Developer Peter Savio thinks he has a solution for Maui’s housing crisis—but not everyone is sold
Peter Savio, who touts himself as Hawai‘i’s largest affordable housing developer, thinks housing has become too darned expensive. With the median home price in Maui County hovering just over a million dollars, and 30 to 40 percent of the population living paycheck to paycheck, it’s tough to argue he’s wrong.
“When we say ‘affordable’ in this state it has no relationship with what we can afford,” said Savio. “Home prices are based on the open market, including mainland and foreign buyers. …Our market has nothing to do with local wages. It’s all driven by outside buyers.”
It’s inevitable that land values would eventually exceed local income levels in a world-renowned tourist destination with a limited amount of buildable land and strong local resistance to overdevelopment.
“This is a serious problem,” said Savio. And he thinks we can solve it, maybe in the next decade, if we follow his plan.
Savio’s strategy is simple. Give me what I want, don’t ask for anything in return, and I will deliver you affordable housing units. Lots of them. What does he want? Concessions from the county that allow him to build more units for less money.
Savio wants to see his projects approved quickly, which would require an about-face in a place where development has been slowed by the glacial pace of the county approval process.
In addition to expedited approval, Savio said that increasing density reduces land cost. He applauds the county’s decision to allow more ‘ohana units, or accessory dwelling units (ADUs). But he thinks the county should add some conditions to those ADU permits.
Permitting ADUs increases the value of the parcel, pushing up the cost of land, he said. He suggests the county sell the right to build an ADU and put the proceeds into the affordable housing fund. By adding that cost, the land value wouldn’t be forced upwards. Or they could predicate the ADU permits on an agreement that they would be rented or sold to locas at below market rate, unless they are owner occupied.
“My goal is to get local people who live here and work here into ownership. I don’t give a damn about the mainland buyer,” Savio told a group of about 50 at an October event promoting Koa Waena, one of his proposed projects in Kihei. To that end, he cuts costs at every step.
“Lumber and building materials are always going to be expensive here,” said Savio. “But you can do single-wall construction and formica counters instead of marble or granite.”
One variable Savio and his company have control over is profit margin. He pledges to take a maximum profit of five percent and swears he’s fine if that margin shrinks because of cost overruns.
Savio’s goal is to sell homes at about half the current market rate. Buyers are selected by lottery. He ties the sale price of each home to a percentage of median income, sometimes as low as 20 percent, but typically closer to 100 percent, and he wants his buyers to do the same when they sell their home—although that isn’t always a legal requirement of the sale.
To achieve that low price point, there’s a lot Savio doesn’t want to pay for.
“I’m 100 percent affordable, so I go to the county and I say, ‘Hey, all of your requests for off-site improvements, take them away,’” he told the group of potential buyers in Kihei. “I refuse to spend my people’s money to repair a bridge that the county should have repaired, or to pave a road that the county should have paved.”
This “play my way or I’ll walk away” attitude hasn’t won him many friends in government. “I do not do well with the government or the county,” he said. “I get into a meeting and they say they want to assess something and I just blow up.”
Whether Savio’s plan is a good deal or not depends upon who you talk to. Some planning officials, community activists, environmentalists, and neighbors aren’t sold. They say he demands too many concessions and that his proposed projects, most of which are located in Kihei, will make traffic and flooding issues worse.
“We regularly object to those exemptions being granted because these communities still deserve these amenities,” said Maui County Planning Director Michele McLean. “They need to be livable. It’s what makes a community a community—having sidewalks, having landscaping, having streets that are the proper width, having curbs and gutters.”
Rather than eliminate those amenities, she would like to see the county subsidize them. “If [builders] have to ask for those exemptions for it to pencil out,” she said, “then it’s a matter of talking to the developer and finding out how the government can contribute in another way so that this can still be a complete community.”
“What they’re doing is they’re using affordable housing to kind of get through the red tape and get it done,” said David Dorn, whose Save Kihei website opposes Savio’s projects, largely because he believes they will make stormwater flooding in the area worse.
“He’s pretty arrogant,” Dorn said of Savio. “He says ‘Everywhere is a flood zone. You just get flood insurance and problem solved.’ But it’s not just a problem for his guys, it’s all the neighbors.”
“They buy low cost land, because it’s wetlands, and then they get all these concessions,” said Dorn. “And then they don’t want to contribute to local infrastructure like parks, roads, sidewalks—any of the things that normal people are required to do.”
Savio is surprised by the community resistance, and insists his motivation is to help working families stay on Maui. “Everything I do, every concession I get from the county,” he said, “is about reducing price.”