CLINT

Cindy Paulos A big Aloha, This is Maui Real Estate Radio with your host Clint Hansen. Aloha Clint.

Clint Hansen Aloha Cindy. It's pleasure to see you.

Cindy Good to see you too. You have a great website. Actually, you have two great web sites. You have a gift for good websites.

Clint I have dozens of great websites. It's a network. You know that's one of the reasons people love using our website is the fact that we pull from a variety of information sources. We even have real estate agents that end up using our website instead of the MLS because it's so easy to just instantly bridge over to county resources and tax records and things of that nature but yeah...

Cindy That's MauiRealEstate.net.

Clint That's right MauiRealEstate.net. It pours...

Cindy Great site.

Clint ...from a lot of different places. So in addition to that we have mauirealestateradio.com which today we're broadcasting at 11:10 a.m. 98.7 F.M. and 96.7 F.M. the KAOY radio group. Thank you for having me Cindy.

Cindy It's always a pleasure. I always learn something from the show. I do. I learn something new every time and I love that. I really love learning things [laughter]. And you have a guest in the studio today.

Clint Yeah. We have Cassandra. She's here today. She's the executive director and principal broker for Na Hale O Maui. Say hello.

Cassandra Hi there. How are you?

Clint Wonderful. Today, we're here to talk a little bit about one of the lesser known types of property and that's leasehold. But I wanted to talk about my favorite part of leasehold which is Na Hale O Maui. They were originally started back not too long ago. What was it like 10 years ago or is it 15?

Cassandra 2006.

Clint Oh, 2006.

Cassandra Yes.

Clint And John Anderson. Actually, my dad Bob Hansen and who is the other guy? Geez.

Cassandra You know there are so many people...

Clint Yeah.

Cassandra ...went off. They really was a grassroots effort.

Clint It was. Yeah. And Bob was one of the original people to put in the seed money to allow for the initial purchases and you know they did some initial bank purchases and it's a shared ownership that they have...

Cassandra Yes.

Clint ...to help teach people and that affordability to put it in their grass because you know there's a lot of different programs available but this is definitely one of my favorite. I think it's.... Just correct me if I'm wrong. I think it's about 60% of the people you know go out of this leasehold form of ownership. This like training grounds for a home and then they convert to the open market. More fee simple style ownership where they have a bigger stake in the property.

Cassandra Yes.

Clint You know obviously they have more fees but they go through that and they're really ready to dive into it. You want to tell us a little bit about what your services offer today.

Cassandra Okay great. And you're right. We are leasehold but we consider ourselves a sustainable leasehold.

Clint Yes.

Cassandra As opposed to the typical leasehold we saw with the big estates on Oahu

Clint Because they're in perpetuity instead, right?

Cassandra That's right. Plus our whole focus is on our home owners not in raising funds for other programs.

Clint For size.

Cassandra So the first thing we do is we separate the property--the land from the house and we hold the land in trust in perpetuity forever.

Clint All right.

Cassandra And then we reduce the price of the home significantly because of that and we will even further reduce it if it's possible. For instance, a recent house that we sold in Kahului We had an appraisal of almost 700,000...

Clint Wow.

Cassandra ...on it. We bought it for 475,000. Put almost 60,000 into it because it was a foreclosure home. And I think the homeowners were not happy when they left [laughter].

Clint I'm going to imagine.

Cassandra All right. And we sold the home to a local family. The husband works for the county of Maui We sold it at 385,000 dollars.

Clint That's beautiful.

Cassandra That is truly affordable.

Yeah. And it's one of the rarest things to have on Maui as affordable property. So it's nice to have programs like these that are available...

Cassandra Right.

Clint ...and help teach people about ownership and you know and here you mentioned it's a local family but there is definitely a line that you want to draw between this kind of leasehold and the other type of leasehold in perpetuity which is the Department of Hawaiian Home Lands.

Cassandra Yes.

Clint DHHL as you know for people of native Hawaiian ancestry 50% or more they can you know qualify to purchase and of course, there's...

Cassandra A with blood quantum.

Clint Yeah with blood quantum. Correct.

Cassandra Yes.

Clint And which their heirs are able to inherit the property as long as they have 25% or more which is you know fantastic. It can be you know sometimes trying situations if there is divorce or whatnot because you know let's say the opposite member can't...

Cassandra Right.

Clint ...take on the property. But in this case, there's none of those kinds of clouds or issues associated with it.

Cassandra Correct.

Clint So it puts out affordability in anybody's hands. That is a resident of Maui Can you tell us a little bit about the program. Let's just say I'm somebody and I want to be a homeowner. You know I'm gotten a stable job or maybe even I'm in between. But I'm ready to make the jump and have a life where my family has roots where we get a dog and you know the whole nine yards the picket fence and we approach Na Hale O Maui. What would be the first step?

Cassandra Well, we do have a four step process. And the first is a quarterly seminar that we hold--no charge to come in and find out about our program. It is leasehold. So that means it's not for everyone. There are families that feel it's very important to own the land also so they obviously this program is not for them.

If they decide that yes they do want to pursue our program then they need to get a pre qualification letter from a lender of their choice and then they take an eight hour HUD-approved program that helps them with financing, cleaning up their credit. You know many of us don't know a lot about credit ahead of time and that's what takes us a long time to get prepared for home ownership. So this allows them to do that and also learn about maintaining their home.

The last thing they do is they come into our offices and meet with our housing coordinator and we go through the Groundlings almost page by page so they truly understand what is involved in the Groundlings because it is different. And once they've done those four steps then they are placed on a qualified buyer list. And when we do have a house it's available for sale. We let everybody on the buyer list know about it.

Clint And take a crack at it.

That's right. So now if I want to live let's say in upcountry and the houses available is in Kihei, I will decide on my own. I'm not really interested so I won't show up. So it doesn't really matter how big our list is. Only the people that are interested in that district or that area will come in and take a look at it. They can come in and walk through the house and then decide whether they do want to pursue it. If that's the case and they do need to get a qualification letter at that time from their lender based on the sale price.

Clint Okay.

Cassandra And then we have a process where board members do a blind selection process so they don't know who the buyers are. They only know a certain data or statistics about them. Okay. And then they make the decision and they select a buyer and then a backup buyer.

Clint Is there any restrictions associated with the purchase of the property...

Cassandra Yes.

Clint ...like do they have to have lived on Maui for like eight years or something along those lines?

Cassandra No, no term time in terms of being a resident. Most of our home buyers are. But you have to be income qualified. So our buyers essentially started about 80% of the area median income. And they can... when we get funding those funders determine what their ranges. So for instance, if we get county money from the Affordable Housing Fund, then it's 80 to 120 percent of AMI. But because of the high cost of living and the high cost of housing on Maui we have from the IRS determination letter, we can go up to one hundred and forty percent of AMI.

Clint That's impressive.

Cassandra But generally that's only on houses where it's funded internally. If it's from the county like I said, it's usually capped at 120% percent of AMI.

Clint Where's your general sources of housing? I mean is it from individual purchases or from bank direct from banks. I mean I'm assuming that there are certain qualifiers in there that you know incentivize probably bulk purchases from you guys, right? At least I know it in the beginning 2006 was rolling around it was a perfect opportunity to acquire many of these homes and I was always curious to see hey, you know how's the program continuing. I like to see that and and it's a wonderful learning experience so I've been curious [laughter].

Cassandra Sure. You know real estate the market cycles and changes. So when we first started it-Na Hale O Maui we thought we would do development. We would be building our own homes. And that's just about the time that we started sliding into the Great Recession. Well, we took a look around and as realtors you know you know that it's basically opportunistic.

We started looking at foreclosures so foreclosures where the houses had been abandoned. Many of them had been empty for so long that they had pulled the water meters. So you know things like that. So most of our homes came there. So about 32 or 33 of the homes. Then we built we had acquired a lot through foreclosure up and like a pool and we built the first home for the organization there from the ground up. So now, foreclosures have gotten so expensive.

Clint And they're so thin.

Cassandra Yes. And we just can't afford it. It's just too rich for us to be able to manage that. So we have shifted and West Molly Land did a development out in Oklahoma--68 lots. They sold 10 of those lots to Habitat and 12 to Na Hale O Maui at an incredibly low price. I think even lower than what it cost them to develop those slots actually given the time that it took them. So now we're going to build twelve homes. And we're almost ready to do that. We have a loan. We have a contractor. We're just waiting for the bonding. We're going to start.

Clint What an incredible. That's wonderful to hear you guys are actually starting to build your own properties after all these. This must've been a long time coming. How long have you owned the land?

Cassandra Not that long. There was a lawsuit against the LUC when it was going through to 21H which is the state streamlining process. And you can't get clear title insurance. So we actually renewed the contract three times before we were able to close. So we close in 27, 2017 I believe.

Clint And the entitlement is one of the big expenses associated with purchasing here on Maui I mean people are always wondering why our prices are so high. It's not just supply and demand. Creating new inventory is very difficult. I believe it's almost like 24 or 25 cents of every dollar ends up coming directly to the cost of building from those entitlement processes.

Cassandra That's right. And it can take you over 10 years to get those entitlements and you really have to have staying power.

Clint And ten years is conservation.

Cindy Can you explain what entitlements is? I really don't know anything about that.

Clint So entitlements is just the rights associated with the property or what you're entitled to do. So say for example you know you have some condominium-zoned land and you're able to build a six unit structure with two bedrooms on each one of them. So that's the entitlement for it. Sometimes you get just raw land. That's one type of zoning. So you want to entitle it to another one. So say you want to go from R1 to R3. You know increase the density or something along those lines. That's basically what we mean by entitlement.

Cassandra And when you're talking about development, you're generally talking about the big change from agricultural land to residential and that's what takes so very long to get through.

Cindy Is that permitting?

Cassandra There's permitting involved but first you have to get the the entitlements themselves of right to change the zoning.

Cindy And who decides that?

Clint That would be the land use commission [crosstalk] would be the main. Yeah

Cassandra It depends on the size of the subdivision. So on smaller parcels I believe it's 15 acres or less. You don't have to but when you go over that amount then you have to go to LUC the land use commission. And then you still you can use the state streamlining or the county streamlining process to try and get through some of those and be some of the exact actions would be waived under that process also.

And then you stoop once you get the approval you have to go to the county council and go through their process and then once you have all those approvals if you're still alive then you do go through the permitting process to actually get your permits to build. You also have to do all the sidebar that you know the utilities, the roadways, the everything sidewalks, parks, gutters.

Clint So now that the LUC issue is settled how long do you think you are until you break ground on your first development?

Cassandra [laughter]. Yes, that is interesting [laughter]. It depends. Like most things in life.

Clint Absolutely. We'll see.

Cindy Does it help to have a lawyer or someone...

Clint It's essential. Lawyers.

Cindy Do you think it's essential? Really? Okay.

Cassandra Good lawyers. Just they can help or but yes. They are always involved.

Clint And even when things are approved you can still run into hiccups. You know oftentimes if somebody wants to subdivide a chunk of property you know. Say for example, you have to go and meet the minimum requirements or the new requirements for that area. Say for example, you have a five acre property in Haiku and you want to subdivided into two two and a half acre lots. While a) do you have water for it?

You need to meet you know the water bill and you know that can be one set of issues. The second one is fire retention you know you're not you either have a stand pipe if you don't have a stand pipe you're in a world community. Maybe they're going to want you to have a 25,000 gallon tank in place in addition to your water requirement. So there is a whole series of hurdles that you have to jump through in order to get stuff done.

And it just really does depends on your zoning. Agricultural is completely different from rural you know and there's a lot of opportunities out there to increase the density of homes. I mean they just recently changed the rules. So if you have seventy five hundred square feet or more as opposed to having just one Ohana in and a main home. You can actually have two separate Ohanas So that's a really big plus.

Cassandra Yes. It is.

Clint It helps increase our density and hopefully alleviate some of the... But that's going to be a long time because people have to permit it or you know do after the fact because a lot of people have those second dwellings anyway and they want to make them legal now that the opportunity is there.

Cindy So you have to be prepared for a long haul?

Cassandra Yes. And even on the Ohanas that are now possible. There's a hiccup in that also because there are state requirements that need...

Clint Separate.

Cassandra ...and your being able to do it. So there's always a change. But what I did want to mention though is when it comes to affordable housing we've all heard horror stories about how long it takes to get permits. And I know of people that have waited over a year to get permits to build residential properties. The county and the permitting department has been incredibly fast for affordable housing. You know I'm just like surprised how quickly we got through the requirements.

Clint That's the priority.

Cassandra So we were able to... We registered our plans. We have three models so that means that in the future we can take those models and they're already preregistered. We can go ahead and build them on other property and it'll short cut the time there. One house in the roof line was different. So we went through the normal process. It was just as quick and they have been incredibly good to affordable housing.

Clint And that's beautiful. I'm always interested to hear about other build processes. You know people talking about incorporating tiny homes for homeless and then that's actually they've done that in other states. You know it really does come down to the zoning and allowability and a lot of you know not in my backyard situations and we are here on Maui trying to get through and alleviate the concerns and congestions associated with people's first home or just a place to live.

And it's a process that we're all working together with and the county has been instrumental to us to make those changes that are necessary. But it is you know just general. Permitting can take time. It's normally about two to three months in the mainland and here can be you know eight months to a year. It's just the cycle. You know we have much more restrictive code comparative to other places even in Hawaii because we don't just have the state code, we also have our Maui County Code which is you know makes it difficult. It's these two giant books I had to work on it. I actually own the paintball field out there Olawalu.

So since I'm on agricultural land, I had a hole I think was about 50 different government state federal regulations to go through and studies. So I had to do a foreign phone account. I had to label all the Hawaiian ancestral grounds and spiritual locations and lookouts. Fortunately, the proper well or unfortunately depending on what perspective you're looking at it used to be tilled used to be sugar cane.

So there's really you know it would be impossible to have anything there that hadn't been dramatically disturbed over the years. So there was traffic counts impact to the area water assessment, water usage, wastewater treatment and that's going happen for everything not just you know doing a commercials use on agricultural land. You know there's rules and differences depending on what activity you want to do if it's considered like an AG tour you know. Say you're going to do horseback riding or something like that.

Each situation has a different set of rules and there's different people planners and perimeters that you can work through. You know even if you wanted to do a bed and breakfast license or if you wanted to do something as crazy as trying to start paintball field [laughter]. It took me years to do and the only reason I did it was because it's a passion of mine.

Cindy How many years really? About five six years?

Clint Well, finding the land alone was about three years. Somebody that was willing to agree and Andy was I would go there to board meetings and I would just basically sit in the hall and nothing would happen. And then West Maui Land was nice enough to you know sit down and talk with them and it was probably about a 20 minute conversation that was after years and years going on. I had my plan all set out. They agreed. Got a lease.

And we actually just recently renegotiated. And you know they like having us out there. We help stop a couple of the fires from progressing and being an issue which is really nice. But it was kind of terrifying simultaneously. So yeah it's it's... I used Rory Frampton when I was going through and getting my special use permit and you know he's available for hire from individuals. There's a variety of planners that you can work through but the county uses Rory on a lot of different things.

Cindy That's important, isn't it?

Cassandra Yeah, he can expedite you're processing.

Cindy That's important thing. Do a lot of people just give up when they start to see all the hoops and bars you have to jump over?

Clint Tell them what you're doing. Yeah, it really does. I mean I think one of the big things that people talk to me on a regular regular basis is about starting a wedding location. Now, we're going to a little off topic.

Cindy No, but it's [crosstalk].

Clint But it is you know there's every sense or years, there's a typical set of rules that you have to follow by and there's a current allowable like if you want to do a wedding once every couple of months. Not really an issue. If you're going to be doing daily or multiple events that's going to be you know a lot more on the commercial side of things. So I always recommend talking to a planner and an attorney to make sure that all the T's are crossed all the I's are dotted. But back to the Affordable Housing, I wanted to congratulate you. That's grad and good to hear that you're along the path to starting the first development. I didn't even know. How many homes do you guys have right now?

Cassandra We have 34 and we're going to close on the 35th. Hopefully by the end of this month.

Clint Oh, congratulations. Wow.

Cassandra Homeowner. Yeah. And then we'll have the 12 more out there in Lahaina

Clint So again that's Na Hale O Maui Would you recommend them going to your website to kind of talk to you first and signing up for the program?

Cassandra Absolutely and they can sign up for our seminar there on the website. We haven't schedule the next one because we just had the last one. But there's lots of information there and it's www.nahaleomaui.org.

Clint All right. So is there any other affordable things that you actually want to talk about today or any other programs that you're excited out beyond Na Hale O Maui.

Cassandra There are a number of programs. Well, actually bills in the legislature right now that have funding for affordable housing and we actually have a bill in the legislature to make funds available managed by HHFDC that would allow nonprofits to borrow money at a more reasonable rate than commercial banks.

So we're hoping that that is settled in committee also. They put a date and amount into it. So we've been busy. I've also been helping organizations on the big island in Hawaii to look at and perhaps form a communal land trust like we are. And we have one new one down on the big island now.

I believe they're forming in Kauai and I went down last year at the invitation of the planning department on the big island to talk about communal land trust and they're looking at how they can create housing for a lot of the people that were displaced by the volcanic activity.

Cindy Oh, good point. And that'd be another place where those small homes you're talking about.

Cassandra Yes.

Clint Yeah, they do actually have some emergency shelters that they've been bringing over from Japan. What I understand. And that's one of the things that they're talking about here. Obviously, there's their own hurdles associated with permitting licensing and making sure it's safe for the occupants inside. That is one of the things you know a single wall construction is not necessarily allowable buildable. They allow...

Cassandra Doesn't meet code.

Clint Yeah, doesn't meet current code. So having exceptions to the rule is a hard thing because it's like leaving an exception, why not everybody? You know how we don't want to have special dispensation for people so having a middle ground that shows a property is really secure; properly insulated meets energy requirements. That single level requires a whole team of engineers and you know people agreeing and board. So we're a long way off but it's happening.

Cassandra And you need water.

Clint You're getting closer.

Cassandra Water.

Clint Water, of course.

Cassandra And wastewater.

Cindy So then when FEMA does those trailers are heads down the past trailers and things such as that. Is that and draw a whole separate category that's easier and that's why they use trailers?

Clint Yeah, those are all double wall construction. And they can meet hurricane tie-down standards because they come up and and drive the peg next to it and put it into the ground even though Maui is one of the few islands that's relatively protected from hurricanes. It's still have to meet all the requirements.

Cindy Can I just ask a question because I really don't know the answer? What qualifies you as low income to purchase low income housing? What's the price range?

Cassandra The Department of Housing and Urban Development.

Clint HUD.

Cassandra Yes, they look at SEC census data and they look at other studies they do intermediately and they determine what the income ranges are for low income, you know moderate income, above average income. And they also set the prices on the sale of the houses. They also have guidelines for rentals and they are adjusted by the number of people in your family. So it's difficult for me to say what the income ranges. It depends [crosstalk].

Cindy That's the family income.

Cassandra We have families with six. We have families with three and you know they can be in the same income range. But the requirement. The maximum is different.

Clint It is typically higher here in Maui compared to anywhere else. I think the average last I checked was about 87,000 of house of gross household income to be a median. But that does depend on regionally where you're located and and they meet those requirements [crosstalk].

Cindy That's total family.

Cassandra Yeah. Yeah family income and that's probably a household of four.

Clint Household of four.

Cindy So a single person wouldn't have that cap of 87 [crosstalk]. Got it. Interesting.

Cassandra Right? And we do look at total family income when we qualify people.

Clint Fantastic. Yeah.

Cindy That... because that really changes the whole picture and it puts you in a different status. So you have to say half of that 45,000 dollars a year for maybe a single person or a couple. You can do a little more.

Cassandra And the problem is that the median income family in Maui County can't qualify for a median price house in the open market.

Clint Absolutely.

Cassandra And that's why entities like Na Hale O Maui or Habitat for Humanity or Lokahi Pacific. That's where we come in and we can help the developer who has been mandated to provide housing in certain income categories. That they basically can't do and break even so they can [crosstalk] have non-profits come in and fill that part of the project.

Clint And is there a general fund? From what I understand that sometimes they pay into. They can you know put that money for it to help you guys acquire more properties to help their...

Cassandra Correct. You can pay in lieu of--meaning your affordable housing requirements. You can do it in kind and many of them make lots available to us. We at this point we either purchase them or they are you know granted to us.

Clint And did you hear about the affordable development that they were trying in North Kihei Actually believed they had some county funds available for that but...

Cassandra Is that Ray Phillips' project?

Clint I think .Yeah. The one that's near the church there or just up to the right.

Cassandra It's off of Ohukai?

Clint Yeah, off of Ohukai

Cassandra Yes, I saw Ray's. He's used to be on our board. He's terrific. I mean they're going to come up with a wonderful project with you know affordable prices.

Clint Yep. And they do have a temporary injunction from what I understand. Now, I think a couple of people went forward and and that is of course, one of the hurdles that everybody has to overcome. Here, it's not my backyard. As soon as somebody gets on you know feet on the ground. They don't want anything else to happen. Even though it might have been slated or approved or whatnot.

Cassandra Sometimes, it's even people that were able to buy affordable housing in the past.

Clint Yep.

Cindy And they want their cost of their home to go up in value so they don't want other homes that they think would bring down the value of the house--the neighborhood [crosstalk].

Cassandra That's hard to know. Exactly.

Clint It's not just that though. Sometimes, they just don't want the noise of construction in their backyard.

Cindy Oh, really.

Clint Yep.

Cindy Oh, I hadn't even considered.

Clint I mean usually when something gets built compared of you know the known is better than the unknown. So when something gets developed next door, it's actually normally a net benefit for the neighborhood because it's done. It sees that there's new property. When those homes sell at a higher value, they typically bring up their neighbors around them and create a better sense of community. But that's not normally the motivation for people to you know put their foot in the door to stop the process. It's very individualistic and you know we have processes to appeal here and I think those are very important but at the same time they can be a hindrance and slow down. You know the cogs.

Cassandra Yes, absolutely.

Cindy When you see large land [laughter] etc. big land masses come available. Their eyes go and you go maybe there's maybe opportunity here. There's maybe... There's some building that could go on for low income housing that could happen and some of that land and you're shaking your head now [laughter].

Clint We're thinking. Everybody's thinking much too small. It's so hard to get the little things done that it's impossible to do the big things. I think the last big project that was considered was West Maui Land developing all the wallow. And when they went to try to go for that project they actually went through the entire process.

They appealed to all the neighbors they set out letters in the newspaper. They had forums. It took them decades and millions of dollars to come up with that entire town project you know to divert traffic and the whole nine yards. And then they went through to the final hurdle of the process. They really weren't expecting to get a whole lot of resistance because they had so many forums and discussions and you know beforehand and that was open to the public.

And then you had over 100 hundred people show up that were very angry about the idea. Even though the majority the mass majority of the community was behind it it ended up not going through because of a couple of issues. And you know I'm for it. I think it's something that needs.

Clint You know I'm for it. I think it's something that needs to happen. I'm really glad that it didn't because you know my paintball field gets a say up. But at the same time, it's so desperately needed. I mean we're at a shortfall of over 10,000 homes. Ten to 15 thousand homes with a demand that's increasing about a thousand homes a year and it's really the kids of the future and the families of the future that are suffering as the average price goes up.

And you know people are coming in and purchasing second homes and just the general cost of property going up here. So unless we can meet that ground level supply and have opportunities like Na Hale O Maui and some of these affordable developments come up. We're gonna just keep hitting our head against the wall.

Cindy If you're just tuning in this is Maui Real Estate Radio with your host Clint Hansen and he's part of the Hansen Ohana been part of real estate on Maui for decades [laughter].

Clint Yeah I know. Licensed 17 years.

Cindy With your family.

Clint Yes, well [crosstalk] definitely my dad has had his license for 36 years. My mom's had hers for over 40. We started our website: mauirealestate.net which is the go to website for everybody on Maui including a lot of agents to research information about properties and get tax info and it's really just easy process that we don't you know require people to sign in. Well, a lot of people are there just checking out our webcam because we've got a webcam on Charlie on beach. That's been there since like '99.

Cindy Well, the thing is for people who don't understand the process and this is what I'm getting from listening to you who do understand that it's so important to be able to have a resource of people that can really know and tell you and educate you what you have to know and get through it to actually get to that point whether it's affordable housing or a buying home. There's a lot of things you would not know if you think you can just buy a lot and build or subdivide if you see a a four acre parcel. I think Oh, we'll just subdivide and and then we can have two homes in it and that's a natural thing to think you know. But it's not always that way.

Clint No, it's a rare rare opportunity where something is ready to go. The entitlements in place and there's really no more hotels on land you know. I mean they're they're out there but people are holding onto it and there's apartment zone land or affordable are already in process. And you know been slated to be developed for decades.

You know there's really not a big change and process that people are willing to take the time, money, and effort to go through because that's just generally easier. If you want to make money, you'd go to the mainland and do a project there. Most of the people that are developing here are you know for lack of a better word hardheaded fools that are looking to benefit Maui [laughter]. They want to get...

Cindy Is that you?

Clint They're looking to help the future. You know there's a lot of opportunities out there to make a lot of money and you know if you're doing a big project on Maui you certainly that there's margins there. But it's typically not as profitable as doing something somewhere else. So you know it's the more expensive developments are often a means to allow the affordable ones to even happen.

Cindy That's a good point.

Clint That's why it was kind of a surprise when you know you have such a high density you know project with phenomenal infrastructure like small town Oluwalu that would go in that have strong [crosstalk].

Cindy That was the Frantenward project.

Clint Actually, no it was not [crosstalk]. Yeah yeah.

Cassandra Anderson.

Clint Anderson. Yeah. Correct. And I think they did some small permitting long ago but that had nothing to do with that project and the process that they went through is all legal and had big community support. And then all of a sudden all that last minute to come through was a pretty big surprise. And that just you know it sours a lot of people's...

Cindy And it can't be appealed.

Clint ...experience.

Cindy And then once it's decided, it's decided.

Clint Well, they will see. They have to go through the process and start from square one basically. So and that was millions of dollars to get to that point.

Cassandra That was all well a project but Hawaii [crosstalk] country town is has a lot of support. Yeah, it seems to be moving through and they've gotten unanimous decisions from the LUC and they're very involved with the community having hearings listening to people. And they're still working on it. But you know it's such a complex dynamic issue to get through all of that and it takes developers like you say maybe it's hardheaded maybe they're just total optimists.

Clint Often they said.

Cassandra Or maybe there's combination of the two. But you have to have a partnership. Really it's what it is. Because if it takes a village to raise a child, it takes a [laughter] community to get housing out there so that we can raise our children in those houses. The counties involved too. And the county is changing. They really are working on their policies their procedures and I think that we're making progress and everybody wants.

We're focused on a goal of providing more housing for our workforce. If we want our workforce to be here, we have to be able to house them. There was just to a survey that was done and they determined that 45% of the voting, now people here in Hawaii 45% of them had already either left the state or were seriously considering leaving the state because of the high cost of living and the biggest chunk of that is housing. If we want them to stay here, we need to find housing a way to deliver that.

Clint So is it true that there's more Native Hawaiians in Vegas than there are in all of Hawaii.

Cassandra I don't know if it's Vegas but you know outside of Hawaii I believe they outnumber in Hawaii.

Clint And it's because there's no opportunities to be here. You know the cost of living goes up so dramatically and there's no opportunities. People end up making the decision to leave and like I told you in the last few episodes that the population of Maui has actually dropped consecutively year after year for these last two years.

Cindy What it didn't used to existence and in some places still were if you had a large hotel or large employer, they would actually try to include housing as part of the opportunity to get pe,ople to be able to do that. Of course there's an issue with doctors et cetera et cetera. But this is almost something that you know has to be thought out if you're going to have a large business and employ people.

Clint And they do I mean I guess I've talked to several board members with the hospital. I've you know and it does make sense and they usually go through and they try to work and set up these collaborative relationships with management companies and whatnot. So when that they come in they have a place for doctors because we're at a massive shortfall for nurses and doctors.

They are trying to cut out the traveling nurse programs so that they can specifically support local nurses that live here. But you know again those nurses get the education here and oftentimes are going to the mainland where they can be paid the same amount more potentially more and then live at a much dramatically reduced cost. You know for both cost of living. You know [crosstalk] any number of things it is that price of paradise.

So you know it does take a collaborative effort on a lot of municipalities but mainly it's right now just up to the individual business. You know like the hospital. I've talked to them I said you know really what you should do is acquire one of these larger chunks of land and look to create a community based around.

You know doctors and nurses that all live in the same place because it works on a business sense too because you're keeping your talent and together and you're creating and fostering long-term relationships with your employees. So if you create these micro communities based around a particular you know the vocation, you're going to create a better sense of community. I mean it's actually you're seeing it a lot in areas [crosstalk]. Well, Silicon Valley is a good example.

Cindy Yep. Absolutely.

Clint They're creating massive campuses where people live work. You know it's a strategic advantage so that they don't have to deal with the commute. It's a strategic advantage because then they don't have to worry about corporate espionage as much because they can keep a tighter hold of the situation in their community.

Cindy Interesting.

Clint Of course, that is a bit different for here in Maui You know the hotel industry has its own set of problems and issues that they're dealing with. It would make sense though because those costs are very real and they pay typically a higher rate for these rents compared to if they were going to own something themself that takes initial capital and time. And most people don't want to think out of the box as such as building a community.

And it is not going to be any easier for them to build a development as it would be a developer themselves. I mean maybe if the nurses were to come together and doctors and specifically approach the county and say hey look we have a shortfall. You want good medical coverage. We need to build this development so we can get these needed doctors and staff in place. It might go a little bit faster but it's going to be the same hurdles that you know we're uncovering for the affordable housing.

Cassandra And the truth of the matter is that housing is such a complex issue like we've talked brushed upon today. You cannot fix one narrow segment of the market. You need to have housing all the way across the market including on the high end for doctors and people to come in because otherwise we have this problem with no doctors. You cannot only focus on one particular area because that's not going to fix it.

Clint Yep, absolutely. I don't know how we're going to build 10,000 homes though.

Cindy Well, that's one of the biggest issues on Maui isn't it? It's really one of the biggest biggest problems and biggest issues that you're dealing with here, right? Isn't that what people found in the last elections where the things they are most concerned about?

Clint Mm hmm. I mean everybody knows the solution is higher density areas. You know apartments and complexes and but nobody wants them built.

Cassandra So now most people on Maui are afraid that we will turn into Oahu

Clint Yeah precisely.

Cassandra We allow the higher density.

Cindy How do you answer that? When people and sometimes it's unspoken because they won't say it. That's their secret fear that they don't want more traffic. They don't want more people. But it's necessary obviously and people say it's the biggest problem. So how do you try to address that? Is that education? Is it community? More community meetings. How do you answer that?

This is actually a perfect example. Na Hale O Maui is a great opportunity for people to live and work in Maui and you know like you said you have these blind studies for people and some basic statistics associated with them to help you know determine who should be purchasing the property at a reduced rate. It's shared income not shared income...

Cassandra Shared equity.

Clint ...shared equity between you know both the home purchaser as well as Na Hale O Maui. So I know that there's a lot of leasehold lands associated especially in Lahaina where the cost of of land is. Well the cost of housing is almost $100,000 dollars higher there than anywhere else and really anywhere else in Maui

Cindy Really?

Clint Yes. So...

Cindy I was not aware of that.

Clint Well, a lot of people are commuting out there on a regular basis. You know there are going...

Cindy A hundred thousand dollars more?

Clint Yeah, for a home. Typically you're looking at that higher price but the funny thing is if you compare that to the high-end property. You know there tends to be a little bit more of a discount you know comparatively to the south side of the island which I do find that funny that you know the low price point is smashed up so much closer to the high end than it is in Central Maui.

There's a bigger disparity between the low-end property and high-end and South Maui. So it is interesting you know I haven't really dived into the statistics of why but I think the main thing is just the supply associated with it and the location. You know people are commuting out there and why would you want to spend two hours every single day...

Cindy Really?

Clint ...driving out there when you could live and work in the same place. I mean two hours of driving a day comes out to a work week worth of driving every month. So you know you want to spend a whole extra week of workdays per month [crosstalk].

Cindy And there is the cost of gas.

Clint Yes there is the cost...

Cindy I mean there is a price that gas is going up and you have that issue and you just pray that it's not an accident.

Clint Then the county actually is working for live work communities and that's one of the things that small town Olowalu and what was the other one that they're working on?

Cassandra Well, actually the project that we're in Hawaiian homes. That is geared to primarily to people who either work or live on the west end of Maui. And that will cut out the commute. If everybody that worked in West Maui where you live there just think of what would happen to the rush hour we wouldn't see anymore [crosstalk].

Clint That would alleviate a large property congestion. I mean and the funny thing is if you reduce congestion by just 3 or 4% even just 1%, it dramatically changes the traffic flow. You know you look at these studies and just small number changes can really drastically change the amount of time it takes to drive from one side to the other. So creating more communities that are specifically focused on you know people who live and work in the same area is going to do the best to benefit Maui.

Cassandra All right. Instead of having people that live in upcountry Maui that are working out in Lahaina, you'd move them to Lahaina so they wouldn't have to deal with that.

Clint Absolutely. Thank you so much for coming in Cassandra. I really appreciate it. I wanted to talk a little bit more about a few other leasehold properties. We've got about 10 minutes remaining in the show. So I want to be working on that.

Cassandra Thank you very much. It is a pleasure to be here and thank you for asking about Na Hale O Maui.

Cindy And again the website for people to find out more is?

Cassandra www.nahaleomaui.org.

Clint Thank you so much.

Cassandra Aloha.

Cindy Really interesting. Thank you so much.

Clint So another part you know leasehold is an animal and there's so many different facets to it. It really depends. It's really a written contract and an agreement between the land owner and the person who is leasing the property. So you know you're not necessarily purchasing the land. You're purchasing the right to lease the land.

Of course, it's different with Na Hale O Maui. It's different with DHHL the heart Department of Hawaiian Home Lands. Department of Home Lands. Let's talk about that. There's very little opportunity. They do have regular lots that they release and that if you have to have the blood quantum of and trace your lineage to the 50% or more and one of the things to be aware of is let's say you have 50% while your heirs, if they're 25%.

Say you're marrying somebody who doesn't have Native Hawaiian ancestry. Your kids, of course, are going to be 25%. You your children actually would still be able to inherit it even though they aren't able to purchase the land. Of course, thereafter it. It has the minimum 25%. So and...

Cindy But is a long wait, isn't there for those properties?

Clint There is you know. There's a... That's again you know a lot of the people and the natives of Hawaii have been moving off island because there's other opportunities elsewhere. I mean there hopefully would be more opportunities out there in the future when Hawaii was overturned or overthrown and there were actually seeded lands put aside for people of native Hawaiian ancestry. But it's still a process. They still have to meet county requirements.

They still have to go and get approvals. So they have the same hurdles with less emphasis or not less emphasis less incentive to do it. You know it's financially tighter target to hit. Now, if you are interested in Hawaiian homelands. There is actually one home that I notice in Central Maui that's for sale.

Still a little higher than average. It was you know about 150,000 cheaper but typically it's about $200,000 dollars less than market value. This one is a four bedroom two and a half bath. That's 1,700 square feet. It's only been on the market 26 days but normally they're sold and you know five or six days. So it's important to you know contact an agent. Get set up on a mailing list so you're the very first. And get all pre-qualified to do the purchase and it's listed at 540,000. I felt that was a little bit high. You know usually it's under 500,000 for something about equal size.

Cindy But it's the big home.

Clint Yep absolutely. And if you wanted to get qualified for that DHHS department of Hawaiian Home Lands, I would recommend giving the Maui office a call directly. That's 760 5120. That's 808 7605 120 or you could go here. They're actually right here in Wailuku 655 Kaumulii. And that's K-A-U-M-U-L-I-I. You can just go up there and stop by and go through the paperwork process and you know it is definitely [crosstalk] to go through but 100% worth it.

Cindy It's if you get it. Yeah, absolutely.

Clint And of course, you know that's completely different than most of the leasehold properties that are out here. One of the ones that's actually a big concern associated with people who are purchasing leasehold property is that this reversion free clause that's in a lot of the properties. Hawaiian which is a property located on the west side was one of the newest ones that we're coming up.

Now, a lot of these properties haven't come to the fruition point where they expire. Now, you'll notice two things when you're looking at these leasehold condominiums while this is actually a single family homes that are condominiumized which is a bit of a different thing. And they do have in addition to their normal maintenance fee for the neighborhood and I don't know if you've seen Hawaiian. It's like old Hawaii.

You've got these smaller homes. You know on this little oceanfront community that are about anywhere from 1000 square feet to you know 1,500 square feet. You know there are two bedrooms three and four sometimes. And it's just so cute. It's private little pool. You know ocean side. I'm a big fan.

Cindy Where is that?

Clint It's on the west side. It's you go along the lower highway. And there's a little neighborhood that's like tucked away behind there. It's gated. And it's funny because it's actually grandfathered in and vacation rentable on a one month basis.

Cindy Really?

Clint So if you rented it once a week.

Cindy Wow.

Clint You can't use it for the rest of the time that's out there. But at least you can pay for it the time that you're not there. But you do have additional fees. So in addition to that normal maintenance fee of like about $3,000 dollars a month for the very prime oceanfront ones. There's that lease payment and that varies depending on where you are in the complex.

The more prime position you're going to pay more like if you're in the very front, you're going to pay something like $6,700 dollars a quarter but $6,700 dollars a quarter. But compared to other ocean from property that's pennies. I mean I'm putting that in and the land owner is really getting interest. Now, they made the decision when reversionary clause came where you know say for example, they could take the land away and use it for themselves.

It would be a considerable battle and normally there's no financial incentive to do it because once they get this land back, what are they going to do with it? They're going to meet current set back standards. They're not going to be able to build where the current homes are. They're not going to get full value added the density is going to be less. So typically, people when the reversionary period that own these lease agreements are going to say, no, I don't want to deal with it. And that's every case I've seen.

They've renegotiated. But there has been very very few of them. You know we're coming up to a precipice where they're seeing more and more of it. And you want to apply for financing. They're only going to finance you know less usually less than five years than that amount. So this one expires in 2059 has a renegotiation date this year. So you would easily be able to get a 30 year lease on that or a 30 year mortgage on the property.

Now, there's other places like Napili Point which is very different. It's called a sandwich lease where there's only a small portion that's actually leasehold. I've even seen them advertised as fee simple where even though they have this lease element to it. So that's only a small chunk of the land that has that lease payment. And then it's what? Seven dollars a month that they're paying. So I mean it's so inconsequential that you know it's not normally a consideration. And people will often completely avoid looking at leasehold properties because they are concerned about this reversionary clause.

You know there is one that doesn't. Has a ways of going. It's expiring in 2035. So for example, you would only have about 10 years worth of a mortgage that you could get on that one. That is Kamaole Nalu their lease is an additional 700 dollars a month. But you're going to be able to purchase a two bedroom two bath 774 square foot for like half a million. If you look at anything else, it's going to be a million dollars.

Cindy That's an interesting one. So people should contact you...

Clint If they're looking...

Cindy ...for those properties.

Clint Yeah, yeah, absolutely. And of course, to get educated there it does depend on where you're purchasing one. One of my favorite ones is Kahana village, Kahana village is a long expiry date of 2065 and their monthly lease payment is only 544 dollars per month so that's a really good example. My favorite out of everything is Sands of Kahana but there's nothing available there [laughter].

They were selling two bedroom two bath vacation rentable 1,580 square foot units for 799 dollar 800 and end up selling for 760. I was blown away it took that long. So you know there's definitely opportunities out there. It's every place is different. You know normally they look at the lease and you have to examine the language of that. Most people are expecting a 7% return for their land. So when that renegotiation comes they're going oh okay how much is the land worth. We're going to get three appraisals of the property.

We're going to average it out or we're going to pick our favorite one. And then that's going to be the renegotiation period for the next 10 years. And that's mostly what I see with leasehold properties on Hawaii. But every individual complex is different. You know sometimes there's a fee element associated in a different type of sandwich leak like Maui Eldorado and that's going to be there and prevent that reversionary period even though most people are not going to want to do it but you're definitely going to have to examine every example like you know Kamaole Nalu.

It makes no sense to take that building down because if you're going to demolish something that's on the ocean you're not going to be able to build the same amount that you had initially. So I would doubt that that property. But there's no guarantees of course.

Cindy Well, I just learned so much from the show that people can go to mauirealestate.net and they can call you even.

Clint Absolutely. My number is 808-280-2764. That's 808-280-2764 or our website mauirealestate.net. Thank you so much. This is Clint Hansen with Maui Real Estate radio the Hansen Ohana and we look forward to seeing you next time.