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HomeMy WebLinkAboutHousing FY2013-2014 DEPARTMENTAL BUDGET CALL-BACKS 04-16-2013 Housing Agency (aa) Page 1 The departmental budget call-backs reconvened on April 16, 2013 at 1:21 p.m., and proceeded as follows: Housing Agency Honorable Tim Bynum (present at 1:56p.m.) Honorable Gary L. Hooser - Honorable Nadine Nakamura Honorable JoAnn A. Yukimura Honorable Jay Furfaro, Council Chair Excused: Honorable Ross Kagawa Honorable Mel Rapozo Chair Furfaro: We are back from our lunch recess and it is our intent over the next three (3) hours to go through our Capital Improvement Project (CIP) targets and I would like to start with Housing. But before I do, Councilwoman Yukimura, you have a presentation? Ms. Yukimura: No. Chair Furfaro: No? In the questions? May I have representatives up from the Housing Department? If we need our CIP Manager to be up here too, that might be the best thing to do in case they have questions that can be referred to you, Mr. Suga. Scott and to the staff, so as we go through things, let us give a text head's up who is next as we get close to the conclusion. It is now 1:20 p.m. and I would hope we can cover what we need to do in Housing within one (1) hour. Do you have anything that you would like to share with us? KAMUELA COBB-ADAMS, Housing Director: Our CIP Budget, as I understand, is we have one (1) item, two hundred seventy-three dollars ($273,000) for Lima Ola project in `Ele`ele. This is a project that was, I guess, we can start with the history and I think Gary is best because he was here throughout that history. Chair Furfaro: Gary, you have the floor if you give us the history on one project that you have. GARY MACKLER, Housing Development Coordinator: Thank you, Council Chair. Just as a backdrop of where this process started I am just going to review a few things with Council. In 2004, the average price of a single family home on Kaua`i was five hundred six thousand dollars ($506,000) and rising rapidly. Along with those escalating home prices we saw that private development was moving ahead to develop market and resort housing in many places on our island in Po`ipu, Kauai Lagoons, Waipouli, and Princeville. Then Mayor Bryan Batiste, Councilmember, and Housing Agency representatives all expressed concern because the lack of affordable housing inventory on the island and the lack of opportunities for residents to participate. Essentially, Kaua`i residents were priced out of the housing market. Rents were also skyrocketing during that time. We were having a great deal of difficulty with our Section 8 participants. We were 04-16-2013 Housing Agency (aa) Page 2 giving them one hundred twenty (120) days to locate housing units for rent which many could not in that timeframe. Also, I can say firsthand, I know, because I took many of the call. We were getting frantic calls from long term renters who were being displaced by property owners who were deciding to sell is their residential property because of the large equity gains that could be had and we were losing long term renters who suddenly found themselves without any real good options to find new rentals. Essentially, the affordability gap was widening and County leaders saw that it had reached a point that necessitated adopting a more aggressive role in developing affordable housing. In November, 2004 Council adopted Resolution 2004-44 to acquire land for affordable housing. Council resolved to identify parcels in close proximity to infrastructure, to work in partnership with private organizations to develop land, and to land bank parcels if they could not immediately be develop for future development. In looking for suitable land the County contacted the State of Hawai`i. The Governor provided the County with a list of State land parcels, approximately seven (7) parcels, which were made available through Department of Land and Natural Resources (DLNR) in 2006. In 2007 the Housing Agency received a list of twenty (20) potential sites for its consideration that had been sent over by the Council. In addition to that, the Administration continued to engage in discussion with large Kaua`i landowners like Grove Farm and A&B to seek out possible sites. In 2008 our Office informed Council we were in discussion with landowner and had reached tentative agreement as to price and acreage. The Council authorized us to proceed with the acquisition. That acquisition was completed in 2010. The County acquired a seventy-five (75) acre parcel in `Ele`ele, now called Lima Ola. Based upon the main objective to increase affordable housing inventory, we based the selection of that property on following: I just want to run through a list of what was considered to make that decision. We looked at cost to acquire fee simple land at a discounted price. We looked at fact that we had a willing seller. We looked at the location of this land in relationship to an established community and as an extension of urban development as well as the ability to entitle this land. We looked at the proximity of the parcel to `Ele`ele's commercial district, district, to `Ele`ele schools, and other essential services in the area all within a half mile from the site. We looked at this land in proximity to infrastructure, in particular the municipal wastewater system, one of the County's four (4) systems, water lines, and road access. We looked at the topography of the land. This land averages less than five percent(5%) grade which makes it accessible and walk able. We looked at the elevation which ranges from one hundred seventy-five (175) feet to two hundred seventy-five (275) feet above mean sea level and the fact that there is no flood issues. We looked at the land's proximity to publication transportation as it is very close to the Kaumuali`i Highway and also distance to major employment centers like Po`ipu, like Pacific Missile Range Facility (PMRF). We also considered the size of the parcel. We needed a parcel to help us add sufficient inventory over time and land that could be phased to meet future demand. Those were mainly the things that we considered and I mentioned, we consummated the acquisition with Council's approval in 2010. Mr. Cobb-Adams: Since 2010 the County Agency then hired a consultant to do a planned community. So, they completed that master plan for Lima Ola and just over four hundred (400) units were designed. That master plan actually last year was awarded an award. I think we spoke about it yesterday, a planning award for the State. We are currently now budgeted and ready to move into what I would consider the 04-16-2013 Housing Agency (aa) Page 3 design phase. In that is the combination some of planning and planning where we are going to be carrying out environmental studies and entitlements. We are also going to finalize our market study, water master plan, and off-site design as well as on-site design. The intent to develop this land, there is a lot of, I think two-thirds of the headaches for developers or anyone to develop land is the entitlements, environmental, all these beginning processes of design and getting through permitting. So, where we see a lot of value, when Gary talked about costs, I think that they made a good decision because there is a lot of value in this land that we are going to realize from carrying out this process. A purchase price of two million five hundred thousand dollars ($2,500,000) for seventy-five (75) acres, and we can do four hundred (400). If we increase the density even potentially more units than four hundred (400) units, there is a great amount of value there. By us leveraging our resources to entitle these lands and take care of the off-site infrastructure, we my believe we will gain partners to take care of the financing and costs for the on-site infrastructure, as well as the building. It is a proven development method that we have recently been using here in Kaua`i and throughout the State, Rice Camp is an excellent example of that, also Pa'anau II which was just completed where we leveraged our land entitlements and partnered with a private entity to come up with the additional financing. So with that, I kind of did a recent analysis to compare the feasibility and wondering if I could pass these out to Councilmembers. This sheet takes a little bit of explaining for you folks to get to used to it. But it shows County developed affordable housing in the last, I guess, since the last project in 1997 which was Kalepa I. If you look at the left column when I say, development type so we are not comparing apples and oranges, there are different types of development. The top one represent ours lot development which basically means and we have done lot development and sold them as fee simple, but what this represents is lot development of leasehold sale properties. Through our lot development we show the years. These are all 2010-2011 samples with two (2) different funding types. If you look at the first one using Neighborhood Stabilization Program (NSP) funding, we purchased eight (8) units, did some rehabilitation if necessary, and sold them as leasehold parcels in order to maintain affordability for these homes. Our investment averaged about one hundred seventy-eight thousand dollars ($178,000) per unit, investment/ subsidy. The reason why I say investment is because we still owns the land so it is a County asset. But our investment was about one hundred seventy-eight thousand dollars ($178,000) and in the Community Development Block Grant (CDBG), one (1) unit was an average of one hundred ninety-four thousand dollars ($194,000) with an average of about one hundred eighty thousand dollars ($180,000) of County investment per unit. If you look at the next color it is kind of a pinkish color, project development County, line items four and five. That represents the County developing a project, one hundred percent (100%0, we financed the project. We financed in 1997 Kalepa with Home Disaster funds, CIP Disaster, CDBG Disaster, and regular HOME funds. We financed one hundred percent (100%) of the project at ten million three hundred thousand dollars ($10,300,000), those are sixty (60) units, and that cost about one hundred seventy-two thousand dollars ($172,000) per unit. Kalepa IV much later, eleven (11) years later, and a little bit different project in the sense that we brought in the range of market and because of that we had to put more money because there was less Federal subsidy. Therefore it cost us about two hundred seventy-one thousand dollars ($271,000) per unit and those are one hundred percent (100%) financed and so we carried that cost. If you look at green portion, this is when we are getting to our public/private partnership. Kalepa II and III, we brought down our investment 04-16-2013 Housing Agency (aa) Page 4 substantially from almost two hundred thousand dollars ($200,000) down to seventy-eight thousand dollars ($78,000) and seventy-two dollars ($72) per unit for Kalepa II and III respectively. Rice Camp, we are projecting expending, even better if you look at the far right column, we are projected to spend sixty thousand dollars ($60,000) per unit and you have to take into account this is which costs are a little bit higher. Lima Ola, I have line items nine and ten, we are projected to take care of all of the off-site infrastructure and entitlements and on-site design of the infrastructure with about forty thousand dollars ($40,000) per unit at four hundred (400) units and of course that number could go up or down, depending on the amount of units we do as well as value engineering that we can apply to the project. To be conservative because we are still just in the planning stage, I put a twenty percent (20%) contingency on line item ten. So, the budget went up from sixteen million dollars ($16,000,000) to nineteen million dollars ($19,000,000) for the County and that puts us at about forty-eight thousand dollars ($48,000) per unit. I guess that kind of shows how we are basically, it is in line with our strategic plan. I think we are trying to leverage our money as much as possible to get more units for less money and private/public partnership is a great way to do that. If you look on items eleven and twelve, these are two (2) examples that we spoke on yesterday, policy. When you make policy, that in turn provides land dedication. If you look at land dedication, there is no value in the project because we are provided land dedication through a policy and because of that, we get much better ratios of County investment because there is a subsidy that comes out from a private developer. For Pa'anau II, Kukui`ula provide the land. There is no value in this analysis to that. But we ended up spending about fifty-four thousand dollars ($54,000) per unit and we are projecting through Kolopua, the Princeville project, to only spend one million dollars ($1,000,000) for forty-four (44) units which is seven percent (7%) of the total cost and that allows us to spend only twenty-two thousand dollars ($22,000) per unit which is awesome, very good. All of these represent projects that provide affordable housing in perpetuity. It is important because in order to do that, you do have to make investment into the land. You do not get that return like a developer. If we sold if fee simple, we would get the total return. In this case, we are investing for propriety and we are trying leverage this as much as possible. We believe that the Housing Agency, that if you look at the green and the purple, we acknowledge public/private partnership is essential because it gives us the best "bang for our buck." But we also acknowledge that we cannot just rely on policy only, that we have to take the lead and do development ourselves. But we should be doing both. We should be working on all facets with policy as well as developing on our own. I believe the future is to do a combination of this and Lima Ola falls into us taking the lead at County to develop affordable housing. That is kind of where we are right now and we would like to open it up for questions. Chair Furfaro: Thank you very much for that presentation and the numbers are very impressive, that you have been able to demonstrate to us. Thank you. Mr. Cobb-Adams: Thank you. Chair Furfaro: Questions? This is the only CIP item Housing had on this year's CIP? 04-16-2013 Housing Agency (aa) Page 5 Mr. Cobb-Adams: Yes. Chair Furfaro: Mr. Hooser. Mr. Hooser: On the cost estimate, this piece. Mr. Cobb-Adams: Yes. Mr. Hooser: Going down the list, the planning contact, is that a Manager? Mr. Cobb-Adams: I am sorry, that is a typo. I put this together in trying to—it is a contract. I apologize. Mr. Hooser: To? Mr. Cobb-Adams: That contract with R.M. Towill to do the planning. Mr. Hooser: To do that planning for them? Mr. Cobb-Adams: Yes. Mr. Hooser: Then the wastewater off-site and major roads, is that enough to service the project? Those are interior roads or are those exterior roads, the major roads? Mr. Cobb-Adams: The major road is an interior road. So, these cost estimates came from R.M. Towill based on the plan. That major road, there is a Phase VI which the first thing we are going do on this next phase is value engineer the project. I believe we can eliminate that major road which is the three million seven hundred thousand dollars ($3,700,000). The reason why I think I left it in there is because there are some major roads that are part of Phase I and Phase V or IV that attach the project to the highway that I think we would share in. We eliminate the three million seven hundred thousand dollars ($3,700,000), but reallocate that to these major roads because they put that in as a phase for the private entity to take which I do not think it is as realistic. I treat it, although it is on-site, it is kind of off-site infrastructure. So, that is kind of summary of that. Mr. Hooser: The off-site water/off-site wastewater is what, up to the property line? Mr. Cobb-Adams: Yes. Mr. Hooser: It is ready to put sewers and water lines inside. But this does not need any sort of water lines inside? It is just up to the edge of the property? 04-16-2013 Housing Agency (aa) Page 6 Mr. Cobb-Adams: In the development concept what we envision is when we get the entitlements done, of course they might not all happen all at one (1) phase, but as they are ready for phases, we do a request for proposal for developers that say this land entitled, has water and everything to your corner or wherever, and you are going to take care of this. We choose the developer based on a certain amount of criteria and some of that criteria is going to be how they finance it and what type of produce that they are issuing? Mr. Hooser: The developer would do the interior roads and the interior water? Mr. Cobb-Adams: Yes. What this budget consists of is us designing the on-site. So, they do not have to pay for the design and the reason why we are taking that scenario is because this project is a multi-year project, multi-phase project. If we do not provide that design, we all feel that that the developer first thing is going to leave a lot of that on-site development for developers in five (5) and so we want to make sure it is fair. So, by us designing it, we kind of set the parameters as to each phase and how much they are going to have to invest into on-site infrastructure. Mr. Hooser: Do you envision the developers selling vacant lots or building turnkey houses? Mr. Cobb-Adams: In the plan we have a mix of different housing types from multi-family, elderly multi-family, single-family, duplexes, and our vision is to stay with the same model of leasehold sales and rentals. So, there is a variety of concepts. Mr. Hooser: Great. Thank you very much. Thank you, Chair. Chair Furfaro: Follow-up from Mr. Hooser's questions. JoAnn you have the floor. Ms. Yukimura: Thank you. On this cost sheet, the contract was with R.M. Towill, so this master plan which was done by Kimura was another cost? Mr. Cobb-Adams: No. Mr. Mackler: Kimura International prepared the master plan as a subconsultant to R.M. Towill so it was part of the same contract. Ms. Yukimura: So, that is the total amount spent on the master plan and the cost estimates? Mr. Mackler: Yes. Ms. Yukimura: Councilmember Hooser mentioned vacant lots. But that is not going to be, I hope, our... 04-16-2013 Housing Agency (aa) Page 7 Mr. Cobb-Adams: I misunderstood. Our plan is not to issue vacant lots but to be the turn key. We did not close the door on self help. Ms. Yukimura: Right. Mr. Cobb-Adams: But yes, there should be a product home. Ms. Yukimura: Right. We have had too many bad experiences with vacant lots. Have you included the cost of an underpass passing under the highway for transit of school kids to `Ele`ele School? Mr. Cobb-Adams: The estimate that R.M. Towill provided for underpass is one million three hundred thousand dollars ($1,300,000). Ms. Yukimura: Is it in here? Mr. Cobb-Adams: No, it is not in this. Ms. Yukimura: What is the plan for accessing — not just for the school kids though they are the most vulnerable, anybody to get across the main highway to that other subdivision and to `Ele`ele Schools? Mr. Cobb-Adams: At the current point in time, our plan is to use a stop light/signalized intersection. We have the same situation with Kalepa in order to cross and we use an intersection on Kuhio Highway. Ms. Yukimura: It is a little different because there is a bypass, Kapuli Highway and Hanama`ulu traffic volume is much less and much slower compared to the speed that people move coming down from Kalaheo into `Ele`ele. To me, it is not the same. Mr. Cobb-Adams: I think we acknowledge that and that is why we have part of that in our plan. If our traffic study, which we do not have a full blown traffic study that is part of this next phase and the community during our environmental studies feel very strongly about that, that is a possibility we might want to take on either an underpass or an overpass. There are pros and cons to both that we need to vet out because there are issues with both. Ms. Yukimura: I agree. But there is also an issue with kids crossing. Pedestrians have been hit in crosswalks and the speed and the size of children, so there is an issue there. I just was wondering how you plan to address it. Mr. Cobb-Adams: We are still open, like I said. There are some things that still need to happen before we actually get to the designing, the actual infrastructure, and we are still in that process. We are open and I appreciate that comment. Thank you. 04-16-2013 Housing Agency (aa) Page 8 Ms. Yukimura: Chair. Chair Furfaro: Go right ahead. Ms. Yukimura: I am done with the follow-up. Chair Furfaro: Start your own question. Ms. Yukimura: Thank you for this sheet, it is very instructive. On nine and ten, which is the Lima Ola project, there are two (2) different scenarios, are they not? They are not two (2) different phases, they are two (2) scenarios of four hundred (400) each? Mr. Cobb-Adams: Yes, what I did was I just put in the twenty percent (20%) contingency to match so they are the exact same scenario. At this stage, best case scenario, my staff has heard a lot. I plan for the worst and hope for the best. So, with a twenty percent (20%) contingency, I am feeling that that is the worst case scenario. We are also anticipating — like I said, one of the first stages in this next phase is to value engineer. That plan was an excellent plan. Some of the things in it, like one of the roads that surround it, my blind eye can see it. But we are to have some engineers look at some things that we can do more cost effectively to decrease the overall cost, yet keeping the quality of the project that makes it walk able and green. So, we want to keep as much concept but lower the cost. I guess it is a dream house that has arches and instead of doing the arch, maybe we will do a post and a beam. It still satisfies the same intent and that is kind of what we are going to do in the first phase, is do a value engineering. Ms. Yukimura: Have you assessed whether applying this either sixteen million dollars ($16,000,000) or nineteen million dollars ($19,000,000) to other potential projects would get you a better or as equal return and get you some other values as well? Mr. Cobb-Adams: Actually, at this point in time, I think our strategy is to keep projects that we have that are in planning and then get projects into design and always have a project in design, always have a project in planning, and always have a project in construction. Ms. Yukimura: That is fine. Mr. Cobb-Adams: With that in mind, what we are doing is this project has been underway for about six (6) or seven (7) years. It is been supported. I think we have shown the data is continuing to support it moving. We have not re-analyzed with upcoming projects, but what we are trying to do is say Rice Camp was not even in the picture, but we took that and with the Council support, we are doing Rice Camp and Lima Ola simultaneously. So, we have not said one or the other, but let us keep going. M. Yukimura: In your program it is not just a matter of two hundred seventy-three thousand dollars ($273,000) because you are also taking from the 04-16-2013 Housing Agency (aa) Page 9 Housing Community Development Revolving fund, if I am reading this correctly, one million six hundred thousand dollars ($1,600,000) and a two hundred thousand dollars ($200,000). That is on page 5 of your submittal to the Mayor, dated March 11, 2013. We are looking at expenditure of one million eight hundred thousand dollars ($1,800,000)? Mr. Cobb-Adams: Yes. Ms. Yukimura: This is what we are also approving in the budget, right? Mr. Cobb-Adams: That is in the budget, yes. Ms. Yukimura: This is a total then of two million dollars ($2,000,000) to be put into this project? Mr. Cobb-Adams: Yes. Ms. Yukimura: From a policy perspective of the County Council, my question is there someplace else we can put that money that will get us more or as much in a location where the housing might be even more critical because of need? Regional need is something that I do not know maybe you have analyzed. My question is, if we were to put nineteen million dollars ($19,000,000) into buying the Courtyards at Waipouli, which is already built turnkey, we could immediately have what is the number there, Gary? Mr. Mackler: Eighty-two (82) units. Ms. Yukimura: Eighty-two (82) units immediately to rent because this is about four hundred (400) units that will come over the next twenty (20) to thirty (30) years. How would the numbers work out? Mr. Cobb-Adams: Well, for one, we do not have the eighteen million dollars ($18,000,000) right now. Ms. Yukimura: True. Mr. Cobb-Adams: Two, this project we have it and it is moving because we own the land. We have not addressed the Waipouli one. This is the first I heard it is for sale. Ms. Yukimura: It is not for sale. But the Council has shown great interest in acquiring it and we have had many conversations about it and the Administration has had some investigation of it. I do not know where all of the investigation has gone to. 04-16-2013 Housing Agency (aa) Page 10 Mr. Cobb-Adams: I mean, I guess we are trying to compare a project that� at we have that is moving versus a potential project and we areaways interested in investigating potential projects. Ms. Yukimura: I am interested in getting the most housing with the least money as fast as possible. So, of those twenty (20) sites that were State land parcels, I mean we could use that land, that seventy-five (75) acres, we could use that right now for agriculture lots. That is prime agriculture land out at `Ele`ele, right? The twenty (20) State land parcels, I know that we were doing a whittling down process to see whether some might be available for housing. What kind of analysis and it would be so excellent to do that kind of analysis on all of those parcels and see where what the potential investment would yield? Mr. Cobb-Adams: I think those are good and potential projects that we can investigate. One of the issues that we look at that are potential, like the Rice Camp, fortunately it came about. But it was in negotiations for years. For us to investigate something that is just potential versus something that has tracks and we are moving on, I think that is one of the reasons why we would like to continue forward with this project. The second thing on the State parcel, the offer, if you really look into it, a very interesting offer. Ms. Yukimura: Which offer are you talking about? Mr. Cobb-Adams: The offer of the State lands because it basically says, I guess, if you do a metaphor and I was selling a house and said come look at my house or look at my piece of land, tell me the best use, prove it to me, give it to me, and then I will decide if I want to sell it to you. This is basically what it says. So, basically go do your due diligence and no guarantee that I will give it to you, but if it looks fine and dandy, then we will give it to you. That was done in a different Administration. I am not so sure. We have tried to confirm with this new Administration if they still support the offer. You folks understand it, people change so we have some concerns. On top of that, the properties are not ideal for development. They have issues. A majority, even the best properties cannot be used because of condition of the topography. Ms. Yukimura: I think... Chair Furfaro: Excuse me, Councilwoman? Ms. Yukimura: Yes. Chair Furfaro: Just with our rule and so forth, after your question, I am going to yield to some other members. Ms. Yukimura: Okay, fine. I guess I will request is a conclusion to your study of those parcels because I know most of them were not feasible, but of the few that were, I would like to know what the analysis would be of them and I would like to see that. Thank you. 04-16-2013 Housing Agency (aa) Page 11 Mr. Cobb-Adams: Sure. Chair Furfaro: Thank you Councilwoman. Vice Chair, you have the floor. Ms. Nakamura: I have a follow-up to Councilmember Yukimura's question. Now, on this sheet which I thought was very, very helpful. Thank you for putting this together to see the amount of County subsidy based on the type of project and the type of financing, it is very helpful. I wanted to ask you on line item nine and ten, relating to Lima Ola, this is for the total cost of the project? Mr. Cobb-Adams: Yes, total. Ms. Nakamura: But this would be done in phases? Mr. Cobb-Adams: We asked that it would be estimated in phases also. Yes. Ms. Nakamura: This is an aggregate cost? Mr. Cobb-Adams: This is basically this thick. It is not really thick, but it is our line item and you know how engineers goes from every line. Ms. Nakamura: Your first phase, would that be a rental housing component or single family home component? Do we have a sense? Mr. Cobb-Adams: There is say Phase I broken up into two (2) phases, Phase I(A) and I(B) and it has both, single family and multi-family. Ms. Nakamura: Do you have any sense at this point which of those two (2) we would be pursue? Mr. Cobb-Adams: Not exactly. So, one of the first things I know I did not put it on the sheet, but one of our first things that we are going to do in this next phase is a Market Study to see specifically in that area of demand, what type of products are wanted. We also, in this study, we have not found condos, the higher density type products which are most cost effective to be as desirable. So, in this Market Study we want to ask more specific questions, like if we put this type of amenity in a condo, would that be more appealing so that we can get people into something that they really like, but yet it is still affordable at their income rate? So, we are going to do that market analysis. That is part of what this money will fund. Ms. Nakamura: Just to follow-up then, the purpose of the funds would be the Market Study and for the Environmental Assessment (EA)? Mr. Cobb-Adams: Yes. 04-16-2013 Housing Agency (aa) Page 12 Ms. Nakamura: The EA would then cover entire project because you look at it holistically. Mr. Cobb-Adams: Right. Ms. Nakamura: On your list of expenses, what does the two million dollars ($2,000,000) cover? It covers the entitlement? Is it a portion of the entitle piece? Mr. Cobb-Adams: Which one are you looking at? Ms. Nakamura: I am look at your spreadsheet. Mr. Cobb-Adams: What dollar amount? Ms. Nakamura: Yes. Mr. Cobb-Adams: What dollar was it? Ms. Nakamura: You are requesting two hundred seventy-three thousand dollars ($273,000). Mr. Cobb-Adams: Yes, I got you. Ms. Nakamura: Councilmember Yukimura mentioned one million eight hundred thousand dollars ($1,800,000) in additional CDBG. Mr. Cobb-Adams: Do you see the one four million four hundred thousand dollars ($4,400,000) entitlements, environmental design? Ms. Nakamura: Yes. Mr. Cobb-Adams: So, that is more specific than that, but it is a portion of that. Ms. Nakamura: That is the main focus for this next year? Mr. Cobb-Adams: Yes. Basically all of that is to take us to the point that we can Request For Proposal (RFP) this out to a private developer, Phase I and Phase II. Ms. Nakamura: Then as the project is being phased, the infrastructure will also be phased I am assuming. Mr. Cobb-Adams: Correct, portions of it. If possible, we would like to do as much as possible upfront just because of the cost. As you see, cost appreciates so 04-16-2013 Housing Agency (aa) Page 13 the more we can do now and that then allows the flexibility to RFP things. But we could phase it, yes. Yes, that is the simple answer. Ms. Nakamura: I think we would be guided by that market study to see really what demand is and how much the market can absorb. Mr. Cobb-Adams: Correct. Ms. Nakamura: This is still the upfront costs, we do not know exactly how much we are going to be spending, but we are making the next incremental step to move, at least a portion,of this master plan forward? Mr. Cobb-Adams: Right. Ms. Nakamura: Thank you. Chair Furfaro: I am going to go back to a comment comparing these projects. Gary, I think you and I had worked on the Courtyard before and at the time we did, I do not remember a number being nineteen million dollars ($19,000,000). I remember a number being closer to twenty-three million five hundred thousand dollars ($23,500,000). Mr. Mackler: There was an appraisal done. It looked at the value of that property utilizing three (3) different methods. I think the cost approach method valued the property significantly below nineteen million dollars ($19,000,000). Chair Furfaro: Yes. Mr. Mackler: I believe the market appraisal may have been higher than nineteen million dollars ($19,000,000). I do not recall the exact number it is been some time since I have looked at the appraisal. But do I think it was higher. I think the expectation of the seller was certainly higher. Chair Furfaro: That is what I am referring to and that project has never been condominiumized? Mr. Mackler: No, not as of yet. Although, I think it will eventually be once the affordable restrictions are over. Chair Furfaro: The return on investment numbers were not based on all of the condos carrying the debt service at being at affordable prices? Mr. Mackler: Correct. 04-16-2013 Housing Agency (aa) Page 14 Chair Furfaro: I have a couple of announcements that I need to make. I wanted to make sure, so maybe you can dust off those sheets. Mr. Mackler: Okay. Chair Furfaro: Mr. Rapozo has given us an absentee notice. He has doctor's appointments for the rest of the afternoon, so we will be five (5) members. Thank you very much. Mr. Hooser. Mr. Hooser: Just a follow-up question. I understand that this is a priority project, but are there other priorities? I mean if there are additional funds that fell from the sky for Capital Improvements, is there something waiting in the wings that you would want to line up behind this one? Mr. Cobb-Adams: Currently, we have some potential things that we are looking at that involves another policy, those are the ones that we can get done g p Y� g quick such as the Kolopua. So, we are looking at things such as that, but we do not have anything as concretes as this, Rice Camp, and Kolopua. Those are concrete that we are going to push. The Waipouli one that was just brought to my attention, I thought of a couple of things policy wise and inviting private partners to come in and we just stand outside with policy and get them to investment with low income tax credits and possibly the County providing an incentive to buy it and make it affordable. So, there are other ideas out there that might take less money. Ms. Yukimura: Like two million dollars ($2,000,000)? Mr. Cobb-Adams: Well, I am thankful that we even had this discussion because I think we are open to hearing any kind of potentials because we do not have concrete, but we have some potentials that we are looking at. Mr. Hooser: Great. Thank you. Chair Furfaro: Glad to hear the comments about the wheels are stirring now. Mr. Cobb-Adams: I wish I could slow them down sometimes. They slow down usually around 4:00 p.m. Chair Furfaro: We are going around again. Councilmember Yukimura and then Vice Chair, questions? Ms. Yukimura: Have you applied this analysis to the workforce Housing Project in Po`ipu? I would be interested in knowing what figure you would come up with. Mr. Cobb-Adams: Are you talking about the Kukui`ula Project? 04-16-2013 Housing Agency (aa) Page 15 Ms. Yukimura: Yes. Mr. Cobb-Adams: We have not yet. That project is a project we are looking at that is a policy project. They have a condition to meet Workforce Housing and we are looking at an alternative in order to make these workforce housing in perpetuity. So, we are looking at that. The issues with that project is that we are trying to work out an agreement because that project does not have the off-site infrastructure and because it is a policy project we tend to not just ask for raw land but land that is entitled and off-site infrastructure. So, we are currently trying to work on an agreement and we still have to come to Council to vet these things out. But there is a lot of potential. I have not been able to put dollars and cents to it. No, I have not. That is a long answer to your question. Ms. Yukimura: Well, I am thinking if we worked hard enough on it, we could put dollars and cents on it and it would be very important to know what do you call this analysis? Mr. Cobb-Adams: I just call at the end of the matrix for us to compare projects. Ms. Yukimura: Well, see the interesting thing is that you are comparing is that our purple means that projects has not happened yet? Mr. Cobb-Adams: No, they are project development through what I call policy, they policy driven projects, so because of the policy, you get certain subsidies automatically. Ms. Yukimura: Alright. Mr. Cobb-Adams: I am differentiating the type of project. Ms. Yukimura: The breakdown for me are the ones that are already done and the ones that are projected. So, there is really Rice Camp, Lima Ola and Kolopua that are projected. Mr. Cobb-Adams: Right. Ms. Yukimura: And I would like to see projections for the workforce housing at Po`ipu, the co-op housing at Po`ipu, the co-op pilot project at Po`ipu and maybe senior housing in Kilauea just so we can see the return on investment would be in each of these. Mr. Cobb-Adams: Okay. Of those, there is only one (1) we are in dialogue with Kukui`ula and we welcome that. It is a priority just to let you know. We just received the Memorandum of Agreement (MOA) that needs to be reviewed. Like you folks, we rely on other individuals to help us get through these documents and we do not control all of that. We have gotten an MOA and it will be reviewed. So, we are trying to move to 04-16-2013 Housing Agency (aa) Page 16 that point. I just want to point out that I feel like we meet monthly and we track all of our projects monthly and we are moving it as a priority. Ms. Yukimura: I am not questioning whether you are moving on it. I am questioning what kind of investment and what kind of return on investment is possible and I would also like you to think about this prospect. If you were not working on this housing project, Lima Ola, and you actually put a lot of time into the other projects you would be able to get these figures. So, before we spend two million dollars ($2,000,000), let us just make sure that we are spending the two million dollars ($2,000,000) in best place. I think, we as policymakers, about where to spend this two million dollars ($2,000,000) would like to have that information so we can make better decisions. Mr. Cobb-Adams: I mean, I respectfully disagree somewhat because you cannot continuously keep overanalyzing every year which projects, stop, analyze, stop, analyze. Ms. Yukimura: Are you saying you are not going to give us this information? Mr. Cobb-Adams: No. I think we can do it. The reason I pointed out the MOA is until we know what the MOA says, we do not know what numbers too and the time for it. There are things that we need to figure out in the MOA that will tell us what we are going to have to put when comes to numbers. Ms. Yukimura: Actually, your analysis will help you understand what to negotiate in that MOA. Mr. Cobb-Adams: I think—okay. Ms. Yukimura: Thank you. Chair Furfaro: Vice Chair, you have the floor. Ms. Nakamura: I just wanted to go back and sort of look at the linkage with the six-year CIP and the information that is in the six-year CIP relating to this project. I just wanted you to take another look at that because what is being presented here and what is in here does not seem to be in alignment. It would, I think, help with future projections if we broke it down by phase. KEN SHIMONISHI, Budget Analyst: I agree. Chair Furfaro: Thank you for looking into that. Mr. Hooser, you have the floor next if you want it. Mr. Hooser: I do not want it. 04-16-2013 Housing Agency (aa) Page 17 Chair Furfaro: Sounds like a hot potato. Gentlemen, I do want to say that some of the discussion that came out today was very good to pursue. We kind of have to be out there looking for draft choices. Mr. Cobb-Adams: Yes. Chair Furfaro: I think what that is what Councilmember Yukimura is saying to be looking at draft choices. But on the other hand, I also want to say this acquisition of this property, to me, fits another bill. I mean, we need West Side inventory. We need inventory close to the base. We need inventory close to the Po`ipu Resort area, all of those components. I want you to look at it all because we want it all. Maybe the drive is twenty-five (25) minutes, maybe it is thirty (30) minutes, but reality is that we do have work opportunity out on the South Side and West Side and this can kind of serve both. But I would just encourage you to continue to look at all of the draft choices. Mr. Hooser. Mr. Hooser: Yes, actually that was my thought also that I want to reinforce. My question earlier about what other choices was not intended to supplant or replace this but was above and beyond this. If there were opportunities above and beyond that were in the near future and you needed assistance, I personally would be happy to look for ways and work with the Council to look for other resources or other mechanisms that might help you grow the inventory.. I just wanted to be clear, mine was not meant to replace this project, but it was just to go above and beyond similar to what the Chair was saying. Thank you. Chair Furfaro: Mr. Bynum is just listening for now. He is okay. I am going to go back around. Vice Chair? You are okay. You have the floor, Councilwoman Yukimura and I pointed out that I said about hour and we have about twenty (20) minutes left. Ms. Yukimura: I have a follow-up to Councilmember Hooser's cost right now. My inquiry about those other projects are also in that same light in terms of we saw the challenge of producing one thousand one hundred (1,100) units by 2016. So, your goal of having so much in the planning phase, so much in the construction phase, and the fact that we have really limited resources. That is why I am asking about whether we arousing our resources for the biggest bang, that is why I am asking these questions. So, to further continue because in making the choices, whatever that list is, your priority list, I would like to know how you create that priority list and what criteria do you use for that priority list? Not a criteria list that changes from project to project. It is a list that you develop before you think of any project and then how you apply. I would like to see how you apply it to all projects and that is what a transparent process would be. Do you have a list of criteria in choosing which projects to pursue? Mr. Cobb-Adams: The bottom line in development and I think you all know this, you look at costs. I can give you a written explanation. It is pretty complex and you try to get every single value, but you are almost never going to get the perfect situation to develop. We just try to get the most amount of our objectives met by each 04-16-2013 Housing Agency (aa) Page 18 project for the least amount of money. In a nutshell that is it. If you want a list of a ton of different criteria we can get you a list of criteria. Ms. Yukimura: Well, the project list that Gary mentioned regarding specifically Lima Ola is for me, it is like the reasons why it is a good project. It is not an objective list, like are we talking prime agriculture land? Is this infill and so forth. You mention all the things that it comes out on the plus for, but you do not mention the other things and you do not show me that you have applied to all of these other projects and this is where we should spend the two million dollars ($2,000,000). Mr. Mackler: Well, we can go through checklists on lands that we can identify, but we do not necessarily have a way to acquire. It requires a willing seller to make land available and... Ms. Yukimura: Could you just apply it... Mr. Mackler: Just let me complete what I want to say. I have worked in the Housing Agency nearly twenty (20) years now and even prior to that, we have had three (3) opportunities to acquire land. First opportunity was the Kalepa Village site, the twelve (12)acre parcel in Hanamd'ulu and we wound not have had that site except for Hurricane. The seller was going to develop it. Charles River Group, after the hurricane, they decided to sell it. We were very fortunate and very thankful to be able to get that land. It is not a perfect site, but it certainly serves one hundred eighty (180) families today. Chair Furfaro: Excuse me, Gary. That was the Charles River Group, right? Mr. Mackler: Yes, it was. Chair Furfaro: Okay. Mr. Mackler: We were able to buy Lima Ola last year. Lima Ola, we negotiated I think six (6) to eight (8) months with seller until we got the appraisal. They walked away from the table,they did not like that number. I am sorry, pardon me. I misspoke. Rice Camp. Thankfully they came back to the table, Council appropriated funds to allow us to acquire those land, and we are very thankful to have the opportunity to develop senior housing there. Lima Ola, I mentioned earlier that we looked at State lands. We had seven (7) parcels identified for us. Very few for developable. We also had a list of twenty (20) other potential sites, all agricultural by the way. All agriculture district lands. Some were extremely large parcels that would need subdivision. Not all were suitable in terms of topography and location. We did some preliminary evaluation,Ken Rainforth did when he was with us in the Housing Agency. As I went through earlier, we applied various criteria to selecting Lima Ola and it was an opportunity for this County to do something in the aftermath of a very huge housing crisis on this island to try to bring additional inventory for the future and those opportunities do not come to us very often as we have seen over the years. I think it is fantastic that we have been able to acquire Lima Ola. 04-16-2013 Housing Agency (aa) Page 19 Ms. Yukimura: Thank you. Chair Furfaro: Excuse me, JoAnn. Chari Furfaro: You wanted to add to that? Mr. Cobb-Adams: Could I follow-up? Just to point out, Rice Camp, my third day here when I came, I ended up meeting with someone and just to show that we are willing. If someone wants to truly make it available, we are willing. Unfortunately we had the money, but I feel like for government in a record amount of time because we still need to do due diligence, meaning we needed to do some surveying, we needed to do ground penetrating radar, and we had to procure all of these things as well as close on this sale. Because the seller said if you are not going to close by a certain time, we are walking again. So I just wanted to say that we are definitely willing at looking other things and if there is a true valid opportunity for it to really happen,we are going push it as hard as we can and make it happen. That is all that I am going to say. Ms. Yukimura: That was not the question. I have no doubts that you work well on the projects that have been selected. I am asking you what is your criteria for identifying and selecting projects? Mr. Cobb-Adams: We can definitely give you that criteria. I guess I am alluding to the point that we are working really hard on projects and if there is a true actual project that really is a valid offering we are going to push to move towards that project and then do the analysis. But if it is just theoretical projects, it is difficult to us to spend a lot of time analyzing a theoretical project that does not have a true offer to it or if it is really available. Ms. Yukimura: I know. But you have two (2) projects that are potentially available in Po`ipu alone and you could also say as the Housing Agency that is responsible to providing housing, where is the greatest need? Mr. Cobb-Adams: My understanding on the Po`ipu projects, you called one of them the co-op project. It is my understanding that it is to go to the Department of Education. I spoke with the Education Planner and the Education Planner said that they want to wait before they give that parcel up to anyone else until Kukui`ula does some sort of development and that is why we are not moving on that one because it is actually assigned to another agency. Ms. Yukimura: I am sorry. Mr. Cobb-Adams: The other parcel, we are moving on that parcel and we just received that MOA. So, we are doing that is I guess what I am saying. Ms. Yukimura: Well, if you apply two million dollars ($2,00,000) to it this year where would you go with it and on the co-op project, have you asked the Mayor to go with you to the Governor on it? 04-16-2013 Housing Agency (aa) Page 20 Chair Furfaro: Excuse me, let me make an announcement before you put the slide up. There are no other questions from other Councilmember at this time. So, I am going to leave the floor with Councilwoman Yukimura until 2:30 p.m. and at 2:30 p.m., we will take a caption break because we are going to go into Transportation after that. Ms. Yukimura: If we finish before that we do not have to go to 2:30 p.m. Thank you. You are familiar with this chart? This came out of Multi-modal Land Transportation Plan and I guess because of a recognition of some Smart Growth principles. But it is an analysis of where the jobs are and where homes are and it is a rough analysis because we know Koloa/Po`ipu/Kalaheo, you can see job location/home location are about the same. But if you started pricing the houses that are available, you would probably find a disconnect except that maybe our Pa'anau project is really available for certain incomes there. You would have to do a further analysis to make this fully useful. But you can see that Lihu`e, for example, has many, many jobs but very little homes which tells you that Lihu`e is a prime place for providing homes if you want to cut down the distance between job commutes and that is just a rough approach. But you could, as a Housing Agency, say that we will use some of this analysis and I think you did that informally for Rice Camp. Although, Rice Camp for elderly is not an jobs issues as much as it would be for other incomes. So, one of my questions is who takes the risk if units do not fill up and related to that is how are you doing your demand studies? Are you saying of all the people on the island who are in the housing category, eighty percent (80%) and below, or choose your level, where is there need for that kind of housing based on jobs or not? I am just saying that I do not feel like you have a list, and actually, I think including the Council in the discussion in making that list might be a good thing to do because it is policy issues. But I envision having a list and then applying it to potential housing projects around the island and saying this is the project because of these reasons. Look at the application of our criteria to different sites and we know this is what it is. People know that between Princeville and Kapa`a, every day in the morning and in the afternoon there is this huge traffic because of workers going back to where they can live because there is no more affordable housing on the North Shore and same thing in Po`ipu. How are you going to assess need in this marketing study for Lima Ola? If you have an apartment in Lihu`e and an apartment in `Ele`ele, in the affordable categories that we want to serve, what kind of demand would we have for those units? Mr. Cobb-Adams: That was a long question. Ms. Yukimura: It was. How are you doing your market needs study? Mr. Cobb-Adams: As part of this next phase we are going to have a Market Study done there. I think you might be happy to know that in our Strategic Plan, we are putting together something very innovative, a Housing Study done by the County, that is going to look at more than just housing needs, workplace, and transit but also take into account infrastructure and availability of infrastructure. We have met just a couple days because I feel that that is a huge missing link that allows us to situate where we are going to build housing and what we can build. Also what that is going to help us do is provide appropriate policy. It is a huge challenge and I cannot disagree with you. Lihu`e is 04-16-2013 Housing Agency (aa) Page 21 a big challenge. We are moving on that front to support policy wise, the DR Horton Triangle Project in any way we can through our Affordable Housing Task Force. But we are also looking at there is a challenge in this place is the infrastructure and making it cost effective. We are looking at ways to not only do it because there is such a tremendous cost for land. Two million five hundred thousand dollars ($2,500,000) for Rice Camp and it is am almost the same cost so we have to take that into account I think. Ms. Yukimura: Of course you have to take that into account. But just because the infrastructure is not available, does not mean you do not say this is where we want to build because if you just go by one (1) factor, cheaper land, you are going outside to agriculture. It is a combination of factors. Mr. Cobb-Adams: I think we agreeing. Ms. Yukimura: Right. What is your answer to my question about how are you structure your market needs study for this project? Mr. Cobb-Adams: We are going to a market needs study. I do not understand what you mean. Ms. Yukimura: How are you going to structure... Mr. Cobb-Adams: As long as we can ensure that there is the demand for the type of product in Lima Ola. Ms. Yukimura: You are going to survey the whole island? Mr. Mackler: It would be very much like what we did with Kalepa Village. Before we developed Kalepa we did a site specific market study to define the market capture area for that project and to analyze the results of the actual study. It is really no different. We would do a site specific study for Lima Ola. Ms. Yukimura: Is that testing what the need is around the island? Mr. Mackler: It is testing what the need is specific to the site. Ms. Yukimura: Who do you inquire of in order to test the need for the site? Mr. Cobb-Adams: I think in short, we are going to get a professional to come up with all of that criteria. Our main purpose is to develop affordable housing everywhere on this island where possible. We acknowledge there are different areas of need with more need and there are different areas with different types of challenges. We are in the position that we are going to take on every possible place that we can. Lihu`e is a nut that we have not cracked except that starting with Rice Camp and we are trying to start with DR Horton. We need to find land that is available, has 04-16-2013 Housing Agency (aa) Page 22 infrastructure, and that we can afford. We are looking and we are pushing on those forefronts. I guess my point is that we are pushing on all fronts and Lima Ola is one of the many fronts that we are pushing on. Unfortunately that is one that has made a tremendous amount of progress. But I feel that just because we have not made as much—I think you would agree it is not our fault we have not. There are different challenges in different areas. But it does not mean we stop moving forward on this project. Ms. Yukimura: I am talking about a system that gives you the biggest "bang for your buck" and I am knoll convinced that you have a system that helps you figure that out. For example, if you took the two million dollars ($2,000,000) and spent it with DH Horton site, bought part of it which allowed them to put money into water or whatever their stumbling blocks were, and then went out to bid on that site for another, what kind of things would you get if Lihu`e is a really important site? That one is way to make the land available, that you wanted to start a project on and you might enable the rest of the DH Horton site to build as well. To me, you do not start with the land which is how this project started. It started with the land. You start with where is the need? Where can get our biggest "bang or our buck" and you go and make it happen. So, that is enough. Chair Furfaro: Well, we have three (3) minutes. Ms. Yukimura: I think I have asked all of my main questions. Unless there is someone else,I am done. Thank you. Chair Furfaro: You are going to send over a criteria list? I want to remind you of something here also. If the studies say we are one thousand one hundred (1,100) short, then you have to weigh some of it towards where we get the largest inventory as well. That has to be part of the criteria because if you are dealing with people that do not have an opportunity for shelter and we are one thousand one hundred (1,100) units behind, well that has to be part of the criteria, too. What can we respond to with the appropriate shelter within a reasonable amount of time because if not, we are just going to continue to fall behind and fall behind. That has to be part of the criteria and I see the Councilwoman is kind of agreeing with me. But we will be asking you to send over to us how you measure this value and criteria. JoAnn, go ahead. Ms. Yukimura: How soon would the first unit be built in `Ele`ele? Mr. Cobb-Adams: We are targeting to go to the RFP in 2016. Ms. Yukimura: What if you figured out with your very creative thinking to get those eighty-two (82) units at Waipouli? We could get those in six (6) months or a year, right? Possibly, you never know. Mr. Cobb-Adams: It is kind of unfair because you are giving me theoretical versus something that... Ms. Yukimura: No, I am not. 04-16-2013 Housing Agency (aa) Page 23 Mr. Cobb-Adams: You just told me a theory. Chair Furfaro: Anyway, let us see your criteria and you heard my point of view. Certainly, want to thank you for great spreadsheet today that yielded Y p Y� Y g p Y Y cost analysis on how we are developing. That was a very nice tool. I think the Mayor wanted to say something, then we are going to take a caption break, and then we are going to go to Transportation. Go ahead, Mayor BERNARD P. CARVALHO, JR., Mayor: First of all, thank you Councilmembers. I really wanted to say that our Housing Agency has done some tremendous work and major strides in trying to move forward. In this particular discussion, we have gone through many sessions on figuring out which would fit best for Kaua`i. The top three (3) projects that we are sharing and have placed at the top, making sure that we are addressing everything else and the needs of the people overall in different parts of our community, knowing that Smart Growth principles are being apply merchandise many different parts and in many different ways on our island. But in this particular case, Lima Ola, Kolopua, geographically, North Shore, West Side and of course, central and so with that overlay, understanding, the process, and how far it is gone, not neglecting any other opportunities. JoAnn knows this, we have talked about Kukui`ula. We have talked about the Wailua project as well. But overall, if you had asked me, and you where in our discussions where I want to go and where I think that it is going to benefit moving forward is in these particular projects, mainly Lima Ola, Kolopua, and Rice Camp. I am totally open, and you know this JoAnn, to talking about other opportunities, just for the record. Our people are doing the best they can. There is a lot of energy, a lot of discussion that is happening right now as we speak in these particular projects at forefront. Thank you for that opportunity. Chair Furfaro: Thank you. Mayor, I think we sense the energy that is in Housing. I just wanted you to know. We are going to take a ten (10) minute caption break. Transportation, you will be next and if we could place a message out to the people after Transportation. Ten (10) minutes, please be timely. There being no objections, the Committee recessed at 2:32 p.m.