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HomeMy WebLinkAboutMIN PCPLUD 2023/03/21 (2022-2024) Policy Committee on Planning, Land Use, and Development 5th Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii March 21, 2023 CALL TO The regular meeting of the Policy Committee on Planning, Land Use, and ORDER: Development was called to order at 3:03 p.m., in the Council Chambers, Kailua-Kona, by Mr. Matt Kaneali`i-Kleinfelder, Acting Chair. ROLL CALL: Present: Ms. Cindy Evans, Member Ms. Michelle M. Galimba, Member Ms. Jenn Kagiwada, Member Mr. Matt Kaneali`i-Kleinfelder, Member Ms. Heather L. Kimball, Member(came in later) Ms. Susan L. K. Lee Loy, Member Ms. Rebecca Villegas, Member Absent& Excused: Ms. Ashley L. Kierkiewicz, Chair Mr. Holeka Goro Inaba, Vice Chair ACTING CHR KANEALI`I-KLEINFELDER: Just for everyone's information, I will be chairing today given that Council Member Kierkiewicz is in the Hilo Chambers or was in the Hilo Chambers. And her Vice Chair, Mr. Holeka Inaba is excused for the day, which according to our Council Rules, makes the Finance Chair, the impromptu Chair for the meeting. So, I'll be chairing today. MR. HENRICKS: Unless there's any objections. So, I'd like to know if there are, quite frankly. ACTING CHR KANEALI`I-KLEINFELDER: Unless there are objections from the Council, I will be chairing. Are there any objections at this time? MS. LEE LOY: Chair, no objections. I just want to clarify, though, it's at the will of the body, correct? ACTING CHR KANEALI`I-KLEINFELDER: Correct, barring any objections. PCPLUD-5 March 21,2023 MR. HENRICKS: So, to Ms. Lee Loy's point, it's kind of a byzantine process, that's basically, if the two chairs aren't available then the Finance Chair serves as chair until the committee can select another chair. So, if the committee would just be okay with the Finance Chair doing it, then that's fine. That's to your point about, at the will of the committee. However, if not, then the Finance Chair would just serve as a Pro Tem Chair until the committee can select another one. I believe that's what you're referring to, Ms. Lee Loy. MS. LEE LOY: Yes, thanks Clerk. But I nominate Matt Kaneali`i-Kleinfelder. Do I have a second? Vote on Motion to Ms. Lee Loy moved to appoint Mr. Kaneali`i- Kleinfelder Appoint Chair: to preside as Chair. Seconded by Ms. Kagiwada and (Approved) carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Kagiwada, Lee Loy, Villegas, and Acting Chair Kaneali`i-Kleinfelder—6. Noes: None. Absent: Committee Members Inaba, Kierkiewicz, and Kimball —3. Excused: None. MR. HENRICKS: Let the record reflect we appreciate recognition of the details of the Rules. So, thank you for that. Please proceed, Mr. temporary Chair. STATEMENTS The Acting Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: The following individual registered to speak and came forward when called by the Acting Chair: Toby Hazel: Comm. 141, comment. COMMUNI- The Acting Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 141: QUARTERLY AFFORDABLE HOUSING REPORT: OCTOBER 1 — DECEMBER 31, 2022 From Housing Administrator Susan K. Kunz, dated March 1, 2023, transmitting the above report pursuant to Section 11-19 of the Hawaii County Code. Motion to Close File: Ms. Kagiwada moved to close file on Comm. 141. Seconded by Ms. Villegas. Page 2 PCPLUD-5 March 21,2023 ACTING CHR KANEALI`I-KLEINFELDER: Council Members, we do have joining us today, Ms. Kunz. Thank you for being here today, Director. I apologize for the delay in getting to you. It's been a long day. Not so much a long day; more of a delayed day. But thank you for being here, and please get us started and we'll go to questions following your presentation. (Note: At this time, Office of Housing and Community Development Administrator Susan Kunz came forward to address the members of the Committee.) MS. KUNZ: Good afternoon. I'm Susan Kunz, the Housing Administrator for the Office of Housing. ACTING CHR KANEALI`I-KLEINFELDER: Thank you for being here. MS. KUNZ: So, thank you for this opportunity to present the first report to this Council regarding the Housing credits. I did want to take the time to point out, since this is the first report, that the starting place for us was the table that was in the audit report that you all received and wanted to share with you or point out that if you noticed, the total amount of credits that's reported there is different from what I am reporting to you. So, that's what I want to make sure that I clarify. So, the first thing that I wanted to point out is that the ordinance is asking me to report on excess credits. The auditor's report includes excess credits, but it also reports on other things. So, if you look in the auditor's notes, on the bottom of the second page where that chart is he is also including information about credits that are part of a developer's obligation. Not just excess credits, and I think the concern was that he wanted to make sure that we were tracking what was still obligated and not met. So, he didn't want to leave it off of the report, but he very clearly states in his auditor's notes that those numbers are included. So, what we did was, Number One, we removed all of the developers who had zero credits. So, that's why we've got a shortened list. So, I didn't include those developers that had a zero balance in the auditor's report. The second change that I made was that we decided, even if this is a report on excess credits, we decided to leave those developers with balances of bonus credits. Now, bonus credits are those credits that developers earned prior to Chapter 11. There is no Chapter 11 in place, but through a resolution, and by approval of the Hawaii County Housing Agency, credits were issued. So, in my report to you, you will see Chalon, Lanihau Properties, Parker Ranch. Those three entities are included in the report, but I'm highlighting that these are bonus credits. Page 3 PCPLUD-5 March 21,2023 In the note on my report, I am telling you that bonus credits are not transferrable. They're slightly different. They're not transferrable, and they can only be redeemed by the originating developer that earned them on a future project. The third adjustment that I made to this report is that I removed those developers who, by the auditor's notation, are not excess credits. So, they were obligations that are still out there that they still owe us, but they have not satisfied, so they have not earned excess credits. I'll give you an example. So, the first one that comes up on the table is Kona Three. And you can see that there is 67 credits that are listed as purchased. So, there was a lot of discussion between the Housing Office, the developer, and a couple of entities actually who had credits. The developer wanted to purchase MS. VILLEGAS: I'm sorry, excuse me, Chair. Ms. Kunz, where would I see that? MS. KUNZ: So, if you look at the audit report on Table 2. MS. VILLEGAS: It's not there, that's okay. No worries, I was looking at the wrong thing. Thank you. MS. KUNZ: Okay. No problem. That transfer of credits was never made, and they have not met their obligation. So, it's not excess credits. Therefore, I removed them from the report. So, there are three other entities that I did the same thing. So, Kona Three was the first one. Lava Kuakini is the other one and RS-10 Kalawa. Soon the auditor's report, you'll see credits listed there. But they are actually obligations that have not been met. They are not excess credits that were earned. So in the end, what I'm showing you here is our listing of the excess credit balance for a total of 1,301.2 credits. Does anyone have any questions? ACTING CHR KANEALI`I-KLEINFELDER: Council Member Villegas, go ahead. MS. VILLEGAS: Thank you. I'm going to have to go back into the auditor's report. I was looking for those numbers in here. So, thank you for helping me understand where I could find those, and I will do so, because Kona Three was the first one that came to mind. So, thank you for mentioning that. Couple of questions. So, these excess credits and this inventory of this number of excess credits, which is a lot, could, based on the current system at hand, be sold. Because these developers for whatever reason when they built whatever projects, they built ended up creating more affordable housing. Maybe not houses, but something within the project that earned them those credits. Page 4 PCPLUD-5 March 21,2023 MS. KUNZ: Perfect. Yes. MS. VILLEGAS: Okay. So, these could be sold to another developer based on our current system that would make is so the new development didn't have to create any affordable housing. MS. KUNZ: Correct. They could use them. They could redeem them to meet their requirements for anew project. MS. VILLEGAS: Okay, and the money that they used to buy these credits goes to these developers on this list? MS. KUNZ: Yes. MS. VILLEGAS: Okay. What's the potential dollar value of these housing credits as it stands? MS. KUNZ: Right. So over the years, Corporation Counsel, and this is over multiple Administrations, but they've advised us to not get involved in the marketing of these credits. It's not in the ordinance, so we really don't know. I think in the auditor's report he reported to the Council that these credits' values could range. I think he said from 7,000 to 75,000 (dollars) or something like that. MS. VILLEGAS: I'm sorry, I'm just going to do a little bit of math. Just for, not only for myself, but for the public who may be watching. If we got 1,301.2 excess housing credits out there, and at$7,000. That's, sorry, it's over $9 million. And I'm going to estimate that at$75, it's going to be over $90 or $900 million or somewhere around there. So, in a time and place in a community that has a drastic affordable housing crisis, the system that was created has left us now with a program that would or could essentially eliminate any new developer if they wanted to buy these housing credits from having to build that. It's preposterous to me, my mind is blown that this is even the system at hand. MS. KUNZ: Yeah, so, these are some of the things that we are contemplating as well working with our consultant. Now, I think one thing to consider is that additional affordable housing units have already been produced, and that's why they were awarded the excess credits. So my understanding when I talked to our predecessors, the people who were involved in some of this creation, right? The credits were used as an incentive for developers to try to get them to do affordable housing. So, the plan was that they would be offered housing credits to do additional housing units. So, housing units technically were built. But you are absolutely correct. Page 5 PCPLUD-5 March 21,2023 MS. VILLEGAS: But were they a unit or were they like a specific housing unit? Because it's my understanding that it wasn't really like—okay, there's a requirement, right? You build, it was 20 percent I believe if you build 100 homes, my assumption was 20 homes would be affordable. But that actually isn't the case. MS. KUNZ: Well, because Chapter 11 awards credits based on the AMI(Area Median Income) that you're building. So, they're incentivizing when you're doing a lower AMI by giving you two credits, right? But if you're doing at a 140 percent AMI, they're only giving you half a credit. So,just to complicate things further, Chapter 11 does this. But I think back in the day, it was a means again to incentivize production of lower AMI units versus higher AMI units. So, it's not a one for one. In any case, we have these credits that can now be now remember you cannot trade or sell the ones that are starred on this report, right, because those are bonus credits. Those were given prior to Chapter 11, but the rest can. And you're absolutely right. They are, you know, technically they can sell them and use them to redeem them to meet a future requirement. So, it doesn't do anything for us. So, you know, some of the work with the consultant is looking at other types of incentives perhaps, you know. So, that's some of the discussion that is currently going on. I'm hoping to come back to the Council with a report from the consultant in the next couple of months and we can wrap this thing up in hoping that we can consider some of those other kinds of incentives, right? But we'll see. MS. VILLEGAS: Are there other municipalities that operate with the same MS. KUNZ: Yeah. There are other municipalities, even nationwide, but not a lot. In fact, it's not legal in certain states. MS. VILLEGAS: I would definitely align with that myself. MS. KUNZ: You know it is kind of backing it up, it's an inclusionary zoning policy and you have to remember, right, inclusionary zoning is a market-based strategy. It's based on market rate housing. And if you don't have market rate housing, you're not going to produce affordable housing. Chapter 11 is 35 years old, so it's time to take a look at it. MS. VILLEGAS: For myself I see the need, and I see it happening already in the value systems of people in positions of leadership both in Government, and in certain companies, and building companies, are transitioning from. Page 6 PCPLUD-5 March 21,2023 You know growing up here I really felt the prevalence was kind of this neediness for external resources. We have to attract this business, and we have to attract these investors and developers from recognizing that we have one of the most valuable resources on the planet. And that it should be a privilege for anyone to get to come and utilize the resources on this island, that it is okay to challenge the status quo when somebody says, "well, that doesn't make enough money." Okay, well then, what's the number? How much money does a typical construction company or developer need to make? What's the percentage point that, you know, hits their bottom line profit that then makes it worth the investment for them? One of the numbers I heard was 20 percent. Then my response was, well then maybe it needs to be 15 percent. Maybe we need to challenge the systems that have been at play. Because the long-term regenerative future of our island home continues to rely on outdated, outmoded, and now obsolete chapters, literally, which have left us in a housing crisis and continues to jeopardize the future of our home and our people, our Maka`ainana, our working class, our people that work and are from this place being able to live here. So, thank you for your continued diligence, research, and exploration of other options. How do we get ourselves out from underneath this loophole? And in my mind, the term Ponzi scheme keeps coming up. But I look at the definition and it's not exactly like a Ponzi scheme. But it just sounds like this incredible loophole created by those who, you know, oftentimes write the policies or lobby those who write policies that benefit a narrow minority instead of the majority. I'm grateful we are at a tipping point where we have to reassess these things. So, thank you for bringing these numbers to us. No matter how concerning they are, it's better to know where we stand than to be left wondering. So, mahalo for that. I yield. ACTING CHR KANEALI`I-KLEINFELDER: Thank you, Council Member. Now, it's Member Galimba. MS. GALIMBA: Thank you. I was more interested on the first page, actually, which is the affordable housing units developed and sold, which are zero. And also, well basically zero for everything except the affordable housing rental units constructed and being rented, which we have some good news there. Is that all one project, or is that several? MS. KUNZ: You're talking about the 60 units that I'm reporting? This is one project. It is actually Kaiaulu O Waikoloa in Waikoloa Village. They came online in December I believe of last year, and at last reporting I think they are still trying to lease up units. But, yeah, that's the only completed project that we had during that time period. Page 7 PCPLUD-5 March 21,2023 MS. GALIMBA: October to December of last year, right? MS. KUNZ: Right. MS. GALIMBA: Do you have anything that you think will be potentially on the next—well, one question, the 60, is that complete or are they continuing to build? MS. KUNZ: Kaiaulu is complete at 60 units. MS. GALIMBA: Okay. And then, I mean we have, our Governor has, you know, it's a priority and I think there was a ground-breaking on something. I can't remember now. Was it an affordable housing project here in Kona that just had a ground-breaking I think last month? So,potentially that could be on here. MS. KUNZ: That particular project is probably not going to be on the list for a few years. So, the first phase, we've already started work on site. You should see equipment out there. But this first year, will be grading of the six acres and the insulation of the road. The second phase, I shouldn't say the second phase. Then we are going to do vertical construction on 16 emergency units with a community center, shared bathrooms, and shared eating spaces. So that would be the first what we're calling phase, I guess. MS. GALIMBA: Okay, so it's more of an emergency shelter. MS. KUNZ: Yes, the first grouping of units is going to be more emergency shelter in nature. And then on the backend, you're going to see 48 permanent housing units with support services to finish out the full six-acre project. But we have a couple of other projects that we're anticipating finishing in the next quarter. So, I'm hoping to see more numbers on this worksheet. There's another project, 140 units in Waikoloa Village that's coming up. I think it's supposed to be finishing up in April. We've been working closely with Hope Services on a project out in Puna. Twelve units for kupuna housing. So, I'm hoping that one will finish in the next quarter as well. So, we see, I think those were the two projects we're anticipating to finish in the next quarter. MS. GALIMBA: Thank you. So, I'd be very interested to hear some of the other strategies that, you know, your consultant might bring forward. Yeah, because I mean, I've been hearing that, you know, the developers are not—somewhat of an ambiguous creature, but we do need them, and I just been hearing that basically the projects don't pencil, especially affordable housing projects on this island. So that's very concerning for our working people. So, would love to—looking forward to seeing some of those other options, and perhaps it might not even be about credits or about money. It may be about, you know, helping, sort of easing the regulatory burden and not necessarily changing the rules, but just helping Page 8 PCPLUD-5 March 21,2023 folks that want to build affordable housing get their projects through our process, so that those projects get to the front of the line, because that's what we need. We don't necessarily need another Kukio or anything like that. We need affordable housing. MS. KUNZ: I hear you. MS. GALIMBA: Thanks. ACTING CHR KANEALI`I-KLEINFELDER: Thank you, Council Member. Council Member Evans, go ahead. MS. EVANS: Thank you. So, this is your first report based on our ordinance, correct? MS. KUNZ: Yes. MS. EVANS: Really good. But what I don't see isso what I see is rental housing, senior rental housing, and tax credits. So, they didn't ask for other types of affordable housing that you've been involved in? Is there something that seem like a workforce? I'm thinking, you know, we do workforce housing projects. We do AMI's, adjusted median incomes. So, we have projects based on certain groups that we're trying to like target. But I don't see that targeted information in here. Was that something like an oversight? MS. KUNZ: Would you like to see in the reporting of say, you know, the affordable housing inventory list? Would you like to see AMI's listed? MS. EVANS: I mean I would only because I think it's such a wonderful chart. I mean you put so much information there, but it looks like there's something missing. MS. KUNZ: I have that information, and quite honestly, I want it to be as succinct, and you know, follow the instructions that were written in the ordinance as much as possible. But I can provide that information, and I just want you to know that affordable housing inventory is anything from 30 percent to 140 percent AMI. So, I think that's what you're saying, right? MS. EVANS: I mean the community. When you're having community meetings, you know, the number one topic is affordable housing for me. And yet, with that information, it would empower me to say, yes, we got X amount targeting for this income level; X for this income level, right? We're working all the different, you know, we are tackling—we're doing it by targeted populations. I think that for me, empowers me to tell them that we're really targeting and really working on Page 9 PCPLUD-5 March 21,2023 that, you know. For me, it would be helpful. I don't know about everyone else, but I think it's nice to have it all in one spot, because it's such a great report. The other thing is, the lady that testified, when I look at the title of the report, you call it Affordable Housing Report, and I think that might have been confusing in a way because it sounds like we're reporting on affordable housing. And some of these projects, you know, they were commenting on how it's getting managed and how the advisoryso, it went way beyond, you know, what this is about today what we're talking about. So, I'm just curious, you know, maybe we sent out the wrong message by the way we titled it. Because it's invited other people to comment about other things going on in these housing projects. Just a side comment. I don't know how we address the fact that people may think it's an opportunity to weigh in on what's happening on these affordable housing projects. But, anyway,just a comment. MS. KUNZ: Right. So, I am following the ordinance the way that it's written. But I did break out the affordable housing inventory into rental housing and senior rental housing. So, you have a breakdown of that. MS. EVANS: So, I appreciate it. I actually think your report is great, and I'd like a little bit more—also, maybe inadvertently, we titled it to where people think they can weigh in now on what's happening, but anyway. Thank you for what you do. Thank you, Chair, I yield. ACTING CHR KANEALI`I-KLEINFELDER: Thank you, Council Member. Council Member Kagiwada. MS. KAGIWADA: Thank you, Chair. Thank you for being here, Administrator. So, I also think it's a great report. Couple things I was wondering, are emergency temporary housing and shelter spaces included in this list? MS. KUNZ: No. MS. KAGIWADA: Okay. So, for instance, Hale Kulike at 34 Rainbow Drive, those are permanent? MS. KUNZ: It's permanent. MS. KAGIWADA: Okay, great. So, as we move forward with some of the services now that you're contracting for work, is it possible to talk about like permanent supportive housing if there is some and kind of just call that out where that exists in the future? MS. KUNZ: Okay, I think we can do that. Page 10 PCPLUD-5 March 21,2023 MS. KAGIWADA: Okay, that would be really helpful. Thank you so much. MS. KUNZ: You know, as you're saying that, I need to work with the staff on that because supportive services could be offered at any one of these existing facilities. So, I think as we're moving forward, if we identify that services are being offered, and it wasn't originally set up as a permanent supportive housing project, but you know, that kind of waffles a little bit. MS. KAGIWADA: Kind of a moving target. MS. KUNZ: But I can try to work with staff on that. I think I understand what you're saying. If we know the services are there. MS. KAGIWADA: I'd just like to know because you're moving forward with some of these more in-depth housing services places. I think it would be really nice to know, like where they are and kind of see—like you can see here where places are around the island and stuff. Alright. Thank you. I yield. ACTING CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball. MS. KIMBALL: Thank you, Chair. And thank you, Administrator Kunz for putting this together. You know,just for some of the comments of folks about other things and additional things that could be added to the report. When Council Member Inaba and I first put this together, the real intention was like just to know how things were moving. That's the big piece of this. With the credits and the accounting, like there was no mechanism to report to us when things moved around. And so, I just want to be clear, like this is the baseline report, and what's going to be more interesting to us as subsequent reports come is just the movement of credits, the additional units. I know I'm the one who loves all the data from all the different angles. At the same time, you know,just trying to be sensitive to additional work that could be in for the department, but what do we really need to know from these reports? For Holeka and I given as Council Member Villegas pointed out, these credits are very valuable, but we just wanted to know where they were going. So, this gives us that baseline to answer that question. So, mahalo for taking the time to put this together. Really appreciate the lens that this is going to give us in the future, and help inform how we look at revisiting Chapter 11. You know, I think you said this the other day that when the credit system was created, there was a genuine intention to do good in that process, like Page 11 PCPLUD-5 March 21,2023 it was meant to create a funding mechanism. You could look at a nonprofit that's built exclusively affordable housing units. They would then be able to fund the next project by selling the credits they earned on a project, like there was a real plan here. It just doesn't work out exactly as intended, as things do. So, you know, it's been a long time. It's time to revisit it. There's a lot of different things we've talked about. Different approaches but we're definitely better informed now. But this credit thing is something that we'll always have to deal with. We can't take these away from people. So, anyway, a little long winded at the end of the day, but I just wanted to let you know that I appreciate this, and I look forward to coming up with a better system in the near future. Thanks. ACTING CHR KANEALI`I-KLEINFELDER: Thank you. Hilo? MS. LEE LOY: Yes, please. ACTING CHR KANEALI`I-KLEINFELDER: Go ahead, Council Member. MS. LEE LOY: Thank you. You know, building off of what the rest of my colleagues ask for, I really would love to see how these—well first of all, in Exhibit 1, where these fell within the AMI. I think I heard Director Kunz mention that she already had that information. And so, I would love to see that. I have a couple of questions, though, Susan. You know, I always hone in on the Department of Hawaiian Home Lands (DHHL), and on this chart, you have 107 units. I was just curious because we know some of these credits are applicable just within a particular mile radius, and I was just wondering if any thought had been given to plotting that radius with these credits? MS. KUNZ: Right. So, Chapter 11 allows for a 15-mile radius. So, developers who earn credits, they can only be redeemed for use within a 15-mile radius. The DHHL credits, these are island-wide, and it doesn't matter what AMI the units were built at. It's a one for one award. You're having this discussion with DHHL about a mile radius would mean changing the Act, and so, you know, thank you very much for working with me. We've been testifying. There are bills going through the Legislature right now, and they actually did amend the bill to include language that will allow the Office of Housing to negotiate with the DHHL on the use now of those credits that are earned. So, I'm hoping that this goes through and the bill passes, as amended. But it would require that change in the law, I would think. Maybe with this opportunity and the ability to negotiate with DHHL, we may be able to address that issue as well. Page 12 PCPLUD-5 March 21,2023 MS. LEE LOY: Thank you for that, Susan, and you know, I'm trying to do a little bit of math myself. You know, we have the ones with bonus credits, and if we exclude DHHL because they don't have a radius limitation, we're down to 860 units. So, have we plotted on any map or any GIS (Geographic Information System) system where these units would generally be available? MS. KUNZ: Yeah, thank you for asking that. Actually, I have in my budget funding for a GIS mapping system, and I think this is definitely some of the information that can be mapped out. Just for our information, right, where the potential for the use of these credits would be? But we are hoping to do that, definitely. MS. LEE LOY: Oh, absolutely Susan, to know where they are. But I also think it would serve a larger planning purpose, that if we are chasing housing and the need for housing, where we should direct our infrastructure dollars to provide the water, or the roads, or the park. I think it would be an incredible tool for Housing to know the limitations of this and how to better plan, so that we can realize the housing. MS. KUNZ: Yes, I agree. MS. LEE LOY: Then I had a question regarding, I guess it's Exhibit 2, which is the Affordable Housing Rentals. And thank you for breaking it out, because we know senior housing is different from rental housing. But I was curious to know, you have units, but what is it compared to occupied units? So, for example on Exhibit 2, you have 2,100 rental units, and I'm curious to know if all 2,141 are occupied? MS. KUNZ: Good question. I have an assigned staff who is an Asset Manager, whose job is to annually go out and do an audit of properties, especially those that we have leases on. And at that time, this information is assessed but I don't have a complete listing. Some of these are properties that we don't manage directly. The developer or whoever they contract with manages. So, it would take some work to do some outreach to get that information. MS. LEE LOY: Okay, no problem, Susan. Maybe just food for thought, and maybe just an offline conversation. Only because I love where we are and I love at least, like Council Member Kimball mentioned, we had no baseline before. But now that we do have one, you know, how do we use it as a tool to do the good work that everybody has to do, including us, right? Planning for and making better decisions. So yeah, I would be really curious to know of the 2,141, how many are occupied. Then building off of Council Member Evan's question about the AMI, if we had a chart of where they fall in the respective categories. Because I'm curious to know Page 13 PCPLUD-5 March 21,2023 if we're stacking too many housing units at the 60 percent AMI and not building enough for our true workforce, like our skilled workforce like nurses, and firefighters, and police officers that would fall in the 120 to 140 percent AMI. I would love to see if we know if we're building the right type of housing for that middle-gap group. MS. KUNZ: I hear you, and let me point out that I do know this list is mostly made up of 60 percent AMI with some 80 percent AMI scattered. So, if you think about it, I'm saying that this list is made up of properties that have sought some type of Government assistance subsidy. So, they're going to be at 80 percent and below. So, we've done a really awesome job, right, producing units at that lower level. As I'm starting to do community outreach, I'm hearing exactly what you're saying. And so, I am a proponent of making sure that we're doing the range up to 140 percent AMI. It's necessary. The Housing Study says that the need for housing is pretty even across the board all the way up to 140 percent, and 140 percent is our workforce. You know, so, I will definitely provide you with that information, and you'll see what I'm telling you. MS. LEE LOY: Yeah, I think that would really open our eyes a little bit more as we make decisions around affordability, because I hear my colleagues talk about local families. But our local families are our teachers; they're our nurses. They're the skilled workforce. If we're not making decisions as a Council to develop that, of course, we're going to see more and more of them leave for places that are less expensive and they can take their skillsets and thrive. So, I would really be curious about that. MS. KUNZ: Okay. MS. LEE LOY: One other question, Susan, and I don't know if this exists. Of the affordable rentals, yeah, more of the affordable rentals, how many of them kind of were given expedited processing? Whether it would be, you know, our building permit process to realize these units, because I just want to judge the efficacy of that incentive. MS. KUNZ: So, under our current programs, that would have been under the 201H program. So, I would need to take a look at that information, like try to identify those projects on the list that went through a 201H, is that what you mean? MS. LEE LOY: Maybe not so much the 201H, but we also know that we were trying to incentivize affordables, you know, because we had such a lag with our Page 14 PCPLUD-5 March 21,2023 building permit process that they were given kind of pathways to get through that process quicker, based on the acknowledgement that they were providing, you know, necessary housing. Do we have that information? MS. KUNZ: So, you know, I've been working with Public Works and have actually presented them with a kind of a process that they would consider, and so, we're actually getting very close to doing that. But identifying 100 percent affordable housing projects that would be expedited. So, I'm really feeling good that we're going to have this process secured, and actually picking out a couple of projects that are in the pipeline right now that I can kind of move through and work on and test the system. So, nothing on this list has gone through that process yet. This is brand new. MS. LEE LOY: Great. Excellent, and like I said, I think we're all trying to do better. You know, we're all trying to crack this nut, and what I hear my colleagues saying is, you know, Chapter 11 is archaic and hasn't met up with the needs, and we now have an audit. But there's also other incentives, right, other carrots or other sticks that are available to us, but I want to get a clear picture of everything that we're trying to achieve to help us make good decisions. ACTING CHR KANEALI`I-KLEINFELDER: Ms. Lee Loy, your timer went off. MS. LEE LOY: Okay, thanks, Chair. You know, I would want to lean in on my colleagues a little bit. We've had some wonderful discussions, but we are missing Council Member Inaba who co-authored the ordinance to do this good work, and I was just wondering if there was an appetite from my colleagues to postpone this for one more committee meeting so that our colleague, Mr. Inaba, can begin to digest this and ask, you know, whatever questions he felt was important. I yield. ACTING CHR KANEALI`I-KLEINFELDER: Thank you. Council Member Kimball. MS. KIMBALL: Thank you, Chair. And thank you for suggesting that Council Member Lee Loy. I think he probably would like the opportunity to discuss this. I think even though he's home sick, he's actually watching the proceedings today, but he probably has comments for us. So, if you don't mind, can I just postpone this to—when is the next meeting, Mr. Clerk? April 4h. Okay, motion to postpone the motion to close file. MS. VILLEGAS: I have one more question. ACTING CHR KANEALI`I-KLEINFELDER: Can she before you do that? Page 15 PCPLUD-5 March 21,2023 MS. KIMBALL: Okay, I will hold off. ACTING CHR KANEALI`I-KLEINFELDER: Thank you, Council Member. Council Member Villegas. MS. VILLEGAS: Yes, I just had a quick question. Administrator Kunz, I was hoping you could share with me what new internal control methods have been put in place due to the prior illegal activities as related to housing credits. What internal controls are now in place to ensure we don't end up in any similar circumstances? MS. KUNZ: Yeah, so much has changed, and so much has changed even prior to the audit as he outlined in the audit report. So, we actually do have a written policy and procedure manual that outlines a definite process. I think the biggest piece is the segregation of duties, where in the past it was only one individual touching this whole process. I actually have a team of people working on this. Yeah, so much has changed where the Division Manager would do the final kind of overview of the work, and a Housing Specialist would be assigned to work with developers. And I actually have a couple that can do this, and not just one person. Once a housing agreement, for example, might be finally executed, which goes through the Division Manager and myself, Corporation Counsel, and the Mayor. On the backend, the monitoring piece, making sure that a development is completed; that the requirements have been met. The Asset Manager would actually step in to do that assessment, not the specialist that negotiated with the developer. So, there's huge changes internally. We're still using a spreadsheet system. I don't have that software in place yet, but I take to heart what Council Member Inaba said at our last meeting. So, really looking at a couple of different software. Regardless of whether or not we move forward with a revised Chapter 11 that includes a housing credit system, I'm looking to secure something like that to continue managing what's in place. Because no matter what, even if we did away with the housing credit system, we would still need to manage what we have. So, those would be the big pieces. Some of the things we're currently working on with Corporation Counsel is trying to finalize templates of contracts, of forms that gets submitted from the developers. Reporting requirements, so we haven't finalized those documents yet, but the staff is working with Corporation Counsel to do some of those things. So that you actually have a template that only certain data can be changed or added, you know. I think it's really going to secure what we do. And the rest of the housing agreement, for example, would really mirror Page 16 PCPLUD-5 March 21,2023 Chapter 11. No changes, right? So, I think things like that really secure our system. MS. VILLEGAS: Okay, thank you. So, that would mitigate any accidental replication of the situation that happened before, and would those systems, you know, you mentioned a couple developments that have not. You know, they have affordable housing requirements that have not been fulfilled. Would that help mitigate those kinds of projects? I know that Kona Three was built 30-some odd years ago, and they're coming back trying to get permission and time extensions for the fourth phase, but they never fulfilled their affordable housing requirements on the first three phases. So, will that help mitigate those things? MS. KUNZ: I don't know that the Government can interfere with the developer's ability to finish a project, right? So, we have a housing agreement that outlines, if you do market, you have to produce so many affordable based on Chapter 11. So, you know, it's this constant monitoring, and now we know awards of credit don't happen until after projects are complete, right? So, that type of work will continue. I don't know if I'm missing anything further of what you're asking of me. MS. VILLEGAS: I suppose it's related to; you know, you have a project that was built, and they never fulfilled their affordable housing requirements. So, it wouldn't be a matter of stopping them, but what are the—do any of the new policies, and procedures, and templates being created provide more teeth, for lack of a better word, in requiring where do we go when they still haven't fulfilled that? MS. KUNZ: So, some of the things that we've been talking about is putting timelines on things. But we haven't secured that or finalized it, I should say. Otherwise, you know, a lot of times if money or the ability to get financing is dependent on their performance. You know, things like that would really give you teeth, but we don't have that in this situation. So, yeah, it's a tough one. MS. VILLEGAS: Yeah, so some of the responsibility in my mind, then falls to Council when we have a project like this one that is looking for to do a Phase 4, and they've never fulfilled what they needed to for the first three. So, that's that awareness, and accountability, and kind of the buck stops here kind of a thing. Okay, thank you for confirming that and continuing to do this dance as we try to navigate our way into getting people into homes they can afford. Thank you, I yield. ACTING CHR KANEALI`I-KLEINFELDER: Thank you. Coming back to Hilo. Page 17 PCPLUD-5 March 21,2023 MS. LEE LOY: Thanks Chair. I'm okay. ACTING CHR KANEALI`I-KLEINFELDER: Okay, thank you, Ms. Lee Loy. Council Member Kimball. MS. KIMBALL: Thank you, Chair. Council Member Inaba was actually watching. So, he just texted back. He says he's all good, so we can go ahead and proceed with closing file on the communication today. But I just wanted toI think you were excused that day we went over the audit. A lot of the stuff that Susan covered is covered in more detail in the audit about the actual implementation strategy to address this. So, thank you for your time here, and I will not be postponing this communication. ACTING CHR KANEALI`I-KLEINFELDER: Thank you, Ms. Kimball. Okay, seeing no further discussion, Ms. Kunz, thank you for being here. I have a couple of questions. The first Exhibit 1, I'm thinking of the auditor's report. There were a handful of developers in the auditor's report who had credits but had yet to build anything. In this set of mass credits for what they were proposing to build, are those included in this Exhibit 1? MS. KUNZ: Let me see. So, you're talking about credits that were pre-awarded? ACTING CHR KANEALI`I-KLEINFELDER: Yeah, the pre-awards. MS. KUNZ: Okay. So, there were seven entities that we were looking at with the auditor. ACTING CHR KANEALI`I-KLEINFELDER: Yeah, there's about that many who had been pre-awarded. MS. KUNZ: Three of them actually completed their requirements. ACTING CHR KANEALI`I-KLEINFELDER: Okay. MS. KUNZ: There were four of them that did not. Okay, so let me see. So, Lava Kuakini was one of them. They are not on the report. Luna Loa is not on the report. Suffolk is on the report, and West View is not on the report. ACTING CHR KANEALI`I-KLEINFELDER: Okay, so Exhibit 1, those entities possess affordable housing credits, correct? MS. KUNZ: Yes. Page 18 PCPLUD-5 March 21,2023 ACTING CHR KANEALI`I-KLEINFELDER: But they're not on this report. MS. KUNZ: They're not on the report. ACTING CHR KANEALI`I-KLEINFELDER: Why? MS. KUNZ: So, for example, there's two of them that are currently under Federal investigation. So, we're not touching those. ACTING CHR KANEALI`I-KLEINFELDER: Is that because they're under investigation or because they're not going to get those credits? MS. KUNZ: Potentially, both. ACTING CHR KANEALI`I-KLEINFELDER: But right now they do own them. MS. KUNZ: Hold on just a minute. ACTING CHR KANEALI`I-KLEINFELDER: Ms. Strance, I'm always borderline. I can see her. I'm not trying to go there. I'm just trying to figure out if they need to be on the report or not. MS. KUNZ: You see, you're making her come up here. ACTING CHR KANEALI`I-KLEINFELDER: I'm making her nervous. MS. KUNZ: Right. Okay. So, there were some that's correct, you're right. There are entities that had credits and the credits have been seized. So, I'm not reporting on them. ACTING CHR KANEALI`I-KLEINFELDER: Okay, so if the credits have been seized, they're not here. MS. KUNZ: Yeah, exactly. ACTING CHR KANEALI`I-KLEINFELDER: That makes sense. MS. KUNZ: So, they're not really under my oversight. ACTING CHR KANEALI`I-KLEINFELDER: Okay, and the reason it stood out to me is I remember the names, but I didn't see them on the list. And I see the bonus credits on the bottom. I'm looking at Exhibit 1, Status Report of Developers in Possession of Affordable Housing Credits. So, I was trying to put all those pieces together between the auditor's report and this report in front of us. Page 19 PCPLUD-5 March 21,2023 Okay, so if they've been seized and they don't possess them now, they're not on the list, correct? MS. KUNZ: Right. ACTING CHR KANEALI`I-KLEINFELDER: So, this is actually what is outstanding. MS. KUNZ: Right. So, I've removed those from the report. ACTING CHR KANEALI`I-KLEINFELDER: Okay, and some were sizable. There's a sizable amount within those developers. MS. KUNZ: I can't remember the numbers, but I want to say, yes. ACTING CHR KANEALI`I-KLEINFELDER: Yeah, okay. And then bonus credits. This is a new term, or is this an existing term? MS. KUNZ: I believe it was a term that was referenced in those resolutions. ACTING CHR KANEALI`I-KLEINFELDER: Okay. Thinking back to some of the comments I heard, it may be good just to provide the ordinance that outlined this report be submitted to the County Council. So, as you do get questions, it's easy to see what was initially requested as part of this report. If you want to branch out further? MS. KUNZ: So, you want me to include the ordinance in the report? ACTING CHR KANEALI`I-KLEINFELDER: Just soI would say, if it makes it easier for everyone, because the information on what was originally requested by that legislation and why you're here today; what you're supposed to show us via the ordinance, but what wasn't on there is real clear. So, as we're asking for different things, you can say, well that wasn't on your original list. I'm happy to do it, but it wasn't on my guiding document, yeah. MS. KUNZ: Okay, so make a statement? ACTING CHR KANEALI`I-KLEINFELDER: In the future,just as an attachment, so we can see it. I think it will help you as far as, well, that wasn't asked of me in the beginning. MS. KUNZ: Okay. I mean, we reference the ordinance in the memo, in the report, but you want me to attach it? ACTING CHR KANEALI`I-KLEINFELDER: It might be good,just saying. Page 20 PCPLUD-5 March 21,2023 MS. KUNZ: Got it. ACTING CHR KANEALI`I-KLEINFELDER: Then, overall, I'm thinking about this as a whole, and in alignment with all the comments I heard today. You know, the units that we have; the credits that are outstanding. I believe the purpose of this, and I don't want to speak for anybody, was really to see how the credits were flowing and who's doing what right? Okay. But also, I think it should be in the lens of where we need to go, and I would think just from real basic data based on, there was an affordable housing report that was done a long time ago, had a bunch of County names in it, it's so thick. It's on my desk, but it outlined how many units they think that we need, what we're shooting for so we can see kind of, this is what we've got; this is where we're supposed to be. MS. KUNZ: Are you talking about the Hawaii Housing Policy Study? ACTING CHR KANEALI`I-KLEINFELDER: Yeah, that might have been the one. MS. KUNZ: Okay. So, that is the number that I keep referring to. The 10,000 units is in that report. ACTING CHR KANEALI`I-KLEINFELDER: Yeah, it had by certain dates we need this many houses, you know, and this much, and this much AMI. Just a real summarized version may help us see this. This information in the overall lens of where we're headed. That's all I could really add to this. MS. KUNZ: Okay. ACTING CHR KANEALI`I-KLEINFELDER: But you are going by what was requested, I totally understand that. MS. KUNZ: Yes, yes. ACTING CHR KANEALI`I-KLEINFELDER: That's why the I think the guiding legislation might be good to attach to this, so you can just say, I don't have to do that, but if you want that I can. Yeah, no, I think this is good so far. It's definitely something to build on, and as you come in again and again every quarter, we begin to see the flow and what's going on and understand better. Page 21 PCPLUD-5 March 21,2023 MS. KUNZ: No, I'm happy to include it if the data is easily attainable, I'm very happy to do it. ACTING CHR KANEALI`I-KLEINFELDER: Yeah, especially if this becomes a document that helps guide decision making, then it should line up with everything else that we have that ties into data we've collected over the years without making this cumbersome. We don't want a thousand-page report in front of us every quarter. That's a lot for you guys. But just real simple, summarized, to the point. MS. KUNZ: Thank you. And in addition, I haven't forgotten that the ordinance does also ask me to submit to the Council within 30 days after execution, any affordable housing agreements. So, that would be separate from this. ACTING CHR KANEALI`I-KLEINFELDER: Okay, beautiful. That's all I got. Thank you for being here today. Sorry, we're running late. Okay, thank you, Director. Council Members, barring no further discussion, we do have the motion on the floor to close file on Communication 141. Any further discussion? Seeing none, motion is on the floor, all in favor of closing file? Vote on Comm. 141: The motion to close file on Comm. 141 was carried by Filed the following voice vote: Ayes: Committee Members Evans, Galimba, Kagiwada, Kimball, Lee Loy, Villegas, and Acting Chair Kaneali`i-Kleinfelder—7. Noes: None. Absent: Committee Members Inaba and Kierkiewicz—2. Excused: None. ACTING CHR KANEALI`I-KLEINFELDER: That does bring us to the end of our agenda. ADJOURN- There being no further business, at 4:10 p.m., Ms. Kimball moved to adjourn the MENT: meeting. Seconded by Ms. Kagiwada, and carried by the following voice vote: Ayes: Committee Members Evans, Galimba, Kagiwada, Kimball, Lee Loy, Villegas, and Acting Chair Kaneali`i-Kleinfelder—7. Noes: None. Absent: Committee Members Inaba and Kierkiewicz—2. Excused: None. Page 22 PCPLUD-5 March 21,2023 CHR. KIERKIEWICZ: That's brings us to the end of everything. We are done. We are adjourned. Have a good night. Approv di CA i r 2 62 PA:( Ms. Ashley L. Kierkiewicz, Chair (Date) Policy Committee on Planning, Land Use, and Development AK/dt Page 23