Star-Advertiser Questions On Housing Credits

Posted on Oct 22, 2014 in Community News, Department of Hawaiian Home Lands, News Releases, Public Information, Public Notice

FOR THE RECORD:

The Affordable Housing Credits or Workforce Housing Credits programs are creations of the various counties. It was the State Legislature that mandated the counties give DHHL an affordable housing credit for each unit that was developed on Hawaiian Home Lands.

The following are the questions received from the Star Advertiser regarding the counties’ affordable housing credits programs.

Puni, there was a bill passed in 2009 (SB1268) to do with allowing DHHL to earn county affordable housing credits that I don’t believe attracted any media coverage at the time. This year there was a bill (HB2286) to extend the life of the program that didn’t pass. I’m interested in learning more about and writing about this program. Can you fill me in with some background and details?

I have read DHHL’s affordable housing credits policy. I jotted down some questions below.


 

Prior to 2009, could DHHL obtain county affordable housing credits for homes it produced?

DHHL did not pursue credits from the counties prior to the enactment of the law in 2009.

How many credits were earned through homes produced for DHHL by private developers?

The department has received 1,296 credits to-date.

What has DHHL done with its credits? How many have been transferred to developers?

The department has transferred 387 credits.

The department has sold some credits. Other credits were used to lower the cost of houses built for our beneficiaries.

Have there been credits earned from unimproved residential land donations? Have there been credits earned from improved residential lots?

No credits have been used to acquire unimproved land or improved residential land.

Can you list the project names and number of credits earned?

County of Hawaii

UH Model Home          2

Lalamilo Ph 1              37

Kaumana                    49

County of Maui

Waiehu Kou 2,3,4       268

Lei Alii                          104

Lanai                           45

Waiohuli Hikina           35

Waiehu Kou Self Help 12

Maui Scattered Lots    15

City and County of Honolulu

Kaupuni                       19

Kaupea                        326

Kumuhau                    45

Kaneheli                      339

The units in the individual projects were completed during various years through 2014. Some of these subdivisions are ongoing. Credits have been requested incrementally as portions of these projects are completed.

Can someone fill me in a bit more on how the credit program has been helpful to DHHL? I imagine it may be a variety of ways.

DHHL invests between $175-200K for infrastructure per residential lot. The use of affordable housing credits allows the department to provide a more affordable home product to our beneficiaries. It is another financial tool that is used to place native Hawaiians on the land.

What I’m trying to understand better is if developers are coming in, where they had not previously, to build homes for DHHL in return for credits? In this case would it be that DHHL gets homes built at a discount or free given the credit?

DHHL provides the land and through the use of affordable housing credits, is able to deliver the developer-built homes for a better value to our beneficiaries.

If this is partly the case, is there a project or two that I could cite as an example of this?

On Maui, the Waiehu Kou subdivisions and the Lei Alii subdivision were built in that manner.

Also, is DHHL still developing/financing home construction but then selling credits to raise money for additional home production. If this is the case, has DHHL been able to increase production?

DHHL has sold credits as part of the Waiehu Kou and Lei Alii subdivisions on Maui.

DHHL has not sold credits strictly for cash.

In the list you provided, there are 15 “Maui Scattered Lots.” What is involved with that? Did a developer improve 15 lots for DHHL? Or did DHHL improve the lots? Or something else? Who and when would homes be built there?

DHHL provided the lots. The developer worked with our list of applicants, obtained agreements, and built the houses. These were done by Armstrong last year and this year. There will be a total of approximately 26 homes built in this manner.

Also, is DHHL being able to lower the cost of homes for beneficiaries given use of the credits? If so, what would be an example of home price/cost with and without a credit?

The Maui Scattered Lots project was able to lower the cost of homes to the beneficiaries. The savings vary depending on the specific circumstance.

I saw a reference in some Nov-Dec 2009 DHHL meeting minutes that indicated the value of an affordable housing credit ranges from $75,000 to $125,000. Is that correct? If not, what is the value?

The value of the credits depends on the development cycle, county restrictions, developers “need” for the credits and other factors beyond DHHL control.

A bill this year, HB2286, that would have eliminated a 2015 sunset for the program expired in conference as time ran out for lawmakers to pass lots of bills. Does DHHL intend to have a bill introduced next year in hopes of making the program permanent?

DHHL will be working with the incoming administration to introduce a bill to continue the affordable housing credit program. That initiative was approved by the Hawaiian Homes Commission for inclusion in the department’s legislative package at its regular meeting in September.

Also, could you send me a few photos of homes built for which credits were received?

There are two UH model homes on the Big Island for which credits were received. Would one of those be either of these mentioned below?

Yes, both UH model homes received credits.

A couple things came up yesterday that I wanted to also ask you about.

One is simple: whether the Lanai project is 45 lots or homes?

The Lanai project consists of 45 residential lots: 29 homes and 16 improved lots waiting to be awarded.

The other thing is more sensitive. Hawaii County put forth in some written testimony on a bill about the credits that it believes (after having discussions with HUD) that the credit program would trigger a violation of the federal Fair Housing Act. Kauai County raised a concern on this issue too. I don’t know specifically what the interpretation is, but somehow the feeling seems to be that an affordable housing program is being directed to benefit Native Hawaiians over non-Hawaiians. I’m sure DHHL can respond to this idea.

The Affordable Housing Credits or Workforce Housing Credits are creations of the various counties. It was the State Legislature that mandated the counties give DHHL an affordable housing credit for each unit that was developed on Hawaiian Home Lands.

DHHL has been working with the various counties to address concerns that they have articulated regarding the affordable housing credits.

I understand that Act 141 says “existing and future” DHHL homes are eligible for credits. I saw something from the agency’s affordable housing credits policy document that defines existing projects as projects on-going as of July 1, 2009 when Act 141 became effective. But the list of projects for which DHHL obtained credits includes some much older projects like Leialii and Waiehu Kou 2,3,4. I may be misunderstanding something. Can you clarify? What is the oldest project for which DHHL has obtained credits for, and does the agency plan to claim credits for other projects going further back?

When Act 141 was enacted the Lei Alii and Waiehu Kou projects were eligible because they were ongoing and not completed.

Waiehu Kou 2 and 3 are the oldest projects that were eligible for affordable housing credits

The department will not be asking for credits for other projects going further back.

Do you mean that there were still more phases to be built at Lei Alii and Waiehu Kou as of 2009? Because I believe the homes there for which credits were claimed were finished between 2001 and 2008?

Projects, as opposed to individual units, that were not completed upon implementation of the act were eligible for credits.

Projects such as Lei Alii and Waiehu Kou were started before 2009 but were not completed.