The following is Joe Kent’s oral testimony before the Maui County Council on July 18, 2022, regarding Bill 107 (CD1).
According the measure, it would establish “a new method of determining the sales price of an affordable dwelling unit to include the total housing costs associated with home ownership such as principal, interest, taxes, homeowner’s insurance, private mortgage insurance and homeowner’s association dues.”
Kent, executive vice president of the Grassroot Institute of Hawaii, submitted written testimony regarding the bill on Friday, July 15.
At the Monday hearing, in the Kalana O Maui Building in Wailuku, Kent communicated with the Council from Oahu via Zoom. To see the video, click on the image below. A complete transcript is provided.
Joe Kent: Aloha Chair [Alice] Lee and Council members,
My name is Joe Kent, and I’m the executive vice president of the Grassroot Institute of Hawaii.
We’re an economic research organization and a nonprofit taxpayer watchdog that promotes the values of individual liberty, economic freedom and accountable government. I am a paid lobbyist for our institution.
Bill 107 seems to be a well-meaning attempt to lower housing prices, but respectfully, our analysis of the bill is that it would hurt the people it’s supposed to help.
The bill would affect the price calculations for all homes that qualify as affordable housing, and through a complicated means, it would effectively lower the price that an affordable home can sell for by around 20 to 25% which would lead to developers taking losses.
The county could cover those losses, but that would mean taxpayers would be paying to refund developers for their costs.
In other words, Maui residents who are struggling to pay their mortgages would be also paying for the mortgages of their neighbors.
If it’s done through bonds, then taxpayers would have to repay the bond plus interest. And interest rates are high right now. This means more money would be going towards debt service instead of paying for infrastructure like roads, bridges, water, electricity and so on.
Another point is that any money from the county or from foundations does not have to be granted to developers to cover their losses.
Developers are not guaranteed that money from the county. They would have to spend money and take a huge risk of a loss on a project with the hope that the council would look favorably upon them. And as we know, the council often does not always look favorably upon affordable housing projects.
So in summary, there ain’t no such thing as a free lunch. There is no way to hide the losses except by pushing it onto either developers or taxpayers.
Either way, this bill increases the risk for home builders who may be taking significant losses, especially when it comes to 100% affordable housing projects.
Thank you for allowing me to testify.
Council member Yuki Lei Sugimura: Thank you Mr. Kent. So you were saying that the proposed legislation, you’re saying that you’re against it going to developers and more to the individual homeowners?
Joe Kent: What I’m saying is that there was previously, in previous testimony, a rebuttal that the county could repay the losses to developers from this bill. But I’m just saying that there’s a problem with that concept because that money would be a scarce resource. It would be directed away from paying for rents, for example. A lot of renters are on the verge of becoming homeless on Maui, and so this would direct money away from them and towards developers instead.
Sugimura: OK. Thank you.