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HomeMy WebLinkAboutCOM 0200.044 2006-2008 Page 1 of 1 Murashige, Laura From: David Arakawa [darakawa@lurf.org] Sent: Friday, June 01, 2007 9:14 AM To: counciltestimony@co.hawaii.hi.us; O'Toole, Patricia Cc: Ashida, Lincoln; 'Gladys Quinto' Subject: HAWAII COUNTY: LURF Testimony on Bill 156 for June 1 Attachments: 070601 Bill No. 156 Affordable Housing for Industrial Development.doc Attached is the testimony of the Land Use Research Foundation of Hawaii regarding Bill No. 156 Ordinance to Amend Chapter 11 (Housing), Article I, Section 11~(d), Hawaii County Code, to Include Affordable Housing Requirements for Industrial Park Developments. David Z. Arakawa Executive Director Land Use Research Foundation 700 Bishop Street, #1928 Honolulu, HI 96813 (808)521-4717 x11 (808)536-0132 fax www.lurf.org r. a n Comm ivo. ~ O • ' T Ref. 7e, ~•~w 1 Ref. Date ~ 3 ~nro 6/1/2007 LAND USE RESEARCH FOUNDATION OF HAWAII 70o Bishop Street, Ste. t9z8 Honolulu, Hawaii 96813 Phone Su-gyt7 Fax 536-ot3z June t, zoos The Honorable Pete Hoffmann, Chair and Presiding Member County Council, County of Hawaii 333 Kilauea Avenue (Ben Franklin Building) zaa Floor, Council Room Hilo, HI 96~2o BY FACSIMILE: (8o8146t-8912 Dear Council Chair Hoffman and members; Subject: Bill No. 156 Ordinance to Amend Chapter a (Housing), Article I, Section ii-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 ("LURE"). LURE 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. LURE is opposed to the Hawaii County Council's ("Council") possible reconsideration of Bill > 56, based on the following: • The law requires that the exactions proposed by Bi115t to be justified by detailed analysis, studies or reports. The Council and the County of Hawaii ("County") have not completed the required analysis of the locality's needs, and have not completed the required thorough and detailed studies or report of the workforce jobs required and generated by the new, or additions, or reconstruction to existing industrial park developments and confirmation that those prospective industrial workers are in need of housing and would financially qualify for such housing; • It is unconstitutional for the Council to impose requirements on industrial park developments to build or contribute to affordable housing, unless the Council and the County can demonstrate, based on thorough and detailed studies and reports, a clear rational nexus and proportional nexus between such industrial park developments and the imposition of affordable housing requirements; and • The Council's proposed Bill 156 is counter intuitive and would likely discourage investments in new, addition, or reconstruction to existing industrial park developments, and is likely to result in very little job creation and minimal affordable housing. County of Hawaii, County Council Page z Affordable Housing Requirements for Industrial Developments Proposed Bill >l56 Bill 156 proposes to amend Chapter 11 of the Hawaii County Code to require that industrial uses fulfill certain 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." Bill 156 is not based on any detailed studies or facts, but is based merely on the following conclusionary statements: • "The Housing Element of the Hawaii County General Plan (enacted as ordinance No. 05-25) 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 affordable housing requirements articulated in Chapter a (Housing) of the Hawaii County Code." Proposed Bill ><S6 is in Violation of the U.S. Constitution Bill 156 is unconstitutional, because it does not satisfy the legal requirements to impose such affordable housing exactions on industrial uses and developments. The U.S. Supreme Court has ruled that laws imposing mandatory affordable housing requirements or "linkage fees" in lieu of housing are unconstitutional, unless they pass the following two basic takings tests: • "Essential Nexus" Takings Test. The affordable housing exactions or linkage fees proposed in Bill 156 are unconstitutional, unless the Council proves, through a detailed study, that industrial park developments have a substantial connection to and contribute to the housing problem that the exactions or linkage fees are intended to remedy. The Council has the burden of providing a detailed study including the facts and evidence to satisfy the "Essential Nexus" test. Nollan u. California Coastal Commission, 483 U.S. 8z5, 837 (1987); See Commercial Builders of N. Cal. u. Sacramento, 941 Fed 872, 874 (9th Cir. 1991); and Dolan u. City of Tigard, 512 U.S. 374, 391 n.8 (citing Nollan) (1994)• • "Constitutional Proportionality Nexus" Test. Bill lg6's affordable housing exaction of "one affordable housing credit for every four full-time equivalent jobs created," is also unconstitutional, because it is not supported by a detailed study. The required study must confirm that Hawaii County has done sufficient affordable housing planning and it must also address the lack of affordable housing at a level proportionate to each industrial development to determine a reasonable percentage for the affordable housing exaction or linkage fees. Dolan at 391(1994)• County of Hawaii, County Council Page 3 Affordable Housing Requirements for Industrial Developments In particular, Bill t56 is unconstitutional because the Council has: (i) Failed to complete a thorough and detailed study of the workforce jobs required and generated by the new, or additions, or reconstruction to existing industrial park developments, confirmation that those prospective industrial employees are in need of housing and that those employees would financially qualify for such housing; (z) Failed to provide any study, legal analysis or justification of Bill a,56 under the "Essential Nexus" Takings Test; (3) Failed to provide any study, legal analysis or justification of Bill i56 under the "Constitutional Proportionality Nexus" Test to support the proposed requirement of one affordable unit credit for every fourfull-time equivalent jobs created. Attached is a legal memorandum prepared 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. The following is an excerpt from Professor Callies' memorandum, which explains that in order to legally justify imposing affordable housing exactions on landowners and developers, the government must first perform thorough and detailed studies to establish a rational and proportional nexus between the projects and the demand for affordable housing: `:As to housing exactions orset-asides on commercial development, the principle -indeed virtually only -federal case approving such set-asides did so only after the local government requiring 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 inhalf -far less than the 40% which the draft County of Kauai Housing Policy Ordinance would require of such commercial development." Proposed Bill i~6 is Counterintuitive to the Development of Affordable Housing The Hawaii's history has generally shown that that overly aggressive affordable housing requirements result in (i) the costs of such affordable housing requirements being passed on to residents as increased prices of market homes; and (z) many times such aggressive requirements result in landowners and developers postponing their projects, which result in fewer affordable units being built. On the other hand, if developers are provided with incentives, it will encourage them to build more housing supply in all price ranges for all income groups, including affordable rentals and housing. 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 in its zoos session, the Legislature was also trying to find 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 135 in 2004. It CounTy of Hawaii, County Council Page 4 Affordable Housing Requirements for Industrial Developments was clear to the participants in these efforts that one of the major problems is that an overall lack of housing supply resulted in a lack of affordable housing. It was also a consistent and common finding that in order to create more affordable housing opportunities, there was a need to provide more housing in all income categories. The problems of a lack of affordable housing and a lack of overall housing supply cannot be solved by burdening landowners and developers with aggressive County exactions and inclusionary zoning requirements. The ctvx 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 is generally explained as follows: Employers generally look for an educated work force and affordability in housing when locating or expanding businesses. From a public policy standpoint, if the Counties want to attract employers to provide higher paying jobs for our residences both now in the future, it is imperative that the Counties provide incentives to developers and land owners to insure an adequate supply of housing for all income levels. We need both new employment opportunities and affordable workforce housing. Rather than placing an affordable housing burden 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 could be employed in the new jobs. However, as we have seen in our State's past, overly aggressive housing exactions and inclusionary zoning result in increases in the price of new market homes because the affordable homes which are sold at abelow-market price must be subsidized by the market-priced home s developed by the same landowner or developer. Similarly, if the Council approves Bill 156, it will result in increased costs and an unjustified burden to new and existing industrial businesses on the Big Island. We caution the Council to carefully consider how best to balance government's intervention in the market system for residential, industrial and commercial developments. Placing too many controls on the landowners and developers will probably result in slowing the production and availability of new affordable housing units. Careful Analysis and Consideration of Alternatives is Required to Develop a Sustainable Affordable Housing Policy We would recommend that the Council should carefully analyze all facts and data, and consider all alternatives and impacts prior to establishing and implementing its affordable housing policy. While local government does not have an ability to influence income or interest rates, its options are usually limited to one of the following: • Government Approvals--(Zoning/Permitting.) Government can, based thorough and detailed studies which establish an essential nexus and proportionate nexus, either require units be built as a condition of the approvals or create incentives to stimulate the market for development of housing units; County of Hawaii, County Council Page 5 Affordable Housing Requirements for Industrial Developments • Government Financing--(i~}frastructure, 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. • Government Incentives. Other government incentives which have been made available to developers and land owners include, expedited processing, fee deferrals. Loans or grants and density bonuses. Homebuilders Assn of Northern California v. City of Napa, Io8 Cal. Rptr. zd 60 (Ct. App. 2oI). Any policy developed relating to 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 both 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 affordable housing problem; however, if the goal is to have more affordable housing product built, we would recommend that the Council launch various initiatives and incentives to address some of the problems identified in each of the interconnected elements which influence the overall housing market. Conclusion LURF is opposed to the Hawaii County Council's possible reconsideration of Bill 156 for the following reasons: (i) The Council and the County of Hawaii ("County") have failed to prepare the constitutionally required thorough and detailed studies or reports to justify imposing affordable housing exactions or linkage fees; (2) It is unconstitutional for the Council to impose requirements on industrial or commercial developments to build workforce housing, unless the Council and the County can satisfy both the Essential Nexus Test and the Proportional Nexus test to justify imposing affordable housing exactions or linkage fees; and (3) The Council's proposed Bill 156 is counter intuitive and would only discourage investments in industrial park developments, and is likely to result in very little job creation and minimal affordable housing. We appreciate the opportunity to express our opposition on this matter.