The island’s top-producing real estate agent for several years, tops again the first quarter this year, says the county lacks finances and focus to develop affordable housing for needy residents.
Terry P. Kamen, 53, an agent with Makai Properties in Po‘ipu, said 25 percent of development costs for housing projects large and small are government fees and requirements, including infrastructure and permitting demands and other regulations.
“The county just doesn’t have the money or the focus” to get affordable units built, so turns to private developers to pay for those costs. “And when you do that, that’s included in the price of the property, and therefore the cost of the local housing goes up,” he said.
“And so it’s very, very difficult to develop affordable housing without some kind of (governmental) help. It’s just almost impossible for a private developer to do it,” said Kamen.
When it takes five years to get zoning, and developers still need to install infrastructure like roads and water, sewer and electrical lines, nobody in their right mind would think about trying to build affordable units, unless they’re out to lose money, he said.
“A private developer could probably never do it without government help of some sort,” he said. “It costs a lot of money to build housing before you ever break ground,” Kamen says from experience.
“So it’s very difficult to build for that kind of market. The people who are being driven out of the housing market are the first-time buyers, the young buyers. They’re having a harder time finding homes,” he said.
“It’s the low-end guy that’s having a hard time buying in. We don’t have the product for the low-end guy,” he said. “There’s no $100,000 house.”
Kenneth Rainforth, executive on housing in the County Housing Agency in the Offices of Community Assistance, disagrees with Kamen on both the money and focus fronts. “I don’t think that’s correct,” he said.
For one thing, the county has much easier access to federal and state funds than private developers. Secondly, it was an administrative and County Council decision for the county to not develop affordable housing for rent or for sale, a decision made during the administration of Mayor Maryanne Kusaka when there was a reported “glut” in the housing market, Rainforth said.
So, instead of developing affordable housing for rent or for sale, CHA officials directed funds to go to a home-buyer loan program, which over the years funded 150 down payments and second mortgages for low-income Kauaians, Rainforth explained.
“We would very much like to get back to development. Finding suitable building sites is the absolute key.”
Kamen said he has had long discussions with government officials about how starter homes might be able to be provided for young residents.
“We’ve got a lot of empty land on Kaua‘i, right? Why can’t you use that land? Because it takes you five years to get zoning, and you have to hire lawyers and hold public hearings,” he said.
The cost to install infrastructure hikes up the per-unit price for a house by $25,000 to $30,000, he said.
Kamen, who helped broker the sale of Kiahuna Golf Course to a group of nine golf-village residents, also partnered with local and Mainland investors to purchase some residential-zoned land near the golf course the group plans to build homes on.
There are five separate parcels with zoning for 170 single-family homes, and Kamen estimates it will cost $10 million to install roadway, water and sewer improvements, as well as conduct archaeological surveys and other preparation work, before the first shovel of dirt can be turned to actually build homes.
“We’re going to develop the whole property,” said Kamen. Already, people from Kalaheo and ‘Oma‘o are calling him to express interest in selling their current homes and moving to Po‘ipu, he said.
Over the first four months this year, Kamen did a total of $38 million in sales activity, acting nearly equally as representative of buyers and sellers, on 36 separate properties including several parcels in and around Kiahuna Golf Course.
His dollar volume doubled the next-closest agent, Paul G. Kyno of Sleeping Giant Realty. With interest rates remaining low and Mainland love for Kaua‘i staying strong, Kamen sees no end in sight to the current boom.
“It’s speeding up,” he said.
“I’ve just been doing some real estate deals while I’m in New York, over the phone. Big, multi-million-dollar deals. Not slowing down at all,” he said. “My office is my cell phone,” said Kamen, indicating he can and does do business wherever in the world he might be.
The native New Yorker was in Manhattan, shopping at Bloomingdale’s, when this interview was conducted.
“What’s happening is the Mainland buyers are coming in, and the Kaua‘i buyers are selling to them and buying again themselves,” so there’s a lot of both local and Mainland buyers active in the market, Kamen said.
“I’m seeing quite a few Kaua‘i people moving up,” such as a local fisherman inquiring about the value of his home because he wants to buy land and build a house that will allow more room for his boat, he said.
“No one realizes that this booming real estate market has made an awful lot of Kaua‘i people wealthy,” just in the difference between what they paid for their homes and what they could sell them for today, he said.
“And 65 percent of the houses on Kaua‘i are owned by Kaua‘i people. They’re mostly owned by people who live in them,” he said.
“Everyone of those people, their houses appreciated, depending on when they bought them, maybe $200,000 or $300,000.” And people who bought homes in the mid-1980s or mid-1990s have seen value appreciate by $250,000 or more, Kamen said.
“They’re not selling them because they don’t want to move, but all of a sudden their net worth has gone up tremendously. The middle class of Kaua‘i has virtually gotten pretty wealthy over this real estate boom,” he said.
“But no one seems to talk about that. Everyone goes, ‘Oh, they’re being driven out of the market.’ The reality is the market has made them wealthy,” he said.
“I mean, they would have had to work eight to 10 years to make that kind of money, and even then it would have been taxed money. Now, you get a half a million dollars tax-free,” he said.
“So a lot of these people, even though they’re not selling, but if they were, they’d have an awful lot of money in their pockets. So I don’t see them being driven out of the market,” he said. “I see them as becoming wealthy.”
Business Editor Paul C. Curtis can be reached at firstname.lastname@example.org or 245-3681 (ext. 224).