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Housing list to prioritize locals draws concerns

Johnson says list will change system that is ‘not working’ as county worries over liability

The Maui County Council is considering a bill that would make the county or a third party in charge of an affordable housing list aimed at getting local people, especially longer term residents, into homes. However, developers and the Department of Housing and Human Concerns are raising issues over increased cost and liability. The Maui News / MATTHEW THAYER photo

An affordable housing list aimed at getting more local people into homes and giving priority to longer-term Maui residents is drawing concern from the development community and the county department that would potentially oversee it.

A bill before the Maui County Council would shift the responsibility of managing the project waitlist and its qualification process from the developer to the county Department of Housing and Human Concerns or a designated third party. It would also have the county purchase any units that remain unsold if there are no qualified buyers left for the affordable units.

Bill 111 also includes other changes, including giving priority to residents who lived on island the longest and extending the buying offer period to income-qualified applicants from 90 days to 120 days.

The measure is up for second and final reading at Friday’s council meeting.

“It is evident that what we have been doing is not working,” said Council Member Gabe Johnson, chairman of the council’s Affordable Housing Committee, which recommended passage of the bill. “Some would say, including economic experts, that the system we have in place is actually part of the problem.”

Johnson said in an email on Tuesday that the changes the council is seeking “are an effort to put long-term residents first, stop mortgage steering by the developer, prevent affordable housing units flipping out to market rates and then sold to off-island buyers. Bill 111 creates a system where residents can be put on a list while getting the support and tools they need to be prepared to buy or rent when an affordable housing project comes up in their desired district to live.”

“The old way of selecting buyers isn’t working, in fact it is actually hurting our local residents,” Johnson added. “We have no choice but to fix the system and give the job to the county or a third party.”

The Department of Housing and Human Concerns has said it supports some aspects of the bill, such as the concept of developing a centralized database for residents interested in workforce housing units and a central place for disseminating information about affordable housing, as well as encouraging residents to become better prepared for rental and homeownership opportunities by working with a U.S. Department of Housing and Urban Development-certified housing agency.

But it has concerns about other aspects, including that the changes could have a “negative, rather than a positive impact on housing projects,” said Linda Munsell, deputy director of Housing and Human Concerns, in a letter to the council.

Munsell’s concerns also include the duty that the county or its designated third party would take on in determining the eligibility of families on the list. She said the county will incur liability, especially if there is an error in the qualification process.

Developers, who currently oversee the qualification process, have said that staffing and cost required to do the work would be “significant” for the county or another party, Munsell added. If there is any delay by the county or the third party in determining eligibility, it increases the cost of development, “making homes less affordable to our residents,” she noted.

The department is also concerned about how it will determine the length of an applicant’s residency in the county and that the process would be subject to errors and challenges. Conducting the verification process could involve significant and maybe even unnecessary administrative time to determine length of residency minus absences.

Munsell said that it would not be in the best interest of the county to require the purchase of all workforce housing units prior to it being sold at market prices.

“We encourage the council to amend this section to give the county the right to purchase, but not be required to purchase,” Munsell wrote. “This change will allow the county to evaluate the value and necessity of the purchase before making a decision.”

The county has limited capacity to hold residential real estate and to sell homes and has not planned for a land trust of some kind to possibly take ownership of the homes, Munsell pointed out.

The department also encouraged the council to do more outreach to developers to work on the amendments.

Advocates for the building industry echoed the county’s concerns over liability, chance of error and an increased burden on the county. Some even said costs will be added to projects by extending the buying periods from 90 to 120 days for various income levels.

“Agencies have specific requirements regarding tenant selection, financial qualifications, fair housing and accessibility,” said a letter to the council from the Pacific Resource Partnership, a nonprofit market recovery trust fund which represents approximately 7,000 union carpenters and 240 large and small contractors. “Adding an additional layer of regulation to the selection process and taking away the developer, its partners or its management company’s ability to establish a waitlist is unnecessary and equates to more risk for the developer, tax credit investors, debt financiers and private equity investors. This risk alone may deter developers from building affordable housing in Maui.”

But Johnson countered that “if we drive away developers who don’t have our local residents’ best interest first, then I say that’s good legislation.

“Developers also need to understand that along with this bill and future bills we propose to support our developers create truly affordable housing through subsidies,” he said. “I intend for the system that I put forward to work for all.”

Johnson said the new system will help developers who want to provide housing to local buyers, as people on the list will be ready to buy homes after receiving support from counseling agencies and buyers will be guaranteed their lender of choice.

Johnson acknowledged that the county may need to hire more staff for the housing department to fulfill the new requirements and said the council will give them the budget to do so.

He added that the county can use the new county transient accommodations tax and change in the real property tax rates and structures to assist with the amendments, which he said were inspired by the Comprehensive Affordable Housing Plan recently drafted for the county.

Friday’s council meeting starts at 9 a.m. The agenda, along with Bill 111, can be found at mauicounty.us/agendas/.

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

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