Maui Real Estate

Jan: 28

Council Wants More Affordable Housing

During the recent recession, affordable housing has become a major concern of local councils. Maui County Council members therefore have been working toward changing the county’s residential work force housing guidelines in order to encourage more development of affordable housing. Members will continue to tinker with the policy which was originally written in 2006 to ensure that as luxury properties were developed so would be affordable housing projects.

Unfortunately, the economy’s recent nose dive hasn’t helped matters much and in its entire life span, this affordable housing policy has only been applied to three housing projects. Many are pointing to these facts as proof that the ordinance isn’t getting the job done. On the other hand, supporters of the ordinance are quick to mention the fact that the poor economy is stalling all new housing projects, not just affordable housing projects. With nobody building due to the recession, little has been done to ensure affordable housing for county residents.

Regardless, something needs to be done to kick start the fledgling construction industry and most people are looking to the government to take the necessary steps to provide housing opportunities for Maui residents. As such, the local government is taking the first steps to revising this ineffective policy.

In their efforts, the city council is reducing the number of affordable homes that must be developed in a new sub-division with five or more homes. Indeed, the first draft of the new ordinance calls for only 25 per cent of new homes in a development to fall into the category of “affordable.” Previously, 40 per cent of new homes in a development were required to be affordable options. If the new ordinance passes, County Council suggests that it apply only to projects in which the houses are expected to bring in $600,000 or less in the open market.

Last year, the average single-family home in Maui sold for around $720,000. With regards to the existing law, when a developer works on a project with market rate homes starting at more than $600,000 at least 50% of these properties are required to be affordable.

Essentially, changes to the affordable housing policy are being lobbied for by local developers and contractors. Hoping for the limit on affordable homes to be lowered to 15%, developers are arguing that the county needs to do something to get construction back on track. New construction will provide new jobs as well as affordable homes.

However, not everybody agrees with these changes. Non-profit organizations and charity groups would prefer a higher threshold, perhaps 30 per cent. As you can see, the county is faced with the challenge of making a compromise. The county needs to take the necessary steps to increase construction but without giving developers the opportunity to take advantage of any loop holes and create neighborhoods only for the wealthiest members of society.

There are also problems with the language of the ordinance that makes it difficult to understand. When a developer works on a project of 100 homes, they can build the affordable homes either “on-site” or “off-site” and this changes the requirement for affordable homes. At the moment, a company can build 100 luxury homes and then have the choice to build either 25 affordable homes at the same site or 40 affordable homes at another site in the same planning district. Local groups want the requirement for off-site affordable homes to be raised to 50 per cent. But some locals are concerned that these kinds of laws will lead to class segregation where luxury homes would be built in one neighborhood and affordable homes in another. The idea of homogenous neighborhoods is a concern because of the difference in community services often seen in neighborhoods of varying wealth.

Nevertheless, the county voted 5-0 in favor of the current ordinance changes and the mayor gives them full support. Over the past year, developers and real estate representatives alike have been submitting proposed changes to this work force housing policy as they want to lift deed restrictions and get rid of a companion law that would force developers to provide their own water sources.

Approximately 3,100 homes have been proposed since the work force housing policy was passed but some of these projects are still in the planning phases while others have lost funding or are hoping for the market to improve before they proceed. Other changes that might be accompanying the housing ordinance are geared to encourage development of affordable housing while preventing owners from selling these affordable homes at market rates.