{"id":16109,"date":"2024-08-03T13:14:18","date_gmt":"2024-08-03T23:14:18","guid":{"rendered":"https:\/\/www.environment-hawaii.org\/?p=16109"},"modified":"2024-08-03T13:14:19","modified_gmt":"2024-08-03T23:14:19","slug":"council-gets-advice-on-housing-credits-first-priority-get-rid-of-them","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=16109","title":{"rendered":"Council Gets Advice on Housing Credits: \u2018First Priority \u2013 Get Rid of Them\u2019"},"content":{"rendered":"\n

One of the strongest arguments for the Kona Vistas development has been that it will bring much needed housing at the mid-level range of affordability. A certain fraction of the planned 450 or so multi-family units will need to meet Hawai\u02bbi County affordability requirements, as set forth in Chapter 11 of the County Code.<\/p>\n\n\n\n

Kona Three at one point stated that it would meet its affordability quota through the use of excess credits acquired from other developers. It still has not stated firmly that it will not do so.<\/p>\n\n\n\n

For the last few years, ever since the disclosures of the criminal manipulation of affordable housing credits by a former county employee, County Council members and others have given heightened scrutiny to the way in which developers comply with Chapter 11 requirements.<\/p>\n\n\n\n

On July 23, the County Council\u2019s Committee on Communications, Reports, and Council Oversight received the long-awaited report of the consulting firm retained two years ago to review the effectiveness of Chapter 11.<\/p>\n\n\n\n

One of the most significant findings concerned the controversial practice of giving developers \u201cexcess credits\u201d if they go beyond minimal affordability requirements in their developments.<\/p>\n\n\n\n

\u201cChapter 11\u2019s ability to ensure new developments address housing needs for a broad spectrum of incomes has been inhibited by the excess credit feature of the ordinance,\u201d the consultant, Keyser Marston Associates, stated in its findings. \u201cProjects that produce more affordable housing than required may sell credits to another party for use in meeting the Chapter 11 affordable housing requirements of a separate project. \u2026 In theory, the system of credits seems like a promising and flexible policy approach; however, the experiment with excess credits on the Big Island does not show evidence of a strong link between successful completion of affordable units and their ability to earn excess credits.\u201d<\/p>\n\n\n\n

Projects that have used excess credits to meet Chapter 11 requirements \u201cdo not create inclusive communities with a mix of market rate and affordable housing,\u201d which was the intention of Chapter 11, the report states. \u201cDevelopers choose the excess credit option because the cost is less.\u201d<\/p>\n\n\n\n

The purchase of excess credits to comply with Chapter 11 \u201cadds cost to projects without a clear benefit or link to affordable housing production,\u201d it continues. \u201cFunds from purchase of credits go to private parties or corporate entities that own credits and have no obligation to reinvest the funds in local affordable housing projects.\u201d<\/p>\n\n\n\n

The use of credits by affordable housing developers, as a means of generating revenue for additional housing, hasn\u2019t worked, either. According to KMA, \u201cAffordable developers primarily rely on state and federal subsidy sources as well as debt financing for their projects and generally have not been able to leverage excess credits as a source of financing for affordable housing development. Most excess credits earned over the past two decades remain unused, resulting in a glut of approximately 1,300 unused credits. This large, accrued balance of credits has the potential to offset future production of affordable housing under Chapter 11 for years to come.\u201d<\/p>\n\n\n\n

KMA lays out a path to phasing out the unused excess credits. First of all, the county should cease issuing them, except when state law requires it (that is, in Department of Hawaiian Home Lands developments). <\/p>\n\n\n\n

Second, the county could \u201capply a pro-ration factor to the value of excess credits that are redeemed five or more years from the date of the affordable housing agreement generating the excess credits. Pro-ration could be based on the portion of the original 20-year required affordability term remaining. As an example, credits generated by an affordable development built ten years prior to redemption would be prorated by a factor of 50 percent, representing the portion of the original 20-year required affordability term remaining. Even in cases where the affordability term is longer, 20 years could still be the basis for pro-ration since this is the affordability term required by Chapter 11 for rental projects, which generated most excess credits.\u201d<\/p>\n\n\n\n

The report suggests a system of in-lieu fees might be a feasible alternative to the award of excess credits. \u201cFunds from a new in-lieu fee could be dedicated to assisting local affordable housing projects,\u201d the report states, going on to describe several ways of determining how fees might be assessed.<\/p>\n\n\n\n

David Doezema, a senior planner with Keyser Marston Associates, presented the report to the council committee. He described at length the findings of KMA\u2019s investigations, including comparisons of Hawai\u02bbi County\u2019s system with how affordable housing is promoted elsewhere in Hawai\u02bbi and in selected mainland cities.<\/p>\n\n\n\n

Council members were interested in learning his suggestions for amending Chapter 11.<\/p>\n\n\n\n

\u201cFirst priority,\u201d he replied, \u201cget rid of the excess credit feature.\u201d<\/p>\n\n\n\n

\u2014 Patricia Tummons<\/strong><\/p>\n\n\n\n

For Further Reading<\/strong><\/p>\n\n\n\n