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HomeMy WebLinkAboutCOM 0200.041 2006-2008 s ,may. ,r -co LAND USE RESEARCH - FOUNDATION OF HAWAII ' ~ 700 Bishop Street, SCe. tgz8 ~ ~ Honolulu, Hawaii g6Bt3 Phone Su-4717 ~ Fax 536-0132 _J May 16, 200 The Honorable Pete Hoffmann, Chair and Presiding Member County Council, County of Hawaii 333 Kilauea Avenue (Ben Franklin Building) z°a Floor, Council Room Hilo, HI 96~zo BY FACSIMILE: (808) e61-8giz Dear Council Chair Hoffman and members; Subject: Bill No. >_56 Ordinance to Amend Chapter a (Housing), Article I, Section a-4(d), Hawaii County Code, to Include Affordable Housing Requirements for Industrial Park Developments My name is Dave Arakawa, Executive Director of the Land Use Research Foundation of Hawaii ("LURF"). LURF is a private, non-profit research and trade association whose members include major Hawaii landowners, developers, and a utility company. One of LURF's missions is to advocate for reasonable and rational land use planning, legislation, and regulations affecting common problems in Hawaii. LURF is opposed to the Hawaii County Council's possible reconsideration of Bill 156 because requiring industrial or commercia~ developments to build workforce housing is (1) unconstitutional, unless the County can demonstrate a clear rational and proportional nexus between market cost developments and the imposition ofbelow-market cost housing set-asides; and (2) counter intuitive and would only discourage investments in industrial and commercial developments, resulting in no new job creation at all. Proposed Bill > 56 According to Bill 156, the Housing Element of the Hawaii County General Plan (enacted as Ordinance No. o5-z5) clearly states that a policy of the County of Hawaii shall be that "large industries or developments that create a demand for housing shall provide employee housing based upon a ratio to be determined by an analysis of the locality's needs." The County Council finds that industrial developments which are comprised of multiple individual enterprises are, in fact, large industries which generate substantial employment and demands for employee housing. Therefore, such industrial developments should be subject to the affo°dable housing requirements articulated in Chapter a (Housing) of the Hawaii County Code. Gomm Ho. ZOO • Ref. 70: _ G Ref. Date MAY 16 2001 County of Hawaii, County Council Page z Affordable Housing Requirements for Industrial Developments Based on these findings, Bill t56 proposes to amend Chapter tt of the Hawaii County Code to require that industrial uses fulfill the affordable housing requirements. Specifically, the bill proposes that "industrial enterprises generating more than one hundred employees on a full-time equivalent basis, whether new or an addition or reconstruction to existing facilities, and including one or more businesses at the same or adjacent sites, must earn one affordable housing credit for every four full-time equivalent jobs created." Proposed Bill ><56 is Unconstitutional Bill 156 is unconstitutional because (i) there needs to be a rational nexus justified by thorough and detailed studies of the workforce jobs required and generated by the proposed commercial or industrial development; and it must satisfy a (z) proportional nexus test showing a legal justification in requiring a certain percentage of affordable units. The County must demonstrate a clear rational and proportional nexus between market cost developments and the imposition ofbelow-market cost housing set-asides. To illustrate further, a memo by Professor David Callies of the William S. Richardson School of Law addressing the Kauai County Council during their deliberation of affordable housing requirements for residential developments of five or more dwelling units and "large" resort commercial and industrial developments (see attached), explains the rational and proportional nexus requirement of such set-asides: "As to housing exactions or set-asides on commercial development, the princdple -indeed virtually only-federal case approving such set-asides did so only after the local government reguiring such set-asides engaged in thorough and detailed studies of the workforce jobs required and generated by the proposed commercial development, which requirements were then cut in half-far less than the 40% which the draft County of Kauai Housing Policy Ordinance would require of such commercial development. " Proposed Bill iS6 is Counterintuitive to the Development of Affordable Housing The general rule in Hawaii has been that overly aggressive affordable housing requirements do not result in more affordable units being built. Such requirements result in fewer affordable units being built. As with other counties in the state, the County of Hawaii has an insufficient supply of rentals and for sale units for all income groups. Maui County just recently passed a workforce housing policy to try and address this issue, Kauai County is also in the process of adopting a housing policy, and the State Legislature is also in the process of finding ways to increase the supply of affordable housing. LURF participated in the Joint Legislative Housing and Homeless Task Force, the Mayor of the City and County of Honolulu's Affordable Housing Advisory Committee, and Affordable Housing Task Force created by Senate Concurrent Resolution t35 in zoo4. A common finding in each of these efforts was that there was a need to provide more housing in all income categories, and that one of the major problems County of Hawaii, County Council Page 3 Affordable Housing Requirements for Industrial Developments was an overall lack of supply. The problem of an overall lack of supply cannot be solved by County exactions and inclusionary zoning requirements. The crux of the problem is not the new jobs that are being generated but, rather, the lack of affordable workforce housing available. These are two related, but distinct, problems which should not be linked together. The connection between housing and income should be understood by policy makers. Employers generally look for an educated work force and affordability in housing when locating or expanding businesses. From a public policy standpoint, if we want to attract employers here to provide higher paying jobs for our residences both now in the future, we need to insure an adequate supply of housing. We need both new employment opportunities and affordable workforce housing. Rather than placing the affordable housing requirement on investors who are bringing new jobs to the market, the County might consider what could or should be done to increase the supply of affordable workforce housing. Increasing the supply of housing would create housing opportunities to those who secure the new jobs. However, as we have seen in our State's past, housing exactions and inclusionary zoning does not create more affordable housing. Rather, exactions add to the cost of a new home because what is sold at abelow-market price is subsidized by a higher market price home in the same development. We caution the Council to carefully consider how best to balance government's intervention in the market system. Placing too many controls on the housing market may result in slowing the production and availability of new workforce housing units. While local government does not have an ability to influence income or interest rates, there are options; however, these options are usually limited to one of the following: i. GoUernmentApprouals--(Zoning/Permitting.) Government can either require units be built as a condition of the approvals or create incentives to stimulate the market for development of housing units; 2. Government Financing--(infrastructure, tax credits, public housing). Government plays the role of actual developer in CIP for infrastructure or public housing. Government also assists in providing tax credits for affordable housing projects. Any policy developed on affordable housing should consider all of the elements that are interconnected and that influence the housing market. Focusing on one element without considering the others, or focusing on one segment of the market, will not lead to a sustainable affordable housing policy. Furthermore, policy makers should be aware of the impact of housing exactions in a growing and stagnant economy. It wasn't too long ago when there was an oversupply of housing because of the depressed economy. There is no simple solution to the problem; however, if the goal is to have more product (housing) built, one suggestion would be to launch various initiatives to address some of the problems identified in each of the elements. County of Hawaii, County Council Page q Affordable Housing Requirements for Industrial Developments Conclusion LURF is opposed to the Hawaii County Council's possible reconsideration of Bill t56 because requiring industrial or commercial developments to build workforce housing is (i) unconstitutional, unless the County can demonstrate a clear rational and proportional nexus between market cost developments and the imposition ofbelow-market cost housing set-asides; and (2) counter intuitive and would only discourage investments in industrial and commercial developments, resulting in no new job creation at all. We appreciate the opportunity to express our opposition on this matter.