Housing woes are focus of Contractors Association of Kaua‘i meeting

HANAMA‘ULU — What to do about Kaua‘i’s affordable housing crisis was the topic of discussion Wednesday night at a meeting of the Contractors Association of Kauai.

Kaua‘i County Councilwoman JoAnn Yukimura, Grove Farm Vice President Mike Furukawa and Kauai Realty real estate agent Carol Cummings formed a panel at the meeting to discuss the issue.

Former Mayor Maryanne Kusaka and David Pratt, president of Grove Farm, the largest developer in East Kaua‘i, and 50 other people attended the meeting.

Top reasons given for the crisis included: The after effects of the Sept. 11, 2001 terrorist attacks; a desire by affluent Mainland buyers to live in “paradise,” a major demand for housing by local residents, plus “historic” high home-sale prices and low interest rates.

The panelists offered some hope of solving the problem, but also pointed to basic problems in government and to the cost of doing business on Kaua‘i as problems that would be hard to solve.

Solutions included setting formulas for setting aside affordable-housing units when housing developments are created, developing units in areas where residents work, and having government agencies fund the infrastructure for affordable housing projects.

The panelists told the audience of impacts on Kaua‘i’s traditional society being caused by the lack of housing an average working family could afford: The break up of Kaua‘i families, families moving off Kaua‘i, and the exacerbation of the island’s social problems.

“We are in a housing crisis. Homelessness is up 120 percent on Kaua‘i since 1999,” said Yukimura. “That is the highest increase in the state,” Yukimura said. “We have very few long-term rentals.”

She said, as of last fall, the median price for homes on Kaua‘i was $380,000 (it means half of the homes are above that figure and half of the homes are below that figure), and the median price now is probably higher now.

Cummings’ voice cracked and she paused when she spoke of how difficult it has been for local families and individuals to buy homes.

“I have primarily serviced people with local ties. It has become a real emotional journey for me,” she said. “People talk about how, you know, how much people must be making, but it is not a happy time. I have friends and families that I can’t help.”

She said the price of homes is, for the most part, beyond what most local families can afford.

Affordably priced homes hovered at the $200,000 range a decade ago, she said. Finding a home at that price is becoming rarer and rarer today, she said.

In 2002 there were 92 homes that sold for under $200,000, including some which sold for $125,000 and $180,000, Cummings said.

As a comparison, in 2003, when the home-purchase boom started on Kaua‘i, there were only 28 homes that sold for $200,000 and less, Cummings said. The drop in the number of homes in that price range between the two years is hard to believe, she said.

The houses selling for $200,000 and less are small in size. One house in Kekaha that sold for $180,000 this year is just 873 square feet, she said.

Today there are only five houses for sale on the island under $300,000, Cummings said, and the lowest-priced home is an 864-square-foot house in Kekaha for $285,000.

Furukawa said the lack of housing has “cut into the fabric of Kaua‘i’s society, creating stress and causing families to break up and, in some cases, leave the island.”

Cummings said the current situation “snuck up” on local buyers in recent years, and can be attributed to historically low mortgage interest rates, and by people who suffered significant losses in the stock market investing in real estate on Kaua‘i.

The terrorist attacks on Sept. 11, 2001 also pushed people to “make quality-of-life decisions,” Cummings said.

“I know of a lot of people who decided, why live and work in the danger and smog of Los Angeles, when I can bring my family to paradise, and work long-distance over the computer and take a trip there (Los Angeles) every six weeks,” Cummings said.

Decisions by homeowners to sell their properties, and to engage in property exchanges, and other people using their homes as vacation rentals, also have contributed to current housing problems, Cummings also said.

Furukawa, meanwhile, said the housing problems can be attributed to “supply and demand for housing.”

As people make more money and can afford to buy homes, the demand for housing will increase correspondingly, Furukawa said. The benefit of people “buying up” is that other people can buy the homes they left, hopefully at lower prices, Furukawa said.

As possible solutions to the housing problems on Kaua‘i now, Yukimura, who is the chair of the Kaua‘i County Council Planning Committee, offered these recommendations:

• Every developer should provide a fair share of affordable housing. Kaua‘i County officials have had an “informal policy” that has not been very predictable. Government officials in Davis, Calif., for instance, have passed an ordinance that requires 25 percent of a development be set aside for affordable-housing units, Yukimura said. A Kaua‘i ordinance should establish a percentage threshold as well, she said;

• Affordable housing should be built within a development. She said she would prefer to see a mix of residents, so “that not all rich people live in one place, not all the poor people live in one place, and everybody in between.” She said Kaua‘i is different from most communities in the United States, because “we are more or less a class-less society. One of the things that is attractive about our community is that people aren’t judged by their financial worth,” she said. “We have a free-flowing community, and I think I would like to see it perpetuated.” Affordable housing also should be built in areas where residents work, Yukimura said. If there was more affordable housing at the Princeville resort for workers, for instance, “we would probably have less traffic in pau-hana hours of traffic going into Kapa‘a,” she said. Affordable housing built in areas where residents work also would help ease traffic congestion in any part of the island, Yukimura said. Residents could save on gas and maintenance costs for vehicles, and drive fewer miles, she said;

• Government should have a clear plan to determine where growth can occur, so that infrastructure can be installed in a prudent and cost-efficient manner, she said. Government has not done a good enough job in building infrastructure to complement private development. Doing so could help keep housing prices down, she said. If developers have to build the improvements, the county help move projects along by floating bonds or providing low-interest, private-revenue bonds or tax breaks, Yukimura said;

• Some affordable housing units needs to be “permanently affordable.” That goal can be accomplished through the development of limited-equity housing cooperatives, Yukimura said. It is a program that has been implemented successfully in cities in California and elsewhere in the United States.

Those running housing cooperatives own the building, land and the units, and people buy a share in it “like a down payment” to become a member of the cooperative, Yukimura said.

Membership in the cooperatives allows people to move into single- or multi-family units, and benefit from real- property-tax deductions and tax deductions in the interest people pay for mortgage, Yukimura said.

Over the years, the savings people derive from living in a cooperative setting can help families buy homes on the open market, Yukimura said.

The cooperative housing is like a rental project, but gives people homeownership benefits and homeownership pride, Yukimura said.

Cummings noted, however, that residents will have to warm up to the idea of that type of property ownership, as they did to condominium purchases some years ago.

Cummings urged people to “think out of the box” in trying to find solutions to the current housing dilemma.

She recommended:

• Government officials should work with unions and “negotiate things;”

• Government agencies should conduct simultaneous review of development plans to speed up the permit process. “There should be a way that a permit can be submitted with a bar code and submitted to different departments simultaneously,” she said. But Yukimura noted the recommendation is already being carried out today in some form;

• Kaua‘i County officials should hire “licensed” people to review the permit applications. Yukimura indicated that idea has merit, and noted that when she was mayor, the Office of Emergency Permitting was contracted to expedite the review of building applications for people trying to rebuild homes after the devastation of Hurricane ‘Iniki in 1992;

• County officials should keep on record 20 to 30 pre-approved building plans to expedite the building of homes. The plans would be up to Kaua‘i County building requirements, and an architect can process the plans for a fee, Cummings said;

• Tax breaks should be given to landlords who rent to income-challenged folks. Yukimura said the council has made progress in that area, approving, while she has been on the council, an interim real-property-tax-relief program.

Furukawa said more affordably priced homes might be constructed if government officials expedited zoning and permitting processes for developers.

Delays cause project costs to go up, and are likely to affect the sales of market-priced homes and lots at Grove Farm projects, Furukawa said.

What is equally frustrating is that, as developers are granted approvals, “every step along the way, agencies are basically extracting what they can get out of you,” Furukawa said.

Agency officials should not be imposing conditions, because the developer, and not government, will pay for improvements, Furukawa said.

Grove Farm has put money “up front” for water wells, roads, drainage systems and sewage-treatment systems, and has paid up to $1 million for studies by scientists and work by attorneys to move a development forward, Furukawa said.

The government’s requirement to donate land for schools and parks also have contributed to higher development costs for Grove Farm, Furukawa also said.

Furukawa said Grove Farm leaders agreed with a government-mandated, 60-percent, affordable-housing requirement for one of its projects in the past.

But such a requirement today would make future projects undertaken by Grove Farm unprofitable, he said. The county determines the number of units now, and Furukawa said he hopes the requirement will be less.

In developing solutions to build more affordable housing, Yukimura said people should beware of “single-purpose thinking,” because it could limit opportunities from being explored.

She also said there is “no silver bullet” as far as finding a solution or solutions, and that in developing affordable housing “we aren’t building houses, we are building communities.”

From his point of view, Furukawa said the problems with providing affordable housing will persist unless changes are made.

“We’ve got to do things differently. Business as usual will not work,” Furukawa said. “And I am afraid unless we do things differently, our projects are going to be few and far between. The result is going to be limited.”

Staff Writer Lester Chang may be reached at 245-3681 (ext. 225) or mailto:lchang@pulitzer.net.