By a vote of 8-0, the Maui County Council has passed Bill 57 which imposes strict new guidelines on future development. A brief synopsis of the bill:

Projects in which fewer than half the units built are to be sold for more than $600,000 would have to provide 40 percent of their units at affordable prices. Developments in which half or more of homes are priced above $600,000 would have a 50 percent affordable requirement…Developers could satisfy the requirements by simply building affordable homes for sale or rent, providing land, or partnering with a nonprofit organization to build the homes. The affordable homes would have to be priced according to a range set by the policy, running from $204,000 to $454,700. They would also have the option of paying fees to fulfill the requirement. Council members on Friday changed how the fees would be calculated, setting them at 30 percent of the average value of market-priced homes in the development. Previously the fee was based on the value of the affordable units.

It is an iron economic law that the more expensive an activity is, the less of that activity happens. Development on Maui has just been made considerably more expensive. It appears to us this will have a significant negative impact on future development and is extremely unlikely to create additional affordable housing. In order to obtain profits, developers are likely to build a smaller number of very high end units on a given piece of property in order to make the affordable housing requirement as small a percentage of the overall dollars spent. We would expect a corollary impact to this to be that the existing housing stock will see higher values than they would have without these constraints.

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