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Summit focuses on affordable housing hurdles

Maui County Department of Planning Director William Spence (from left); Richard “Dick” Gushman II, managing partner of the DGM Group, a Hawaii-based real estate company; and Department of Public Works Director David Goode chat Friday after participating in a panel at the 2017 Maui County Affordable Housing Summit at the Maui Beach Hotel. The Maui News / MELISSA TANJI photo

KAHULUI — Roy Katsuda, executive director of Hale Mahaolu, told a room of developers, government officials and affordable housing advocates on Friday that developing “affordable housing is easy.”

All you need is land, water, power, roads, no significant archaeological findings on your property, more-than-sufficient funds and government approvals, including certificates of occupancy, all “signed sealed and delivered,” he said.

Katsuda was joking, and he got a laugh from audience members attending the 2017 Maui County Affordable Housing Summit at the Maui Beach Hotel.

Participants heard from several panels about the struggles, difficulties and possible tools for building affordable housing on Maui. Speakers discussed the need to lessen governmental regulations to ease restrictions and hurdles for developers.

Around 150 people registered for the event co-hosted by Maui County’s Department of Housing and Human Concerns and the Maui Chamber of Commerce.

Set to retire in October, Katsuda was part of a panel at the summit that addressed fast-track affordable housing issues.

Katsuda discussed his nonprofit’s public-private projects over the years, which have turned out affordable rentals for senior citizens and low-income residents. Currently, Hale Mahaolu manages 1,100 rental units.

The nonprofit will add more with its Hale Mahaolu Ewalu Phase I project at the Kulamalu Town Center. The Ewalu project groundbreaking is set for next week.

Katsuda said private developer Everett Dowling has drilled for water in the area, so the affordable rental project — which is in Dowling’s Kulamalu development — does not need to stand in line for long-awaited Upcountry water meters. Hale Mahaolu is receiving help from the Hawaii Housing and Finance Development Corp., Maui County and other entities to make the 61-unit project a reality.

Over the years, Maui County and Alexander & Baldwin have provided most of the land for Hale Mahaolu’s projects, Katsuda said. Some land was donated and other project areas were sold to the nonprofit at discount rates or leased to it for 99 years for $1 a year, he said.

Katsuda said that his entity has used the state’s fast-tracked affordable housing law that allows developers of qualified affordable housing projects to seek exemptions from certain laws relating to planning, zoning, construction and developments. Some fees and costs also may be exempted.

Katsuda said that an entity developing affordable housing needs to be vigilant, nimble and sometimes just plain lucky to acquire and keep funding sources for the affordable housing projects and rentals.

“It is expensive and complicated; (but) it is doable,” Katsuda said.

Another panel discussed: “What are the Economic Realities of Creating Affordable Housing?” The panel addressed financial issues and regulations.

Susie Thieman, executive director of Lokahi Pacific, described economic and procedural hurdles that her nonprofit needed to get over to build 16 affordable homes in Happy Valley. One challenge was finding a lo’i wall, or irrigated terrace wall, around the property, which added costs because surveys had to be done. An initial survey cost $20,000.

The nonprofit discovered that it needed to convert a 6-inch waterline for its property to an 8-inch waterline. Thieman said that the county had done the conversion along nearby Mokuhau Road, but it stopped the work before the property, leaving it up to Lokahi Pacific.

The project would cost an additional $200,000, and if the cost were passed along to homebuyers, it could increase their costs by $14,000, Thieman said.

Then, she approached the county Department of Housing and Human Concerns, which agreed to help. Thieman also worked with Maui County Council Budget and Finance Committee Chairman Riki Hokama and Department of Water Supply Director Dave Taylor.

The county would pay for the waterline project as a one-time grant from the water department to Lokahi Pacific.

The 16-home project’s total cost came to $7.5 million. Sales prices for homes are in the $300,000 range, with income requirements, according to Lokahi’s website.

Thieman said that her agency hopes to get the first eight families into the homes in December.

County Department of Planning Director William Spence said that the entitlement process to develop housing takes an average of about seven years, and it may take millions of dollars even before construction begins.

Depending on the project and its land use designations, developers may need to do various studies, including an environmental impact statement that runs in the hundreds of thousands of dollars and may take at least two years to complete, Spence said.

There are other approvals that may be needed from the state Land Use Commission, where the process may take a year or two and also cost hundreds of thousands of dollars to pay attorneys.

Then there is the county approval process that may take another four years because projects may need to be reviewed by the Maui, Molokai or Lanai planning commissions and the Maui County Council.

“It takes about seven years, that’s an entire real estate cycle,” Spence said.

“This is money a landowner is putting in with the idea I’m going to be able to build a product for people to live in,” he said.

He asked: “Who here is going to be able to know what will go on in seven years?”

Spence said that he wants to see what can be done at the government level and believes that environmental reviews done at the state Land Use Commission, Maui County Council and possibly other panels “are largely redundant.”

“My opinion, we should do it once,” he said, but he noted that environmental reviews need to be done.

He also suggested doing comprehensive zoning and not having each project come one by one to the Maui County Council.

* Melissa Tanji can be reached at mtanji@mauinews.com.

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