial 10, 8 or 5th year, respectively, you are:
1. Allowing the owner to build greater equity,
2. Giving them the incentive to stay in the home longer;
3. Providing them the ability to buy their next home at market rate, while enhancing our tax base, and
4. Maintaining affordability by allowing the home to be resold at below market rate
This suggestion is an opportunity to try as the Havard study suggests, “attempt to do the impossible” keep property affordable and profitable at the same time.
Sincerely,
Gary Saldana
808 283-0197
http://www.law.harvard.edu/programs/olin_center/fellows_papers/pdf/Chen_95.pdf