HomeMy WebLinkAbout06-16-2010-Doc15935
MINUTES
PLANNING COMMITTEE
June 16, 2010
A meeting of the Planning Committee of the Council of the County of
Kauai, State of Hawaii, was called to order by Councilmember Jay Furfaro,
Chair, at the Council Chambers, 3371-A Wilcox Road, Lihu`e, Kauai, on
Wednesday, June 16, 2010, at 10:38 a.m., after which the following members
answered the call of the roll:
Honorable Tim Bynum
Honorable Jay Furfaro
Honorable Daryl W. Kaneshiro
Honorable Lani T. Kawahara
Honorable Derek S. K. Kawakami
Honorable Bill "Kaipo" Asing, Ex-Officio Member
Honorable Dickie Chang, Ex-Officio Member
Minutes of the June 2, 2010 Planning Committee Meeting.
Upon motion duly made by Mr. Kaneshiro, seconded by Mr. Bynum, and
unanimously carried, the Minutes of the June 2, 2010 Planning Committee
Meeting was approved.
The Committee proceeded on its agenda item, as shown in the following
Committee report which is incorporated herein by reference:
Bill No. 2361 A BILL FOR AN ORDINANCE AMENDING CONDITION
NO. 19 OF ORDINANCE NO. PM-2004-370 RELATED TO
THE KUKUI`ULA WORKFORCE HOUSING
[This item was deferred.]
JAY FURFARO (COMMITTEE CHAIR): I would like to confirm that members do
have summary notes from the Planning Commission? Thank you very much. On that
note I would like to suspend the rules so that I can call up the applicant to give us a
brief history of this bill and maybe we'll start from there.
There being no objections, the rules were suspended.
TOM SHIGEMOTO (KUKUI`ULA REPRESENTATIVE): Good morning members of
the Council, Chair;: Asing. For the record my name is Tom Shigemoto, I represent
Kukui`ula Development Company Hawaii Limited and A&B Properties, the joint
venture for the project. Before I start and you know I apologize for not doing this
representation during the public hearing because I did not want to prolong that
particular process and felt that there was enough in our application that you have to
explain things but being that it is... let me give you some historical perspective first
and then get into the particulars of our request. The Kukui`ula project was an A&B
project you know we had zoning approvals for thirty-four hundred (3,400) units. This
was prior to the joint venture forming and we actually met our housing conditions or
requirements before the joint venture was formed. So we had the ten percent (10%)
requirement, at that time we had approvals for seventeen hundred and thirty-eight
(17,038) units and we complied with the ten percent (10%) basically at `Ele`ele Nani,
Hilinani Subdivision II and also with the dedication of some land at Paanau Village,
for a total of a hundred and seventy-six (176) units and we do have letters to that effect
from the Housing Agency on file. When Kukui`ula came in 2004 or got the approval in
2004 the request really was fora (inaudible) from a potential thirty-four hundred
(3,400) units to fifteen hundred (1,500) units and yet KDCH, the joint venture, agreed
to donate four and a half acres of land adjacent to Paanau with free sewer hookups.
They agreed to donate five (5) more acres to the county for its limited equity housing
but there was catch to that one, this is only if the DOE decides that the five (5) acres is
not going to be needed for expansion or another Elementary School and that's
determined after the three hundred (300) unit is built out at the project but knowing
what the enrollment at Koloa Elementary School is today, plus the fact that there's
another seven (7) acres adjacent to that school that A&B is committed to dedicate to
them, it's highly unlikely that the DOE is going to need this five (5) acres. So in
addition to this four and a half acres, the county gets five (5) acres more for this limited
equity housing.
I want to remind the Council, the seventy-five (75) units that we're talking about
which is the subject of our zoning amendment is... was units that we offered to the
County, it was not exacted, we offered... because we realize that we're going to have
employees in our own development that needed housing. Now in the negotiations
process, thirty (30) units were then reserved for the public, members of the general
public and these are all affordable and forty-five (45) units were then going to be
reserved for the Kukui`ula employees. Now other conditions that we talked about
involved a ninety (90) year buyback for this, for any sold unit. The applicant being
required to buyback all of the sold units with no ability to sell any remaining units to
the open market once the restricted sales period has lapsed. Now these conditions
actually preceded the adoption of the current County Housing ordinance 868 which
contains conditions or provision that address the things the we were asking for relief
from. Now please be in mind that Kukui`ula is not asking to be relieved from providing
the seventy-five (75) units, we are going to provide these seventy-five (75) housing
units, we're asking that the terms of the sale in the sold units and disposition of this
units after the units are built is what we're asking for some relief on.
Now specifically our request is to reduce the ninety (90) year buyback to twenty
(20) years, and why twenty (20) years? Because twenty (20) years is what's contained
in the current housing policy. We're asking that the county have the first option to
repurchase the units that are for sale or sold and then the ability to market, rent
and/or sell any unsold housing units after first being offered all qualified affordable
buyers. Those are the three (3) request that we made of the county. Now at the
Planning Commission hearing the Planning Commission basically felt that they had no
hand in crafting the current housing conditions, so they basically took what the
Housing Agency recommended which was to reduce the ninety (90) year buyback
period from ninety (90) to twenty-five (25) years and then they opposed the two (2)
other request. They did not cite any reasons why but they just simply opposed those.
Now as any responsible development company would, we want... we held meetings and
have been holding meetings with the Housing Agency to discuss and try to see what
their concerns were and to see if there were any common grounds or any compromises
that we could come up with to make our housing work.
On the buyback, the Housing Agency felt that the twenty-five (25) years that
they recommended preserved the affordability factor, the longer the better. At the time
gave the homeowner the ability to retain .some of the equity in their units upon the sale
of it. Now the joint venture believes the consistency purposes, the twenty (20) year
buyback accomplishes the same goal and is why the term was adopted in the housing
policy. Regarding the option of the buyback, we learned that the Housing Agency
resisted primarily because it could not repurchase the units in the hundred forty-one
(141) to the hundred eighty percent (180%) of the median income group, as
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repurchasing would not only deplete their reserves but also make it almost impossible
for them to resell those units, so that was their major concern on repurchasing. So as a
compromise we have offered that the joint venture would take the first position on
those units, the one forty-one (141) to the one eighty (180) if the county would take the
eighty (80) to a hundred and forty percent (140) of the median income group units.
That's the offer that we made. Regarding the ability to sell to the open market once
the restricted sales period has lapsed, the concern from the Housing Agency was that
the period after the houses were built was just too short a time. Because the... they
feel that most buyers want to see and touch and feel these units before they make a
decision on whether or not they want to invest in these units and so we've agreed to
extend that period for purchasing to eight (8) months after the certificate of occupancy
is issued and that seems to be satisfactory but again we'll... you know that is on the
table and that's what we discussed.
The details, obviously we do have a housing agreement with the County right
now, with the Housing Agency. The details of these... you know what I'm talking
about needs to be ironed out in the Housing agreement and we're willing to do that.
And finally these compromises are offered with the intent of providing awin/win for
the County, KDCH and most importantly the beneficiaries of the affordable housing
units and we ask that the Council support us in this endeavor, thank you.
Mr. Furfaro: Thank you Tom for that history as we do have new
members to the Council. Tom may I ask was there any discussion with Housing as to
you know initial cost such as you know moving forward with infrastructure and
perhaps phasing some of this housing so that it would go to your intended employees
first, was there any discussion on that nature?
Mr. Shigemoto: Um, you know we discussed it a little bit. It came... it
really came from the Housing Agency's perspective that perhaps there should be some
shared appreciation or shared cost, shared profit... or whatever you want to call it and
you know this is something that we're open to.
Mr. Furfaro: But I'm right in my history and as you pointed out
today that forty-five (45) of the units are intended for your projected employees...
Mr. Shigemoto: That's correct.
Mr. Furfaro: Of the seventy-five (75).
Mr. Shigemoto: That's correct.
Mr. Furfaro: And then thirty (30) are intended for general
affordability to the general public.
Mr. Shigemoto: That's correct.
Mr. Furfaro: Where would we be on the additional five (5) acres
with the DOE? Could you give us an idea of what kind of incremental building you
have now, are you... have you anticipated by year end to have twenty (20) homes built,
do you have any idea? Because this is triggered at three hundred (300).
Mr. Shigemoto: Yes at three hundred (300). We have actually two (2)
subdivisions although they're broken up in phases but basically two (2) subdivisions. If
I had to guess I would say we would have twenty (20) units, we could have twenty (20)
built within the next year.
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Mr. Furfaro: But the condition triggers a review of the five (5) acres
with the DOE...
Mr. Shigemoto: Three hundred units.
Mr. Furfaro: Three hundred units.
Mr. Shigemoto: Right.
Mr. Furfaro: Has there been any additional expressed interest from
the DOE in recent times?
Mr. Shigemoto: We met with...
Mr. Furfaro: (inaudible)
Mr. Shigemoto: No not really. We've met with them to find out where
we were regarding that and they're sticking to their guns, they're going to hold that
site until our three hundred (300) units is built, and rightfully so that's you know...
that's the agreement we had with the DOE.
Mr. Furfaro: Tom if you don't mind let me go around the table and
open it up for other questions.
Mr. Shigemoto: Sure.
Mr. Furfaro: Are there any questions from members? Mr.
Kaneshiro.
DARYL W. KANESHIRO (COMMITTEE MEMSEx):Thank you Mr. Chair, I do have
a question for Tom... you know with this global market I guess from when you first
started and when we approved this I believe in 2005 this conditions of a ninety (90)
year buyback, there's been quite a change in the Real Market in Financing, I believe.
We've seen some banks closing, we've seen some finance companies become more strict
in lending, has this been a factor for you people in even trying to get the project moving
ahead and get the housing moving ahead because of the ninety (90) year buyback?
Mr. Shigemoto: Absolutely. By all accounts this economic downturn is
probably the worst in American history you know, and it definitely has had an effect on
how we proceed, what we're doing with our project and you know we had to scale, look
at cutting cost, we've downsized personnel-wise, we're just doing everything we can to
smooth down the pace of spending because there's no market, absolutely no market.
And right... same thing for the housing, affordable housing market, there's basically no
demand right now because. people aren't working. So this is something that is
seriously affecting most if not all developers. We know it will come back you know how
soon is there anybody's guess but when you talking about providing affordable housing,
if there's no market, you just cannot recoup cost to subsidize the affordable units that
you have to build.
Mr. Kaneshiro: And the reason I ask that question too because I
believe that with a ninety (90) buyback could be almost impossible to find financing
from an institution for you to get an affordable housing project like this started.
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Mr. Shigemoto: That's a... again you're absolutely correct. You know
to get financing even the purchasers would have a hard time getting financing for with
a ninety (90) year buyback...
Mr. Kaneshiro: Right.
Mr. Shigemoto: Provision. You know we've been told that by potential
purchasers, by housing... affordable housing developers, so again we just... it's a bad
time now. At the time we agreed to the ninety (90) year buyback, it was a much, much
better time you know how the economy was doing so well, market was just hot... units
were selling off the wall but today, this is a totally different story.
Mr. Kaneshiro: And I thank you for that because I wanted people to
realize that the economic conditions in 2005 compare to 2010 is completely flipped right
over from when we started and when we first approved that ninety (90) year buyback.
Mr. Shigemoto: That's right.
Mr. Kaneshiro: And you know I realize how difficult financing is to
even get this project kicked off and moving.
Mr. Shigemoto: Right.
Mr. Kaneshiro: With such conditions so...
Mr. Shigemoto: I'd just like to add to Councilmember Kaneshiro that
you know we had a deadline to commence construction.
Mr. Kaneshiro: Right.
Mr. Shigemoto: You know...
Mr. Kaneshiro: That's right.
Mr. Shigemoto: There was a caveat in there that said for good reason
we could get that extended and we petition or we requested that consideration of the
Planning Director and we do have an extension but the extension to commence
construction is July, I believe mid-July 2013.
Mr. Furfaro: Thank you. Any other members have questions?
LANI T. KAWAHARA (COMMITTEE MEMBER): Thank you. Thank you for the
history I think everybody knows that it's difficult economic downturn right now but I
also wanted to acknowledge and thank you for saying that we also know that they'll be
economic upturns, yes?
Mr. Shigemoto: Yes.
Ms. Kawahara: Whenever there is... so it's a cycle, a business cycle
developers and business people and even us, people that you know are going to go
through furloughs and all that so to make a decision in a downturn time where there
could be upturn times are also legitimate concerns, yes?
Mr. Shigemoto: Yes.
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Ms. Kawahara: Okay. I think that was it... and you have an extension
now from till July 2013 so you don't have to do anything till then.
Mr. Shigemoto: Yes.
Ms. Kawahara: Really. So just to make the point that you do have an
extension and there's no reason for having to actually build right now and take
advantage of the downturn because it's actually not good for you but you can do it at a
later time when we go back up.
Mr. Shigemoto: Yes.
Ms. Kawahara: Okay thank you.
Mr. Furfaro: Is there any other questions? Mr. Bynum?
TIM BYNUM (COMMITTEE MEMBER): Morning Tom.
Mr. Shigemoto: Morning.
Mr. Bynum: These matters are a little complicated as all housing
agreements are, I think. And I think we're beginning a dialog that I think will go on
for a little while because I don't think we're going to move on this bill today is my
understanding. But I want to start by asking some kind of based questions... they
shouldn't really indicate what my position is on this it's just... the questions that are
on my mind that I want to get out there on the table so... and the first one has to do
kind of following up on what Councilmember Kawahara was saying... in 2005 and I
wasn't on the Council at the time but I watched this very closely because it was a really
important issue for Kauai about how we were going to proceed with development in
the Po`ipu area and because at the time I was thinking about running and I thought I
might be there someday and need to you know pay attention, I've always tried to pay
attention to what the County Council's was doing but in that period I was really paying
more close attention so I remember these meetings quite well. You know the
Councilmembers at the time the questions they had the rationale, so I want to start
with... in 2005 Kukui`ula agreed to the agreement that we have before us. Is that
correct?
Mr. Shigemoto: You mean the ninety (90) year buyback and all the...
Mr. Bynum: Right.
Mr. Shigemoto: Conditions... yes.
Mr. Bynum: All these conditions...
Mr. Shigemoto: Yes.
Mr. Bynum: Where Kukui`ula was on the record saying that we can
live with this we're okay with this... right?
Mr. Shigemoto: Yes.
Mr. Bynum: And I understand that the economy has changed and
it's a difficult time for all of us but the... as you mentioned and I'm glad you did, you
exercised the provision to... so you don't need to perform on this housing agreement
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right now and you could be granted another extension if the economy hasn't come back
by 2013. Is that correct?
Mr. Shigemoto: I believe so, yes.
Mr. Bynum: So my first question has to do with why are we even
discussing this now? You know... yeah we made this discussion, the economy is in a
downturn but there's no expectation for Kukui`ula performing on this now. Shouldn't
we wait until you know the market comes back and make those decisions in that
timeframe?
Mr. Shigemoto: Actually I think we're too late in asking for this, we
should've asked for the amendments right after we got the approvals and... because
really ninety (90) years is just too long a period and why we didn't ask for it right
away... you know we get caught up in doing other things. We've performed pretty
much the way we represented we would you know perform. And as we speak I believe
the County Housing Agency is, has selected a developer for the four and a half acres
that we are going to donate to the County as an extension of Paanau but anyway we
know as developers, we have to... we have to rely on predictability and we're telling
you right now that the ninety (90) years regardless of when it is, is just an
unreasonable period of time to require as a buyback...
Mr. Bynum: Okay.
Mr. Shigemoto: So we don't think that it's untimely, I think it's
timely... we should have gotten this request in a lot sooner.
Mr. Bynum: Okay so let me understand because... you know we're
going to talk about the ninety (90) years in a minute but from my understanding is
that the Housing Agency has agreed with you and the Planning Commission and the
bill before us has that change from ninety (90) to twenty-five (25)...
Mr. Shigemoto: Yes.
Mr. Bynum: Okay but that's not the only change that you're
seeking?
Mr. Shigemoto: Right.
Mr. Bynum: Right so if we could kind of systematically take one (1)
at a time.
Mr. Shigemoto: Okay.
Mr. Bynum: Because what I hear you say is that you're... you
wished you would have come back right away after we just... when we got the deal, you
wanted...
Mr. Shigemoto: Well we... I should rephrase that... we should have
come in a lot sooner than now.
Mr. Bynum: Or maybe not agreed to ninety (90) years in the first
place or?
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Mr. Shigemoto: Well at the time... again at the time the economy was
a lot, lot better and we felt that even with the ninety (90) year buyback, if we could sell
our units as projected, we wouldn't have been able to make that project work.
Mr. Bynum: ~ Okay.
Mr. Shigemoto: But, but again things change and so we're telling you
right now that it was not... I will admit that it was not something that we should have
perhaps agreed to but to get our zoning approvals, we're willing to compromise and
agree to the ninety (90) years.
Mr. Bynum: And I appreciate that answer and I just... aside I'll say
that I think the Housing Department has already agreed that they can live with a
change there. Planning Commission has agreed to it...
Mr. Shigemoto: Right.
Mr. Bynum: I think in our conversation I've said I'm not going to be
opposed to that, that I want to support the Housing Agency but I think yeah... so but I
still don't understand why we have to address this issue now. There's no requirement
for you to build these units now in the current economic climate so we can you know...
I think we all have faith, I certainly do that Kauai is a very special place and the
market will return. We've seen these kinds of economic cycles before, I recall watching
Council when the Council at the time decided not to continue to build Kalepa Village
because the... we were in a down economy, the rents have come down, similar to this
situation and the argument was... you know we don't want to compete with the private
sector. The counter argument was in a down economic time, you know the bids that
the County was getting to build affordable housing were lower and I know the County
Housing Agency wanted to proceed, it's the same reason I think they want to proceed
with Paanau right now. Because with that history Kalepa we ended up building out
that units when there was a desperate need at the height of the economy and paying
very premium dollars for the construction dollars. And so you know... and the point of
this is that we go through these cycles... we're clearly in a down cycle right now but
why not come back and revisit these housing agreement when you know the market is
back because right now you're not... we're not requiring you to, to you know the
agreement had provisions to delay implementation presumably basic for these
circumstances, so I'm still not clear that... you know to use a legal term, whether this
is right, right now. Why do we need to revisit it right now? There's no...
Mr. Shigemoto: Well again as a development company we have to base
our projections on some kind of predictability and it takes... if you ever done any
development, you know how long it takes to get approvals for your development. We
have a subdivision in the county right now that takes a long time to get approvals for.
Now if we don't... if we can't get an answer on the buyback, three (3) years is not a
very long time in our world so you want us to amend it in two (2) years and then miss
the boat again because, perhaps do you know how long it takes to get a zoning
amendment through? Okay so you're talking... you know... you might hit it... we
might request it at the time come 2013 but by the time we get approvals for, we might
miss the boat again, so there's really... it's not... there's never an early enough time to
resolve these things and the sooner we can resolve them, the better it is for us to move
forward and do our projections.
Mr. Bynum: Okay so... and again I'm just wanted to give you this
opportunity to answer these questions...
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Mr. Shigemoto: Sure.
Mr. Bynum: Put it on the public record...
Mr. Shigemoto: I appreciate it.
Mr. Bynum: You know... because I don't think it's unreasonable
things that you're saying, those are real world factors...
Mr. Shigemoto: Yeah and your questions aren't unreasonable either
but you know there's a reason why we're asking for it and as I said we already may be
too late but there's no good time.
Mr. Bynum: And I think it's also clear that... you know what you
can finance is changed appropriately in our country because we were financing people
who never should have been financed and that's why. we have this collapse to begin
with, right on a National level and so...
Mr. Shigemoto: Well those things... again see all those things factor
into the unpredictability of our business...
Mr. Bynum: Right.
Mr. Shigemoto: You know we don't know what's going to happen, and
the things that we have control over we should try and resolve as soon as possible.
Mr. Bynum: And that's I think why I'm hearing a consensus
developing around changing the time of the buyback because ninety (90) years was
pretty unprecedented and it was a reach...
Mr. Shigemoto: Right.
Mr. Bynum; But there was a reason, the reason is to try to keep
permanent affordability for a portion of our housing so we can house our workforce,
right...that's the overall reason for all of these provisions, correct?
Mr. Shigemoto: That's correct but again you know look at your own
housing ordinance and provisions in there for any developer that comes in from today
on or after that ordinance was approved, they do have provisions for buyback much
shorter than ninety (90) years so there's a realization that any even the affordable
buyer at some point in time may need to sell or wants to sell and they want you know
they want some equity that they put into the house.
Mr. Bynum: Okay let's stick with that for a minute.
Mr. Furfaro: Excuse me Mr. Bynum, I just want to make sure that I
give others an opportunity and I can come back and recognize you again but you know
if you can just be aware that I might have to recognize somebody else in a few minutes
and continue with your questions...
Mr. Bynum: Yeah just because...
Mr. Furfaro: Just so we can give everybody involved in the
discussion, go right ahead.
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Mr. Bynum: Okay.
Mr. Furfaro: I mean we do have existing rules that recognizes eight
(8) minute increments and so forth, I'm not saying it but I just want to give others the
opportunity to. Go ahead.
Mr. Bynum: Right because I have a number of questions so anyway
you want to run it, it's fine with me.
Mr. Furfaro: Yeah. I'm just saying I might ask to come back to you
but you were going to start a new round of questions.
Mr. Bynum: Yeah because I have four (4), five (5)...
Mr. Furfaro: Okay you want to yield to somebody else at the
moment? Mr. Asing.
BILL "KAIPO" ASING (Ex-oFFicio MEMBER): Yes, I am not a member of
the Committee but I think it would be in the best interest of conducting the meeting so
that when a particular member of the Committee ask a question and prior to extending
the courtesy to that member for asking other questions that that first question that
was asked, before you move on to the next question, I believe that you should give
other members an opportunity on that question and it should be cleared first and then
that's done and then if you have the second question, I think it should be handled the
same way and if you do that I think it would be a better way in my opinion to get the
meeting to run more smoothly, in my opinion...
Mr. Furfaro: Okay I didn't think we were hitting any bumps but I
think you most eloquently summarized what I was pointing out that others, as
questions are asked, may have similar questions and I want to give them the
opportunity to be recognized before we go onto another series of questions. So Mr.
Bynum, I want to point out that I have had a few people raised their hand on questions
that we don't necessarily want to keep going back t, a few that have raise today was
you know... you know the ninety (90) years isn't going to cut it I mean that's what...
the dialog was basically that I was hearing on the table and I would like to have some
dialog about that and be able to recognize others but I'm going to let you finish up if
you had questions...
Mr. Bynum: Well I'll stick with the two (2) questions I posed so far
from me was why now, and then we got into the ninety (90) year and so... I'll finish up
on that and wait and I'll go onto the next....
Mr. Furfaro: Sounds like a good way for us to go.
Mr. Bynum: So you know I think that the why now, I wanted to
pose that question, I think I hear you know the need for predictability on the ninety
(90) year buyback you're citing provisions of our housing ordinance that passed
subsequent to this provision and I know that the world has changed and I think that
around the ninety (90) years both the Housing Agency, the Planning Commission and
perhaps the majority of the County are agreeing that... and that's what this bill is
currently written addresses. It changes it to twenty-five (25) years and so I don't
necessarily... I don't disagree with making that change but I do want to point out that
it's a very significant change because it impacts other provisions of the bill. The bill as
written requires the petitioner, you, is required to buyback units during the ninety (90)
year period, so the idea of having affordable housing the way the bill was written you
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market at a certain schedule but you retain ownership either they go to affordable
housing or you retain ownership for nine (9) years, if we change to twenty-five (25),
change it to twenty-five (25) or twenty (20) then you don't have to retain ownership
right but you're also asking us to change that provision, right?
That you retain ownership?
Mr. Furfaro: You know...
Mr. Shigemoto: No... I don't think so...
Mr. Furfaro: Let's let him answer that question and then I'll
acknowledge someone else.
Mr. Bynum: Okay.
Mr. Furfaro: Go ahead.
' Mr. Shigemoto: No, I don't think so, I think the way it's worded is...
(inaudible) twenty-five (25) period starts again once the unit is repurchased.
Mr. Bynum: The way it's written?
Mr. Shigemoto: Yes.
Mr. Bynum: Now?
Mr. Shigemoto: Yes.
Mr. Bynum: So the twenty-five (25) years... but during that period
the way it's written you would have to retain ownership if you couldn't market to a
qualified buyer?
Mr. Shigemoto: I think you're getting the two (2) mix up. We're asking
on the one (1) hand for on the buyback for the County to take the first position and also
we're asking for the ability to sell any unsold units to the open market once we went
through the progression.
Mr. Bynum: Right. And I know this is complicated but the bill
that's before us... because it has no amendments have been introduced, the bill that's
before us only addresses the twenty-five (25) years or... you know without it being
amended it changes the ninety (90) to twenty-five (25), correct?
Mr. Shigemoto: That's correct.
Mr. Bynum: But it doesn't do the other two (2) things you asked. It
doesn't make the county to first buyback and it doesn't allow you to go to market and
lose the unit from affordability completely.
Mr. Shigemoto: That's right.
Mr. Bynum: Right and so you know, we got to start with the bill we
have...
Mr. Shigemoto: Yes.
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Mr. Bynum: Because I haven't seen any other amendments and but
under this provision under the old bill you would have to retain ownership for nine (9)
years or market to a qualified buyer. If we change that to twenty-five (25) then you
would have to find a qualified buyer or retain ownership for twenty-five (25) years.
Under this current bill...
Mr. Shigemoto: Right, you're right.
Mr. Bynum: So if you want to break now...
Mr. Furfaro: No, I might ask if there's other questions and if I can
interpret your question the other way as well as a nine (9) year member of Habitat I
see the difference as is it ninety (90) years of renting for employee housing or is it our
policy about providing ownership to people you know and in the past I was on the
Council, I strongly supported a shared equity that was closer to the Habitat conditions
of four percent (4%) a year over twenty-five (25) years, the fact that I think home
ownership and I have some articles I'll share with you even from housing and urban
development that they're very concerned in making policy statements that deal with,
are you building rentals or are you going to share the pride in home ownership and I
think that's part of the dynamics here as well so but anyway Tom did you want to add
anything...
Mr. Shigemoto: No.
Mr. Furfaro: Before I recognize someone else?
Mr. Shigemoto: No.
Mr. Furfaro: Mr. Kaneshiro did you have a question? Anyone on
the two (2) items that we're dealing with right now?
Mr. Asing: As I... as anon-member...
Mr. Furfaro: Yes.
Mr. Asing: Can I say something?
Mr. Furfaro: Absolutely and if we can stay focused on the ownership
and the ninety (90) year continuance.
Mr. Asing: Yeah and that's what I want to...
Mr. Furfaro: Go right ahead Mr. Chair.
Mr. Asing: I don't understand the length of time we spent on the
ninety (90) year provision. And to me it's almost anon-issue... why do I say a non-
issue Isay it's anon-issue because our Housing Agency agrees. So there is no issue as
far as the Housing Agency, our Housing Agency is saying fine.
Mr. Furfaro: You know...
Mr. Asing: So with that...
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Mr. Furfaro: Mr. Chair, I need to say I do plan to bring the Housing
Agency up and since we have had no previous meeting it is an assumption as presented
to us that they do agree but am calling them up to confirm.
Mr. Asing: It is not an assumption for me...
Mr. Furfaro: Okay.
Mr. Asing: I did in fact sit down with Housing and talk and
discuss this issue with them so it is not something that is an assumption with me.
Mr. Furfaro: No, I understand that, I just need to have it confirmed
for the body.
Mr. Asing: Okay.
Mr. Furfaro: And I do plan to do that.
Mr. Asing: And that's fine. So that's why I'm saying we spent all
this time for what? It's anon-issue... they agree... unless we disagree then that's
another story but I happened to agree with Housing Agency...
Mr. Furfaro: And I do plan to call them up.
Mr. Asing: Thank you.
Mr. Furfaro: Are there any more questions at this time before I ask
for the Housing Department to come up? Mr. Bynum and I do want to share with .you
that your assumption about me deferring this for two (2) weeks is accurate as
Chairman of the Committee but it's best that we flush out a few questions rather than
looking for the immediate answer because I do plan to have it back on the agenda for
two (2) weeks so we'll go to you since there are no more questions dealing with the
ninety (90) years and/or the ownership issue until we have Housing come up. Go right
ahead.
Mr. Bynum: Yeah and Mr. Chair thank you and given that this is
you know the bill has been deferred once and I haven't seen any and that's my intent is
dust to put these questions out on the table you know that's part o£.. to me doing the
due diligence and I agree with the Chair, I think I said I don't have the issue with
changing the time, it's the other provision that you discussed that I'm struggling with.
Because you pointed out that part of your rationale for being, changing the time is to be
consistent with the Housing policy that we wrote but you also said that the Housing
exaction or your requirements were met with a ten percent (10%) requirement and our
current housing bill has a thirty percent (30%) requirement so I don't think you're
asking us to apply that part of the provision and say you know let's go back and have
you comply (inaudible) with thirty percent (30%) because you made the deal, you dealt
with it, fulfilled it when the provision was ten percent (10%) right?
Mr. 5higemoto: Yeah we're not asking for it but you know there's a you
know I could go and give you a list of housing units and lots and things that A&B has
done over the many, many years that we've been here that have provided affordable
housing units for our residents. And so yeah as I said we're not asking for that but I
think we have provided over the course of the history... of our history as far as
development concern a fair amount of affordable housing units which actually if you
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take our Kukui`ula project we developed the `Ele`ele Nani housing and the Paanau was
developed nine (9) years before we built our first house on the project.
Mr. Bynum: No question.
Mr. Shigemoto: Okay.
Mr. Bynum: No question. I just meant to say that we you know
things have a history and the rules are this way and then they change right but we
usually go with the deals and with the agreements that we made and the timeframe
that we made and the timeframe that we made them and you as a developer expect the
county to follow through with the provisions that we agreed to and I think it's fair for
us to expect that we... that people agree with the provision, that they agree to. If
circumstances change and those provisions are no longer reasonable, you should be
willing to change them and I think we are in this instance, at least that's what I'm
hearing from my colleagues and from the Housing Department. But you are also
asking for two (2) other provisions, one (1) is to... sorry...
Mr. Shigemoto: It's the...
Mr. Bynum: You wanted to change the requirement that you
buyback the units if they can't be sold to a qualified buyer and the other is to change
the schedule because currently under the agreement the schedule is you sell to the
qualified buyers, you go down hierarchy but at the bottom line if you can't sell to a
qualified buyer, you have to retain the unit for rental for workforce housing, for the
working class on Kauai who's servicing that area. Those are very significant changes
that you're requesting that are above and beyond the twenty-five (25) years or
changing the timeframe. Is that correct?
Mr. Shigemoto: On the buyback again we're asking that the county
take the first position on the units that are reserved for the people in the income
groups eighty (80) to a hundred and forty percent (140%) of the median.
Mr. Bynum: I mean to quote from the bill... the ordinance makes
no allowance for the sale of units on the open market. The agreement requires the
rental of any unsold units to income qualified employees until qualified buyers can
purchase the unsold units right, so you're asking us to change that?
Mr. Shigemoto: Right.
Mr. Bynum: And that's very significant that's above and beyond
changing the timeframe. That's the only thing I want to make.
Mr. Shigemoto: Yeah again we're asking for that, for that
consideration based on your current housing policy.
Mr. Bynum: So that... the outcome of that would mean that a unit
that you purchase could eventually be sold at market with the profit to Kukui`ula and
never, ever be available for affordable housing to the workforce, that's a potential
outcome if we change that provision.
Mr. Shigemoto: Again it's because that's what, that's what the current
housing policy allows. We have a set...
Mr. Bynum: (inaudible) before the Housing...
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Mr. Shigemoto: Set of Conditions that you know if you take a
developer that came in today, would not be subject to. He would be allowed to sell the
units that he developed on the open market once the sales, the restricted sales period
terminated, correct?
Mr. Bynum: Yeah and to me...
Mr. Furfaro: That's correct Tom that's in the current policy.
Mr. Bynum: To me that's...
Mr. Furfaro: He asked for the question to be answered so I didn't
know if you were going to answer it or not but that is the comparison.
Mr. Bynum: Right and so...
Mr. Shigemoto: So that's happening today...
Mr. Bynum: To me that's apples and oranges, you make an
agreement in this timeframe, you make a agreement in this timeframe, you know to
say... if you're going to follow all the provisions of the current policy then the exaction
should be thirty percent (30%) not ten percent (10%), I mean I can make that
argument, I'm not going to but you know you make an agreement, you sign it, it's an
agreement right? Now we're discussing whether it's reasonable to make changes to
that agreement...
Mr. Shigemoto: Right.
Mr. Bynum: Some of those changes I think are reasonable.
Mr. Shigemoto: Right.
Mr. Bynum: Others I don't know if they are, I'm. trying to
determine that and this... is this democratic process o£..
Mr. Shigemoto: Right.
Mr. Bynum: Dialog, but I know it's a very significant change when
the original intent is to create a workforce housing that's affordable to the workforce
and this change could result in units being sold at market and never have that unit
available for workforce housing for any person, whether it's by rental or in any of those
(inaudible), that's a very significant change. That's the only point I'm making. Do you
agree with that that's a significant change?
Mr. Shigemoto: Well we don't... you might consider that significant...
for us it's significant that you know we're required to do something that nobody else
needs to do.
Mr. Bynum: Okay, thank you.
Mr. Furfaro: Are there any other questions for Tom before I call
Housing up? Is there anything you would like to add Tom before I call Housing up?
Mr. Shigemoto: No, thank you.
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Mr. Furfaro: It is my intention to defer this bill at this point.
Mr. Shigemoto: I understand.
Mr. Furfaro: So that we can get some of these benefits or mutual
benefits evaluated with the Department.
Mr. Shigemoto: Okay.
Mr. Furfaro: Thank you Tom.
Mr. Shigemoto: Thank you.
Mr. Furfaro: The rules are still suspended and I ask Mr. Mackler
and Mr. Jimenez if they would like to come up and join us.
GARY MACKLER (HOUSING DIRECTOR): Good morning Council, Gary
Mackler for the Housing Agency.
Mr. Furfaro: Mr. Mackler, I want to clarify a few particular pieces
as this bill went back to Planning and it came back. I have heard number one (1) I
have heard the possibility of a twenty (20) year buyback and the Housing's position for
a twenty-five (25) year buyback, to get that clarified first, it is the Housing's
willingness to modify this to twenty-five (25) years and not twenty (20), am I correct?
Mr. Mackler: Yes and I can just give you a little brief background on
that...
Mr. Furfaro: Let's focus on that question first.
Mr. Mackler: We were asked to give comment to a petition that was
submitted by Kukui`ula Development to the Planning Department; this was in pursue
of making these amendments. At that time as you know they were, they are still
subject to a ninety (90) year buyback, a control period of ninety (90) years. In our
discussions in the Housing Agency on whether or not to offer a alternative control
period of something less than ninety (90) years, we had our discussions, we looked at
what our policy goals are as a county because I think that's very important to do when
you're looking and trying to impose conditions like that. Prior to our housing ordinance
taking effect in 2008 we had a ten (10) year buyback provision and I think we felt that
that maybe it was too short. We have talked about fifteen (15) years in our agency, we
looked at twenty (20) years, we looked at twenty-five (25) years, we settled at a
recommendation of twenty-five (25) years to try to strike a balance between those who
would ,purchase units, at some point having the buyback period be able to sunset so
that they would have the potential for equity gain, and hopefully by having that
potential be able to move up the social ladder as we would like to see the families that
purchasing have as an opportunity in their life time.
We also looked at the purpose of why we have buyback restrictions; you know
first and foremost it's to curb speculation. Having a buyback restriction keeps people
from attempting to buy these units only to hold them for a brief period of time and flip
them for profit so I think that needs to be said here. In a longer sense those buybacks
periods also preserve affordable housing because as it has been mentioned, if a unit has
been repurchased during the eight (8) buyback restriction, it is resold with a new
comparable buyback restriction. So in the case of a twenty (20) year buyback, any
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repurchase and resell would carry a new twenty-five (25) year term as would a twenty
(20) year or any other period of time.
We prepared our recommendation to the Planning Commission by looking at the
affordable housing agreement that the Housing Agency and the... and Kukui`ula
entered into in 2005, this was after the zoning amendment was approved by the
County Council by 2004. In that agreement there is provisions which speak to
situations where somebody may work for the project and retire and what happens to
those individuals, can they stay in the unit... it was determined at the time that they
could not and so what we did and at that time we were working with Mike Roberts who
was representing Kukui`ula, provisions in that agreement which basically said that if
you work for the development for or the project twenty-five (25) years or more, you can
retire and remain in the unit... even though you were not technically a project
employee at that point and if you had a spouse and you pre-deceased your spouse, the
spouse could live in the unit until their passing and so when we came up to... when we
were trying to fashion a period of time for this buyback restriction, we looked... we
tried to fit it into the affordable housing agreement that we already had on the books
with Kukui`ula Development Corporation. From our standpoint it serves the policy
goals that we, that we have established for this County and that was the basis of our
recommendation.
Mr. Furfaro: Gary may I say that I might reference it as a mission
statement for your division or as you said as a policy goal... Peter, I'm going to read
from this piece with HUD if I can... and could I just say that it sounds like our policy,
our Housing policy is now paralleling itself a little bit more with the Office of Public
Housing Development and HUD where it says a primary motivation of the policy is the
concept of ownership of occupied housing which can be an important means of wealth
for individuals and families. Moreover this policy statement is designed to ensure that
once households achieve homeownership they will remain homeowners and I think that
addresses the piece as we were talking about what if somebody spends twenty-five (25)
years of their life as an employee, they now have ownership of this home and they have
a place. The policy goes on that enables families to transition to higher valued
ownership from this opportunity and that the units over time will increase
substantially their potential housing wealth and the wealth they accumulate and this
could be used for sending kids to college and the equity in the home and so forth...
would you say that our policy is aligned with this HUD policy?
Mr. Mackler: I would say that. I think at some point in time those
families who are able to purchase affordable units and to pay their mortgage should
have an opportunity at some point to a reasonable return on their equity. You know
the way it's structured right now with the ninety (90) year buyback there is... if the
unit were to be repurchased during the ninety (90) year period of time, the most the
owner could receive would be basically inflation, it would be somewhere between one
(1) and three percent (3%) per year. There's really no opportunity to them for any
significant equity gain, it's all basically getting back what the inflation rate is for being
there for that period of time. But we are in alignment with HUD's view, one of the
grant programs that we manage that I worked on which is the home investment
partnership program just... I can share this with you... for homeownership activity
under that grant the minimum or I should say the longest affordability period in that
statute for homeownership assistance using that grant is fifteen (15) years. And so I
think we are fairly consistent with HUD's view and homeownership and how it helps
families overtime.
Mr. Furfaro: There's also some particular pieces that I just would
like to share that in our housing program there are our below affordable housing units
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which I think you've expressed to A&B under a hundred and forty percent (140%) there
would be an interest to buy those back for the possibility for long term occupancy
through rentals and so forth with county ownership but I could confirm that from that
gap group... Firemen, School Teachers, Nurses and so forth... the one forty-one (141) to
one eighty (180), there is no interest on the county's part to?
Mr. Mackler: Let me just speak to your question... when we were
looking at whether... how to comment to the petition for these amendments, the way
that the amendment was drafted by Kukui`ula Development Corporation made it
mandatory for the county to buy back, to be in the first position, and to buy back units,
there was really a technical problem with the way it was drafted and when we looked
at that it said shall purchase, it's never mandatory for us to buy back a unit, we have
an option to buy back, which of course you all know...
Mr. Furfaro: Let me clarify that... our interest we're at below one
forty (140).
Mr. Mackler: Yes and what it would have meant to us given their
proposed amendment is that we would've been required to buyback units, all of these
units from eighty (80) to a hundred and eighty percent (180%) of median income which
we didn't think was such a good thing for us to agree to at the time. Since we've been
having dialog with representatives of Kukui`ula Development Corporation for six (6) or
seven (7) months now I would say, we have talked about dividing the responsibility
where the County Housing Agency would be in the first option for units that would be
for those that are sold at a hundred and forty percent (140%) and below because our
workforce housing policy defines our affordable housing as eighty-eight percent (88%)
to one hundred and forty percent (140%), so it's really consistent with that. But in
terms of us being in the first position or having the first option to buy units at a
hundred and forty-one percent (141%) to one hundred eighty percent (180%), we would
decline that because if we were to buy a unit priced at a hundred and sixty percent
(160%) of median, we would probably have to bring more subsidy to the table to make
it affordable to sell somebody at a hundred percent of median and we just don't want to
be forced into that position. So we are comfortable in dividing the responsibility.
Mr. Furfaro: So you're very much referencing the consistency of the
policy as your position.
Mr. Mackler: Yes.
Mr. Furfaro: And then on the flipside we still have that gap issue
where you could have a couple, School Teacher, Police Officer, Fireman, Nurse that
they actually end up in that group that wouldn't qualify because their combined
earnings would put them as a family of four (4) or five (5) would put them outside of
this range and we've always have a problem of developing inventory.
Mr. Mackler: Yes.
Mr. Furfaro: For that range.
Mr. Mackler: I think it's a excellent range of income that can be
served by this project because it will hit a group that we're not traditionally able to
serve and as I heard Tom say earlier they would be okay with holding the first option
to buyback units that are in that...
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Mr. Furfaro: You know there's so much economic news today out
there and when I... I don't profess to know how to grasp all of the information but
there's several articles that I have at... that really indicate that homeownership is
something that we want to happen, but yet going into the future in the current
financial situation, it might be something in this country we see less o£ So you know
to create opportunities to fill the homeowners gap is ~ really important as far as
homeownership and shared wealth, to be able to invest in families. What do we have
in this general area of the Koloa, Po`ipu, Lawa`i area... what do we have as far as
housing opportunities that the Housing Department is working on now?
Mr. Mackler: Well I think it was mentioned in Tom's testimony that
the Paanau Village project is one of those projects. This is a fifty (50) unit project that
you know... I heard him mention that it takes several years to bring a project to
fruition. I can sit here and tell you that's exactly true because I've been working on
Paanau Village Phase II for a solid four (4) years to bring us to the point where we
have a developer who is developing the project to just recently just receive their
financing to build and hopefully will start to do their site work later this year to
produce fifty (50) units for households that are in sixty percent (60%) or below our
median income groups... one of our lower groups of residents here. That project is
moving forward, I'm pleased to report and also in that area aside from the seventy-five
(75) units of employee housing and the fifty (50) units I just mentioned there is really
the... hopefully the future prospects of having ownership of that five (5) acre piece
which is right now subject to the Department of Education's decision making of
whether... use it or not but we do see that site as an excellent site for housing in the
future to serve that area.
Mr. Furfaro: What kind of density could we get out of that kind of
site that size?
Mr. Mackler: Well I think we're looking right now... moving away
from some of the traditional R4, R6 densities and looking at R8 to R10 densities with
different types of housing products so we would want to look at all different kinds of
alternative with that in mind.
Mr. Furfaro: Anything else happening in that area?
Mr. Mackler: Not really. I think there are some other rental
projects that exist in that area, there's of course our sixty (60) units Paanau Village
first phase, there's the public housing project Kauai Lehua which is fifty-one (51) units
and then there's also the Hale `Ghana apartments which is...
Mr. Furfaro: It's private...
Mr. Mackler: On the other side o£..
Mr. Furfaro: It's private,
Mr. Mackler: It's a privately owned rental project but it is serving
sixty percent (60%) and below the median income... about two (2) years ago with
successful in getting tax credits to acquire and refinance the property and so they are
going to be serving that population for a very long time.
Mr. Furfaro: Most of what you just shared with me is sixty percent
(60%) and below or eighty percent (80%)...
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Mr. Mackler: For the rental mix our Paanau Village phase one (1)
goes from eighty (80) and below but the rest of the projects for the most part goes to
sixty percent (60%) and below... so it is hitting a target group that has a very high need
for housing on this island.
Mr. Furfaro: Has there been any discussion about shortening this
term and on the possible sales outside to the gap market, has there been any discussion
about maybe some share of equity here?
Mr. Mackler: In terms of the seventy-five (75) units?
Mr. Furfaro: In terms of... what could be the thirty (30) units that
don't independently get sold? You know we have the forty-five (45) workforce housing
and we have thirty (30) units that are supposed to be in the affordable market, I
mean... is there?
Mr. Mackler: Well the... we have approached that subject with the
developer as far as looking at alternatives if units were... if they were given
consideration for markets (inaudible) and again this is all conditional of course what I
say but we have looked at some other ordinances within the State, Maui County
ordinance in particular which actually has a provision which provides a sharing of
appreciation that the developer might gain through a market sale if after a restricted
marketing period there are still unsold units that then are sold at open market. We've
never used that concept here in this county but it is an interesting one that we looked
at and talked with Kukui`ula representatives about.
Mr. Furfaro: What is the Housing Department's position about... I
think it was brought up as kind of the feel and touch period of people looking as buyers
where would you folks be in letting people actually, I mean if there was
homeownership what kind of time table would you folks consider?
Mr. Mackler: Okay, that actually... your question actually goes back
to one of the amendments that was proposed to the Planning Commission by
Kukui`ula. They essentially wanted to align themselves with the marketing process in
ordinance 860, our workforce housing, policy. That ordinance allows a developer to
commence marketing twelve (12) months prior to the certificate of occupancies for the
units. Generally we don't like. It I think it's too early to start the official time clock for
marketing because there really isn't anything there for people to see...
Mr. Furfaro: They might just be looking at the slab.
Mr. Mackler: Basically. So we have... in the past we typically
impose requirements that the formal marketing period start three (3) or four (4)
months prior to the certificate of occupancy of a project and we would not like to see us
use what we have in ordinance 860; we would really prefer to see something along the
lines of starting about four (4) months before the units and ready for occupancy and
then carrying on for a period of time thereafter. The condition that Kukui`ula has right
now is to have a marketing period of no less than twelve (12) months, this is income
restricted marketing to the project employees and to the Kauai employees, so we
would at least want to see a twelve (12) month period or longer starting no more than
four (4) months before the certificate of occupancy.
Mr. Furfaro: So three (3) or four (4) months before the certificate is
estimated to be issued and then maybe... eight (8) to ten (10) months after...
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Mr. Mackler: Yes.
Mr. Furfaro: So it's still in your control and people have an
opportunity to feel and touch during that restricted period?
Mr. Mackler: We think that would be a reasonable period of time.
Also in light of the fact that this project will most likely be built incrementally, that
there would be phasing in of units that's really an advantage for this because it will
mean that... the phasing will be market driven, that there will be... hopefully you
know with an assessment of demand and future demand that the number of units built
within each phase will be sufficient to be absorbed when they become available for
purchase. So we think it's really reasonable to have a marketing period along the lines
that I described.
Mr. Furfaro: So kind of like within this phase of time if you lay out
this twelve (12) to sixteen (16) months that you have control, it would be better for
Housing to have a period that is twenty (20) units built, twenty-five (25) units built and
phased over time, so that you have a consistent supply and yet at the same time you
don't exhaust those that can qualify to be owner occupants.
Mr. Mackler: .Absolutely. This is a large resort development where
project employees will come along in different times and by having... and in fact our
agreement now does call for incremental development of the project and we think it
will really benefit more people in the long run if it were done in that fashion and so as
opposed to having all the units come up all at once we really do think it's an advantage
to stretch it out over a longer period of time because it will give more people an
opportunity.
Mr. Furfaro: Gary, I have here and you know my intent is to collect
some questions to send back to your office...
Mr. Mackler: Okay.
Mr. Furfaro: And defer this today but I have a worksheet that
makes some comparisons about income assumptions as well as mortgage assumptions
versus rental assumptions, would you have a problem if I shared this for the purpose of
dialog with the other Councilmembers?
Mr. Mackler: Oh no.
Mr. Furfaro: Okay.
Mr. Mackler: That's fine.
Mr. Furfaro: And like I said I'm going to try to collect some
questions here.
Mr. Mackler: Okay.
Mr. Furfaro: And maybe come back on the calendar in two (2)
weeks. Peter, you have this schedule you can share that?... may I ask if there's any
additional questions from (inaudible). Mr. Chair, I'm going to have to go to Mr. Bynum
first.
Mr. Asing: Yes.
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Mr. Furfaro: You're fine? Mr. Chair, go ahead.
Mr. Asing: I just want to make a comment Chairperson Furfaro,
you know you read the... from the I guess the US Department of Housing and Urban
Development in Office of Policy Development and Research, the portion that you read
is very important...
Mr. Furfaro: I think I highlighted...
Mr. Asing: Yes and you highlighted... very important but even
more important than that is for you I would suggest you read the bottom of the next
page portion because that's even more important because that is really the nuts and
the bolts of the issue.
Mr. Furfaro: Okay. I may be mistaken but I did highlight that as
well...
Mr. Asing: Yes you did.
Mr. Furfaro: And I thought I read it but maybe...
Mr. Asing: No you read the front portion which is important but
the nuts and bolts is really in this second portion...
Mr. Furfaro: Okay well then...
Mr. Asing: And I believe you should read it.
Mr. Furfaro: I would bring that out again, I apologize to the group.
The two (2) areas that I highlighted Gary... I think are very consistent when
comparing political subdivisions and their housing policies. This one goes on to suggest
that policies designed to ensure that once household achieve homeownership, they may
remain homeowners rather than reverting back to a rental tenure. The policies that
enable families to transition to higher value owned units over time will increase
substantially their potential housing wealth and accumulation of such. These
conclusions about the value of owned housing is reinforced when the positive social
impacts of homeownership on families particularly the children are also considered and
that's what I made reference to having equity for financing education opportunities.
And my apologies to the group, I did highlight those two (2) areas. If I only read one (1)
and your comment about mission and policy goals seem to be parallel to what I got
from HUD. Thank you Gary. Mr. Bynum, I'll go to you.
Mr. Bynum: Just a few I think general questions... the bill that's
before us is consistent with the Housing Division's recommendations, is that correct?
Mr. Mackler: It is. It's atwenty-five (25) year buyback.
Mr. Bynum: Right and the Housing Division did not support the
other provisions that would allow markets, units to potentially go to market or
requiring the county to be the first buyback?
Mr. Mackler: That is correct, we did not.
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Mr. Bynum: And then if I understand your testimony correctly and
just correct me if I don't...
Mr. Mackler: Okay.
Mr. Bynum: What I hear you saying is... if the Council's going to
entertain other provisions you would like an opportunity to say what those conditions
are and that's when the issues about shared appreciation might come up?
Mr. Mackler: We would certainly like that opportunity, we want
that opportunity. There are some other concepts we think we can bring to the table
which may improve the project and would welcome any opportunity we can be given for
that so absolutely.
Mr. Bynum: And I... you know I started this discussion today by
saying these issues are complicated, they're complex, and I appreciate the expertise of
our Housing Agency of helping educate me over the last four (4), five (5) to these issues
and... but you know you got to... if you make this move it impacts this so you got to
really look at the big picture. And so you know I hear clearly that the current bill
when Kukui`ula approached us and said hey times have changed, things are different...
it's reasonable to take another look at this agreement, even though we agreed on this
in 2005 given the current issues and that the Housing Division agreed in terms of the
buyback provision time and that this bill before us currently represents your position,
is that correct?
Mr. Mackler: It is correct.
Mr. Bynum: I know I'm being a little redundant.
Mr. Mackler: No it is.
Mr. Bynum: So if we are going to entertain any other provisions or
changes, I hope that we do it very studiously and carefully and allow the Housing
Department an opportunity to comment and you know craft those in a way that is the
best interest of working families of Kauai because you know the overall reason we
have these policies is the understanding that I think we all understand that the value
of property even in this downturn on Kauai that there is a huge affordability gap
between what market is and what you know working families, not just in low income
families and I think this chart is accurate... a hundred percent (100%) of median
income right now is for a family of four (4) is... what do you know off hand?
Mr. Mackler: Our most recent numbers that came to us last month
from HUD was about seventy thousand five hundred dollars ($70,500) as a median
income.
Mr. Bynum: Okay so for anybody who might be watching this at
home a hundred percent (100%) of median income or what the average person, average
family... brings home is seventy thousand dollars ($70,000) so when we talk about
affordable at a hundred percent (100%), we're talking about a sales price of what?
Roughly?
Mr. Mackler: I would need to refer to my charts to give you an
answer to that question...
Mr. Bynum: Okay.
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Mr. Furfaro: Excuse me, Mr. Bynum can I add to that? But I want
to remember that that is the HUD chart.
Mr. Mackler: It is.
Mr. Furfaro: And the fact of the matter is we might want to
consider a different chart that reflects Kauai statistics and you'll find the statistics
needs to be lower. We might be dealing with a number that's higher than what it
should be on Kauai.
Mr. Mackler: Yes what I...
Mr. Bynum: I'm sorry which number is that Mr. Furfaro.
Mr. Furfaro: So if HUD says seventy thousand five hundred dollars
($70,500) for a family of four (4), the reality on Kauai is that that number might be
more like sixty-seven thousand (67,000) and so our policy should be directed if we want
to get to ownership not at the National numbers but more that is something that is
more regional if we want to promote homeownership.
Mr. Mackler: Councilmember Furfaro that is true we've... in the
past when we conducting housing policy studies here in this county we found that the
surveyed income was typically ten (10) to twelve thousand dollars ($12,000) below
HUD's numbers. And so... I think there is a lot of merit to looking at fashioning policy
more at what's really here rather than what HUD says is here. We are preparing to go
forward with another policy housing study later this year and we will have data in the
spring of 2011 so perhaps at that time we could really have that dialog about looking at
an alternative you know... chart of numbers to follow.
Mr. Furfaro: Thank you and Mr. Bynum, I apologize...
Mr. Bynum: Sure.
Mr: Furfaro' I just wanted to give clarity to whose chart that was.
Mr. Bynum: Yeah and I wish I brought that chart in with me but
basically if you... if your family is making around sixty-seven (67), seventy thousand
(70,000) you know with two (2) (inaudible) you could afford a mortgage less than three
hundred thousand (300,000) right? It's right in that range and it will be stretched to
pay the mortgage payments on three hundred thousand (300,000) and we know there
aren't many housing opportunities on Kauai in the three hundred thousand dollar
($300,000) range. So the reason we have this policies and the reasons we have a huge
issue on Kauai is that gap between what market, what... you know what the free
market will sell a home and what the working families on Kauai can afford and if we
don't address that rather aggressively I hope, then we're going to be left in a position
where we have a lot of high income people moving to Kauai and we do and the local
people can't survive here, can't make it... and so these are very, very important and
critical issues and creating that affordable housing inventory is a real challenge. And I
think the Housing Agency has done a great job at that given the resources you have
but you know I can't think of a more fundamental issue for Kauai you know now and
in the short term and in the long term and so just to finish that thought you know we
talked about `Ele`ele Nani being part of the affordable housing inventory that met the
conditions for this, that was a long time ago and I believe those homes sold in the one
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seventy-five to two hundred thousand dollar range and they had a ten (10) year
buyback if I recall, is that correct?
Mr. Mackler: Ah yes. There was actually three (3) kinds of offerings
there, there was (inaudible), homes that were built and sold, there were lots that were
prepared and sold for those who wanted to build their own homes and then there were
also twenty (20) self-help home built in `Ele`ele Nani phase two (2). They all carried...
well I'm not sure about the lots but the homes carried a ten (10) year buyback
restriction and a fifteen (15) year shared appreciation restriction.
Mr. Bynum: So if we provide a home that say at three hundred
thousand dollars ($300,000) to a qualified family, that's the sales price they pay... but
the market value of that home is five hundred thousand (500,000), that's a two
hundred thousand dollar ($200,000) subsidy so it's not reasonable that in a year later
somebody would be able to turn that around and sell it and reap that windfall. And so
that whole debate is what is a reasonable buyback period you know?
Mr. Mackler: Yes.
Mr. Bynum: How much equity should the homeowner share, those
kinds of things.
Mr. Mackler: And in all of that there is no right answer, there's no
absolutely correct answer, it's really establishing a policy you think is meeting the
goals that you set for your county. There really isn't a right answer here.
Mr. Bynum: Right. It's a negotiating answer.
Mr. Furfaro: I would like to say we're trying to find a reasonable
answer.
Mr. Bynum: Right.
Mr. Furfaro: You know at Habitat, it's twenty (20) years and four
percent (4%) a year.
Mr. Mackler: Yes.
Mr. Furfaro: I mean five percent (5%) a year, I would think at
twenty-five (25) years it could be four percent (4%) a year. So Mr. Chair did you have a
question?
Mr. Asing: Yeah. I had more a comment then a question and that
comment was your comment regarding you know the so-called median income and the
charts that we follow and whether the charts that we follow is reasonable that we
should use them or should we look at that further and... we know that they are not
reasonable. And my reason for saying that they're not reasonable is because we found
out that in the rental housing, we ran into problems with that, right Gary? Am I
correct? In the sense that we were giving tax breaks to people who can rent units at
the high, higher rate because that's what the chart shows, but in fact the going market
here was far lower.
Mr. Mackler: Yes.
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•
Mr. Asing: So we,were really giving breaks to people to make this
additional income and charging higher than the market rate, so we need to be very,
very careful on how we read, interpret and administer those charts that we use that
come from the so-called National level to us and that was what Councilmember Furfaro
was alluding...
Mr. Furfaro: Yes.
Mr. Mackler: Yes.
Mr. Asing: When we should be looking at that and maybe making
some adjustments and I agree with you totally.
Mr. Furfaro: And you know the adjustment might not be in the way
of earnings but the adjustments might be like... federal compliance with the wage and
earnings where they give you an index. You use the National number but maybe for
Kauai because of our financial income levels, it might be point eight six (.86) of what
that number is so that...
Mr. Mackler: Yeah.
Mr. Furfaro: There's an index rather than salary.
Mr. Mackler: Ah.
Mr. Furfaro: Sometimes... or on the flip side with cost of living and
salaries they go... and on Kauai it's one point one four percent (1.14%) of your income.
Mr. Mackler: Well I... personally speaking I feel much more
comfortable using our surveyed information than I do sometimes using HUDs
information, there is a lag as to when their information becomes available to us and we
have seen in a relatively short period of time substantial changes into our housing
market which they don't catch given their lag and so I also agree to a large extent that
we need to look at other base line for putting in our requirements for our housing
programs.
Mr. Furfaro: Well I appreciate your confirmation on that and you
now my intent today is to perhaps to gather some questions from everyone, send a
communication over to Housing and so that we could have some black and white clarity
on the table as we go forward, would you be acceptable to a deferral?
Mr. Mackler: Yes we would.
Mr. Furfaro: For two (2) weeks?
Mr. Mackler: More than happy to address those questions and to
assist the Council.
Mr. Furfaro: Thank you very much and thank you for all your
assistance. I'm going to ask if there's any one else that wants to speak on this right
now? Gary...
Mr. Mackler: Oh okay.
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Mr. Furfaro: Before I do... I would ask if there's any
Councilmembers... they could either contact me individually through our staff about
the questions or if there's anything pressing right now they can raise the question with
you. So if it's acceptable I'd like to put it in one communication, you're okay with that
Mr. Bynum? Yeah? Okay, very good.
Mr. Mackler: Thank you Council.
Mr. Furfaro: Tom, you wish to come back up?
Mr. Shigemoto: I just wanted to confirm that... Gary talked about
phasing...
Mr. Furfaro: Yes.
Mr. Shigemoto: That that phasing works very well for us as well.
Mr. Furfaro: Oh okay.
Mr. Shigemoto: So we would be in favor of doing that.
Mr. Furfaro: Okay. That will be one of my questions, I guess we're
looking for some clarity... is it twenty-five (25) units, twenty-five (25), twenty-five (25)
or is it twenty-eight (28) twenty-eight (28), fifteen (15)...
Mr. Shigemoto: Right.
Mr. Furfaro: ~' ' ~ ~ But they would also have to be some kind of time
increment that's tied to the completion of sales of one phase...
Mr. Shigemoto: And when the next one starts.
Mr. Furfaro: Before you go to the next.
Mr. Shigemoto: Yes.
Mr. Furfaro: Obvious it would help us keep the units in local hands
because people qualify for housing at different points.
Mr. Shigemoto: Yes that's correct. Thank you.
Mr. Furfaro: Okay thank you. That will be one of the questions
Tom. Is there anyone in the public that would like to speak on this item? If not, I'll
call the meeting back to order and I think you folks have clear understanding I hope to
gather some questions from you but I'm looking for a deferral.
There being no one else to speak on this matter, the meeting was called back to
order, and proceeded as follows:
Mr. Bynum: Thanks Mr. Chair, I just wanted to say that this is the
first time we really got into dialog and I wanted to pose questions today just to share
my thinking because I think we all want to come up with a reasonable you now
solution to the changes in our economy. And but it is a complicated situation so I think
we got a good start today, thank you very much.
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i
Mr. Furfaro: Thank you for that comment and it is... it is
complicated because as we go forward in our current economic situation we see the
Federal Government helping out financial institutes and so forth, what they really
done is you know we shifted some of the burden on us as government and then you
know the cost associated with the Gulf clean up will certainly limit the future federal
funds as well so we have a lot of big issues on the horizon. On that note I'm looking for
a move to defer.
Mr. Kaneshiro: So move.
Mr. Furfaro: Thank you. Do I have a second?
Mr. Bynum: Second.
Mr. Furfaro: Thank you. All those in favor say "aye"
Committee Members: Aye.
Mr. Furfaro: Thank you.
Upon motion duly made by Councilmember Kaneshiro, seconded by
Councilmember Bynum, and unanimously carried, Bill No. 2361 was deferred.
There being no further business, the meeting was adjourned at 12:07 p.m.
Respectfully submitted, ,
aC~,~i~.~,G! ~~,Y~I,~d~'~'a~
Darrellyne ~',I- Simao
Council Services Assistant I
APPROVED at the Committee Meeting held on July 7, 2010:
,~--
JAY
Chair, MITTEE
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