COM 0935.001 2022-2024 - Laserfiche WebLink

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1.0 EXECUTIVE SUMMARY AND RECOMENDATIONS This report provides analysis and recommendations to support potential updates to Hawaii County's Affordable Housing ordinance established in Chapter 11 of the Hawaii County Code ("Chapter 11"). Chapter 11 requires affordable housing be provided as part of new residential developments where property is rezoned to create five or more residential units or lots and rezonings for resorts, hotels and industrial uses that add more than 100 full time equivalent jobs. The report was prepared by Keyser Marston Associates, Inc. ("KMA") for the County of Hawaii ("County"). 1.1 Summary of Findings The analysis presented herein evaluates the financial feasibility of representative market rate residential developments in a range of locations on Hawaii Island and their ability to sustain existing and modified affordable housing requirements. Residential developments in Kona and Kohala were found to be feasible assuming use of the existing option under Chapter 11 to purchase excess credits or at a range of fee levels under a potential in-lieu fee option. Mandating on-site production of affordable units was found to adversely affect project feasibility with existing on-site requirements. Residential developments in Hilo, Puna and Hamakua have constrained or challenged feasibility. New market rate units in these areas are also priced within or near to the income ranges Chapter 11 is targeting (up to 140% of Area Median Income). Despite more constrained feasibility, permitting data shows construction of new homes is occurring in these communities, primarily individual homes and smaller scale projects made possible by a supply of existing lots. The feasibility analysis was prepared in fall 2022 and reflects market conditions as of that time. Subsequent escalation in costs and increases in interest rates may have adversely affected feasibility relative to results presented herein although home prices also increased slightly. Conditions will continue to evolve going forward. In interpreting results, it is useful to keep in mind that policies may be in place for a number of years through both strong and weaker cycles in the housing market, and that projects will move forward when market conditions support it, and it is at that point when projects will be required to satisfy the requirements of Chapter 11. Like all inclusionary policies, Chapter 11 depends on market rate housing development for its success and will only create affordable housing if it does not create a barrier to market rate housing. While projects on the Big Island are challenged by high costs and other factors, Chapter 11 in its current form is not a primary driver of feasibility constraints. Feasibility findings for all project types evaluated are similar with or without existing Chapter 11 requirements. Keyser Marston Associates, Inc. Page 1 \\SF-FS2\wp\13\13996\001\014-001.docx