2023-01 Office of Housing and Community Development Affordable Housing Credits

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Executive Summary The goal of the Office of Housing and Community Development (OHCD) is to provide for the development of viable communities in Hawaii County by providing decent housing, suitable living environments, and the expansion of economic opportunities. The OHCD's Community Development Division is responsible for the planning, development, construction, and management of assigned housing and community -related projects in Hawaii County. OHCD's Planning Branch administers the affordable housing policy, Hawaii County Code (HCC), Chapter 11, through processing affordable housing agreements on rezoning. Hawaii County has a severe housing crisis. The lack of affordable housing often forces residents to leave the state. Chapter 11, Hawaii County's Affordable Housing Policy, mandates the inclusion of affordable housing in and throughout various market developments. The rezoning of parcels triggers Chapter 11. Zoning is administered through Chapter 25, Article 5, Zoning Districting Regulations. Chapter 11 provides a means for developers to satisfy their affordable housing obligation through seven options: developing finished lots, selling, or renting the required units on or off-site, conveying land or infrastructure, or purchasing affordable housing credits. At approximately 44%, purchasing has become the most often used method of satisfaction. See Table 3. In July 2022, media outlets reported a fraud scheme committed by a now -former employee of the Office of Housing and Community Development, questioning the efficacy of Chapter 11. In September 2022, Hawaii County Council's Resolution No. 467-22 requested the Office of the County Auditor conduct a performance audit. The audit sought to ensure the efficient issuance and utilization of affordable housing credits, including a comprehensive accounting of all issued, outstanding, transferred, or redeemed, and recommendations to enhance program controls, efficiency, and effectiveness. We also evaluated Chapter 11 of the Hawaii County Code and OHCD's written policies and procedures for implementing Chapter 11. While theft and loss can and do happen, the ability to conceal and deceive for a long time is symptomatic of inadequate internal controls. Decades of neglect in monitoring the program has left the department unable to evaluate its success. Executive Summary 1