Best feature of Maui County Comprehensive Affordable Housing plan is at risk

The following commentary was published originally on Jan. 7, 2022, in The Maui News.

Maui County is set to see a fresh set of housing regulations, if the County Council approves additional pieces of a new plan.

The proposed “Maui County Comprehensive Affordable Housing Plan” contains sweeping reforms to the county’s housing policy.

Prepared by Hawaiian Community Assets, the Hawai’i Appleseed Center for Law and Economic Justice, PBR Hawaii and other organizations, it is a mixed bag of proposals, increasing red tape in some areas while decreasing it in others.

Its goal is to facilitate the construction of 5,000 new, much-needed affordable housing units over the next five years.

“The current affordable housing system is not meeting the needs of Maui County residents,” it accurately states.

Especially admirable is the plan’s attempt to streamline the county’s development approval process. But the flaws are significant: In addition to adding some unnecessary, cumbersome regulations and its massive $1.17 billion cost, it fails to promote “by-right” development.

By-right development refers to pre-established rules. If a development meets those guidelines, it can proceed. There are no final approvals subject to the whims of a political or administrative body.

According to the National Multifamily Housing Council, the state of Massachusetts and numerous U.S. cities have found by-right development to be a crucial tool in increasing affordable housing. In 2019, it stated that by-right development “reduces carrying costs, consulting fees and other costs associated with approval processes when compared to a lengthy discretionary review process.”

As University of Hawaii economists Carl Bonham and Sumner La Croix recently noted: “By-right development ordinances have the potential to speed project approval and substantially reduce project costs.”

In an October report for the Economic Research Organization at the University of Hawaii (UHERO), Bonham and La Croix called the emphasis on by-right development “the best feature of the (proposed Maui) plan.” But they worried that the plan would pay only lip service to by-right approvals, substituting one arbitrary process for another.

As it stands, the proposed housing plan scraps the old approvals process, whereby residents can use litigation to appeal a development to their neighborhood board or the County Council. This discretionary process “raises project costs and reduces projected project revenues,” the report stated.

In undoing this costly system, however, the plan creates a new burden to housing: It would allow opponents of a housing development to appeal the approval to the County Council, which could then overturn the project, thereby undermining the by-right process.

“The whole point of by-right development is to replace the traditional discretionary approval process with a rule-based approach,” Bonham and La Croix stated.

They recommended striking the final-appeal element from the plan, as it “could actually lead to fewer affordable housing projects being developed.” The UHERO report also suggested expanding by-right rules to multifamily projects, which the plan currently leaves under the old discretionary process.

But even with a firm by-right clause, Maui’s housing plan would still be far from perfect. It calls for a bond to be financed by $58 million in new taxes, which the UHERO report cautioned could have “unintended consequences that limit revenues to be raised from the tax increase.”

At a time when Hawaii’s residents have pretty much had it with higher taxes, the Council would do well to look for ways to limit the housing plan’s cost.

On top of that, the Council has already approved two of the plan’s questionable recommendations. One creates an affordable housing waitlist to be managed by the County or a designated third party; the other would reserve new affordable housing units for Maui residents.

Mayor Michael Victorino vetoed the bill, citing concerns about legal liability and conflicts with anti-discrimination laws. But the Council overturned the veto on Dec. 17.

As it continues implementing the housing plan, the Maui County Council should be wary of any proposals that increase harmful red tape. So far, its efforts are dubious.

Perhaps most importantly for the success of the plan, the Council should heed the UHERO report’s warning about amending by-right development. Just paying lip service to the concept won’t fix Maui’s housing woes. Only a robust by-right process can ensure development happens quickly and affordably.

That’s the whole point of the plan, after all.

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