Maui committee hears homeownerspleas to shorten 20-year deed restrictions as developers, housing officials warn of financing, infrastructure limits

The Maui County Housing and Land Use Committee heard detailed testimony March 10 on three bills that would change residential workforce housing deed restrictions, as homeowners pressed for shorter restrictions while housing officials and developers warned longer or more complex rules can make financing and construction harder.

Homeowners from the Hale Kai Ola workforce subdivision in K—hei detailed construction defects, sharply higher homeowner-association fees and mortgage pressures that they say make 20-year deed restrictions untenable for many families. "We're finding we would like our deed restriction . . . decreased from 20 years," said Lucas Olson, a Hale Kai Ola homeowner and testifier. Several other owners described doubled HOA dues and unfinished amenities and said some recent buyers could not qualify for financing because of high interest rates.

Why it matters: the committee has been working through three bills described on the agenda as changes to residential workforce-housing deed restrictions (Bill 22-20-24, Bill 12-20-23 and Bill 74-20-23). Committee members and staff said the policy choice involves tradeoffs: longer restrictions help keep housing permanently available to local workers, while shorter or more flexible restrictions reduce underwriting friction and let owners sell without being trapped if their financial situation deteriorates.

Department, DHHL and staff comments Remy Mitchell, the countyDirector of Housing, framed deed restrictions as one element among many that affect whether a lender will finance a project. He urged the committee to distinguish temporal restrictions (lengths in years) from what he called "non-temporal" provisionsrules such as resale procedures, buyback mechanics and owner-occupancy covenants that can create underwriting friction. "If you can make the non-temporal restrictions as appropriately frictionless as possible," Mitchell said, lenders will find projects more attractive.

James DuPont, District Operations Manager for the Department of Hawaiian Home Lands (DHHL), described DHHL practice for beneficiaries: the department issues 99-year leases, typically at a dollar a year, and lessees use standard mortgage products (FHA, VA, USDA and other programs) when they qualify. "We have various options for financing," DuPont said, adding that DHHL lessees still must qualify with lenders and that financing mechanics vary by project.

Homeowner testimony: costs, defects and resale risk Multiple Hale Kai Ola residents described similar problems. Lucas Olson and other testifiers said the project had builder warranty problems that owners say remain unresolved, and that HOA dues had nearly doubled in about a year. Elaine Bogart said flooding from inadequate drainage left her floors and walls being repaired a year later; Brandy Beaulieu said she had expected a 10-year restriction and only learned at a homeowner meeting that the restriction was 20 years. Several testifiers said buyers who qualified in 2023 are now confronting 7%+ mortgage rates and higher HOA and insurance costs.

"We feel trapped," Olson said. Homeowners reported using legal counsel and asked the committee whether the county could ease the burden for owners, or exercise buyback/first-right-of-refusal authority if resale in the restricted period becomes impractical.

Developers, lenders and builders: financing, entitlement and standardization Developers and housing providers who testified emphasized different constraints. Several said the largest impediments to delivering housing are entitlement delays, infrastructure costs and high current interest rates on construction financing. Linda Schatz, principal at Schatz Collaborative, and others said mixed projects that include market-rate units can be easier to finance; lenders look at the overall revenue stream as well as deed restriction terms.

Peter Savio, president and CEO of Savio Group of Companies, urged a more aggressive, market-shaping approach: he recommended county-held land, long-term affordability tied to local wages rather than to market appreciation, and financing models that remove risk and lower carrying costs for developers. His proposals included models that keep units affordable "forever" by controlling resale formulas and indexing price increases to local wages rather than open-market values.

Developers warned that perpetual or highly prescriptive deed restrictions can discourage private financing. "If it's done correctly there should be no problem with financing," said one developer, adding that standardization and clear, consistent terms for lenders are critical. Several developers and builders told the committee that off-site infrastructure and entitlement uncertainties already add millions to project costs: one developer said a recent project required several million dollars for off-site sewer and road improvements.

Committee next steps and absence of votes Committee members repeatedly flagged the tradeoffs between longer temporal restrictions (10, 20 years or longer) and the non-temporal mechanics that lenders and owners find problematic. No formal votes or final committee actions were taken March 10; the committee scheduled additional sessions to hear lenders, financing experts and housing advocates and to continue deliberations on the three bills. Staff said written testimony and additional documents will remain in the record.

Ending: forward look The committee said it will continue the discussion at upcoming meetings to get lender perspectives and to consider code or process changes (including zoning and entitlement steps and possible uses of the countyaffordable housing fund) before proponents return with draft language. Committee members and staff emphasized the meeting had surfaced substantive implementation issues that would need fixes if the council changes deed-restriction policy.

Votes at a glance No final votes or formal committee actions were recorded during this session on the bills listed on the agenda.