County Offers to Swap Infrastructure for Affordable Housing

Waikapu developer would double low-cost housing in exchange for county-funded sewer plant, road extension

A proposal by Maui County Mayor Michael Victorino would have the county shoulder the cost of building a required wastewater treatment facility and road improvements in exchange for doubling the number of low-cost workforce housing units in the planned Waikapū Country Town development. As a bonus, the new wastewater plant could be built with enough added capacity to service Kahului as well, allowing the existing facility at Kanaha Beach to be decommissioned. Authorities worry that its location in a tsunami zone could one day lead to disaster.

Citing a need for more affordable housing on the island and asserting that the dearth of less expensive homes was just a symptom of sluggish development overall, the mayor offered to build the sewer treatment plant at an estimated cost of $87 million (including sufficient capacity to service Kahului), as well as making some needed road improvements, provided the developer agrees to add 213 additional workforce housing units, bringing the total to 500. Under the public-private partnership Victorino proposed, the number of market-rate units would be reduced so that the density would remain unchanged.

An agreement between Maui County and the developer of the proposed Waikapū Country Town rural-residential development would have the County foot the bill for a new sewage treatment plant and road improvements in exchange for adding 213 more low-cost “workforce housing units to the 1,500 home project. Courtesy Wikapu Properties LLC.

“It’s time for government to return to its obligation to build infrastructure and enable developers to build homes,” Victorino said in a prepared statement. “My administration is prepared to build the needed wastewater treatment plant and to obtain state money to help fund the Waiale Road extension. If, and when, federal infrastructure money becomes available, we will pursue those funds as well. This is a win-win solution for all concerned and an important step toward addressing our urgent residential housing shortage.”

The county’s contribution is based on the “opportunity cost” to the developer–or the reduction in potential profit–of selling more units below market. The opportunity cost of selling 63 more units below market rate is valued at $22 million, which is expected to cover the cost of extending Waiale Rd. from Waiko Rd. to the Honoapiilani Highway. The opportunity cost of designating 150 more units “affordable” is valued at $53 million, which would constitute Atherton’s contribution to the wastewater treatment plant.

The “affordable” units will be sold below market rate based on family income and their sale prices capped for five to ten years or more. However, it remains to be seen what “affordable” means in a housing market in which the median home price tops  $1 million.

Approved by the County Council in 2019 following nearly two decades of planning, the farm-focused development is currently slated to include 1,433 single-family, multifamily and rural units surrounding the Maui Tropical Plantation on Honoapiilani Highway in Waikapū. The plan also allows for almost 150 ohana units and 200,000 square feet of commercial space, making it the county’s largest development proposal in decades. The total value of the finished subdivision could top $1 billion and it will more than double the town’s size.

Plans for Waikapū Country Town, more than two decades in the making, include 82 acres of parkland, sites for two schools, and 900 acres of adjacent land designated an agricultural preserve, all surrounding the Maui Tropical Plantation on Honoapiilani Highway. Country Town Agriculture courtesy Wikapu Properties LLC.

Last year’s Maui County Comprehensive Affordable Housing Plan called for the county to take on more of the cost of infrastructure when land developers commit to providing below-market-rate homes. Apparently, Victorino took that to heart. The mayor formerly represented Waikapū on the council and has long been familiar with the project. He believes that an adjacent county-owned parcel would be an appropriate location for low-cost rental housing. If built by the county itself, those units could legally be reserved strictly for qualifying local residents.

Landowner and coffee farmer, Mike Atherton, has enjoyed unusually widespread community support for his project’s unique agriculture-focused design, which includes small farms, 82 acres of parkland, and sites for both a 5-acre Hawaiian immersion school and a future 12-acre elementary school. More than 900 acres of adjacent land has been designated an agricultural preserve, where Atherton, now 73, grazes cattle and offers long-term leases to a few dozen small farms.

While testifying in support of the public-private partnership, Stan Franco, president of the affordable housing advocacy group Stand Up Maui, said that Atherton had sought their input many times during the planning process. “It’s an example of what all developers should do,” he said.

The mayor’s proposal won support from the Planning and Sustainable Land Use Committee, March 23, provided that the project return to the Council for further review of necessary zoning changes and conditions of approval, including an extension of the period for which the workforce units would be kept affordable. While it’s unclear exactly how the partnership with the County might affect the timetable for construction, project attorney Jeffrey Ueoka claims that, with the new agreement in place, construction could begin by the end of the year and the first buildings could see completion in 2025.

Dan Collins