The Maui News

Updated affordable housing guidelines that aim to lower sales prices for homebuyers will take effect in the spring under a new bill that became law on Tuesday.

Bill 107 creates new guidelines for the sales price of county-subsidized housing units and provides a program within the Home Acquisition and Ownership Programs Revolving Fund to help homebuyers when a developer does not receive direct county subsidies, according to the county.

The measure was passed by the Maui County Council in September and signed into law by the mayor on Tuesday.

“Bill 107 will put homeownership within reach for more Maui County residents,” Mayor Michael Victorino said in a statement Tuesday. “We will continue to work with developers to make these home prices possible. We have examples of successful public-private partnerships that bring construction costs down through subsidies, infrastructure support, creative financing, various exemptions and bonus packages. Bill 107 should encourage developers to meet with the County while still in planning stages to negotiate similar partnerships.”

The bill adjusts the guidelines to include a maximum monthly payment — including principle, interest, taxes and insurance — of 31 percent of the homeowner’s income in county-subsidized developments.

“Maui County has been using a formula to estimate how much buyers in each income bracket can afford to pay for a home, but the formula didn’t account for costs like homeowner’s association fees, mortgage insurance, and other expenses that mortgage lenders require,” said Council Member Gabe Johnson, who introduced the bill. “Bill 107 requires sales prices to be calculated similar to how lenders do, making it easier for homebuyers to qualify for mortgages. It will help to shield our residents from Maui’s volatile investment market.”

Linda Munsell, deputy director of the Department of Housing and Human Concerns, has estimated that the new sales price calculations will reduce the cost of affordable homes by an average of 22 percent, according to a county news release.

Sales price guidelines for 2022 estimate that a family making $60,000 annually could pay $289,100 for a three-bedroom home. The new guidelines would bring the price closer to $157,000 for the same family. Similar reductions would occur at all qualifying income levels. The new guidelines will take effect when the U.S. Department of Housing and Urban Development announces the 2023 area median income numbers in the spring.