Follow-Up Report: Office of Housing and Community Development Affordable Housing Credits

Report Highlights

Why This Review Matters

Implementing these recommendations strengthens the County’s ability to effectively administer its Affordable Housing Policy while maintaining a feasible environment for development. Aligning Hawaiʻi County Code Chapter 11¹requirements with current market conditions helps ensure affordable housing objectives are achieved without unduly constraining housing production.

The recommendations also improve clarity and consistency in policy implementation, supporting greater compliance and more uniform application. Strengthened reporting practices and formalized procedures further promote transparency and accountability.

Collectively, these actions support ongoing, data-driven improvements to the County’s Affordable Housing Policy and help ensure it remains effective and responsive to evolving community needs.

Key Takeaways of Audit Recommendations

Clarifying applicable sections of Chapter 11 helps make laws easier to understand and helps ensure compliance.
Establishing administrative rules helps guide OHCD authority to effectively administer the County’s Affordable Housing Policy.
Updating and enforcing policies and procedures helps ensure consistency throughout the organization and with industry best practices.
Ongoing monitoring helps ensure OHCD’s internal control system operates effectively and efficiently as designed.
Using technology as a monitoring tool helps improve mangement of affordable housing agreements and credits.
Segregating incompatible duties helps ensure one individual does not oversee key steps and/or elements of the affordable housing process.

Ongoing training helps ensure employees at all levels of the organization involved in the affordable housing process are knowledgeable and held accountable.

Summary of Audit Recommendations

Definitions

Completed: Department has sufficiently implemented the audit recommendation. We reviewed sufficient and appropriate evidence to support corrective actions.

In process: Department has made significant progress toward implementing the recommendation. We reviewed sufficient and appropriate evidence to support corrective actions.

No	Recommendation	Status
1.	Clarify County Code Work with the Hawaiʻi County Council to revise applicable Sections of Hawai‘i County Code Chapter 11.	In Process
2.	Establish Administrative Rules Establish administrative rules to effectively administer the County’s Affordable Housing Policy.	Completed
3.	Update and Enforce Policies and Procedures Clarify and enforce policies and procedures to ensure consistency and adopt industry best practices.	Completed
4.	Increase Monitoring and Program Oversight Perform ongoing monitoring of the internal control system’s design and operating effectiveness as part of operations.	Completed
5.	Use Software and Technology Use software and technology as a monitoring tool to improve the management of affordable housing agreements and credits.	Completed
6.	Segregate Incompatible Duties Separate incompatible duties. One individual should not oversee key elements of the affordable housing process. Compensating controls should be implemented to reduce the risk if duties cannot be sufficiently segregated.	Completed
7.	Provide Training Provide ongoing training to employees involved in affordable housing, including specialized training to support competency.	Completed

Status Recommendation 1: Clarify County Code

Recommendation 1 In Process

Work with Hawai‘i County Council to revise applicable sections of Chapter 11.

Status Update
In February 2022, OHCD contracted Keyser Marston Associates, Inc. (“KMA”) to examine Chapter 11 and make recommendations for its improvement. In July 2024, KMA issued their final report, Analysis and Recommendations in Support of Updates to Chapter 11 of the Hawai‘i County Code².
In response, the Hawai‘i County Council formed an Ad Hoc Committee³ to identify additional improvements to Chapter 11. Based on that committee’s recommendations⁴, a second Ad Hoc Committee⁵ was established to continue evaluating potential revisions. While these actions represent meaningful progress, further amendments to Chapter 11 depend on the completion of the Ad Hoc Committees’ work and approval by the County Council.

In 2023 and 2024, the County Council adopted Ordinances 23-20⁶, 23-77⁷, and 24-18⁸, to clarify housing procedures by amending Chapter 11 and require OHCD approval for the transfer of affordable housing credits. In July 2025, OHCD revised policies and procedures to strengthen internal controls (Exhibit 1).

OHCD reported the following Chapter 11 sections updates:

Exhibit 1: OHCD Progress on Chapter 11 Implementation
No	Chapter 11 Sections	Reported Progress
1-01	§11-2(5) Objectives.	Account for future conditions. No changes were made to this section; however, internal policies and procedures have been developed for calculating the affordable housing obligations for resort and industrial development.
1-02	§11-3 Definitions.	Define “eligible applicant.” There were various new terms added to the definition section of the Housing Policy. However, the OHCD does not require eligibility for an applicant, as suggested. The Hawai‘i County Code (“HCC”) requires that any parcel owner that triggers Chapter 11 compliance shall be obligated to satisfy the affordable housing requirements, regardless of any experience or other potential eligibility criteria.
1-03	§11-5(a)(1)-(7) Satisfaction of affordable housing requirements.	Replace ineffective satisfaction methods. Establish limits and create incentives. The OHCD secured services with Keyser Marston Associates to evaluate the effectiveness of Chapter 11. As a result of their report, OHCD and the Ad Hoc Committee, established by County Council, are actively evaluating which satisfaction methods are successful or unsuccessful, and how to improve them. A stakeholder meeting was held on October 10, 2024, to discuss incentive and satisfaction recommendations. There is a dedicated housing specialist to offer a preliminary review of plans, prior to submission to the Department of Public Works (“DPW”), facilitate plan review, and to serve as a liaison between DPW and the owner/developer. The Ad Hoc Committee is evaluating additional incentive options.
1-04	§11-5(c)(1)-(12) Satisfaction of affordable housing requirements.	Discontinue ineffective calculation of credits earned. The draft revisions to Chapter 11 will include clarification in language on evaluating the credit awards and coordinating income percentages to avoid overlap of the income categories. The OHCD has established policies and procedures for the compliance monitoring of projects with an Affordable Housing Agreement. This ensures that the household income of all renters or buyers has been evaluated for accuracy and completeness. This also serves to clarify the Area Median Income (“AMI”) served for each individual unit so that it can be evaluated as to the amount of affordable housing credits earned. The OHCD has established policies and procedures for the certification, authentication and verification of credits, that must be completed prior to any award or transfer.
1-05	§11-5(d)(1)(A)(B), 2(A)(B) Satisfaction of affordable housing requirements.	Discontinue ineffective housing percentage requirements. The draft revisions to Chapter 11 propose that the ineffective housing percentage requirements be discontinued. The prescriptive tiered income requirements have not been effective in generating affordable housing development. Consider an in-lieu fee matrix where amounts paid mirror the desired housing composition. The establishment of an in-lieu system is actively being drafted through the Ad Hoc Committee.
1-06	§11-9(a) – (f) Sale of Lots and units.	Consider capacity to monitor and enforce. The draft revisions to Chapter 11 specify the requirements of deed riders for all sales. Additionally, language has been included to clarify eligibility requirements, in accordance with the amendments made to 11-13 HCC. In the interim, measures have been implemented to create controls. There is a template application form available to screen for buyer eligibility. A checklist has been created to guide the housing specialist in their evaluation of eligibility screening. A template deed rider has been created to serve consistent requirements for all owners within all projects subject to the condition. Additionally, OHCD has created procedures to require that the developer submit a marketing plan for review and acceptance, prior to conducting sales of homes or lots. This procedure has not been executed, as there are no sales projects at this time. Revisions to reflect this procedure will be built into Chapter 11 and/or Administrative Rules, as necessary.
1-07	§11-10 Buyer of finished lots.	Consider capacity to monitor and enforce. The development of the affordable housing dashboard includes the capacity to display deed rider dates and their deadlines to allow simplified monitoring through an automated system.
1-08	§11-11(b) Rental units.	Consider extending the affordability period. Based on the report from Keyser Marston Associates, the affordability period is consistent with other municipalities and extending the period may reduce financial feasibility. Additionally, some projects may seek additional funding assistance from agencies that will automatically extend the affordability period. As an example, Hawai‘i Housing Finance and Development Corporation’s Low Income Housing Tax Credit Program establishes an affordability period of 15 years but often accepts up to 65 years.

1-09

§11-15(a)-(f) Transfer of excess credits.

Discontinue ineffective transfer policies and create new policies to manage chain of custody.

OHCD has established policies related to the award, transfer, and redemption of affordable housing excess credits. Additionally, a procedure has been implemented to require that all credits undergo certification, authentication and verification prior to any action.

1-10

§11-19 Reports by the housing administrator.

Make reports compulsory and include excess credit transfers, and balances.

Ordinance 23-20 amended Chapter 11 to modify the language and require that OHCD reporting is made compulsory, effective February 23, 2023. Since that time, OHCD has submitted quarterly reports to the County Council, beginning March 1, 2023, for the period of October 1st to December 21, 2022. This, and all subsequent reports have been made available within the OHCD website archives.

1-11

Applicable new section

Create incentives.

OHCD has a dedicated housing specialist to review plans prior to submission to DPW and to serve as a liaison between DPW and the owner/developer. The Ad Hoc Committee is evaluating additional incentive options, which will be included in the revisions of Chapter 11 HCC.

Source: OHCD Progress on Chapter 11 Implementation

Conclusion

We determined OHCD has taken the necessary actions to partially address the intent of this recommendation, based on our review of the Keyser Marston Associates’ report, relevant council resolutions and ordinances, committee meeting minutes and actions, communications, OHCD’s Chapter 11 policies and procedures, and quarterly reports on affordable housing credits and inventory.

We commend OHCD’s continued collaboration with the Ad Hoc Committee and encourage ongoing coordination to advance comprehensive amendments to the County’s Affordable Housing Policy, as well as updates to their administrative rules, policies, and procedures.

Status Recommendation 2: Establish Administrative Rules

Recommendation 2 Completed

Establish administrative rules to effectively administer the County’s Affordable Housing Policy.

Status Update

The Hawaiʻi County Code Chapter 11 establishes the County of Hawaiʻi’s Affordable Housing Policy and consists of two articles. The Ad Hoc committee has proposed amendments to improve clarity within each section. To support implementation of the Affordable Housing Production Fund Program, administrative rules were adopted prior to any funding distribution. In addition, OHCD established internal policies and procedures to guide the work related to Article 1. Both the administrative rules and internal policies and procedures may be revised following the amendments to Chapter 11.

I. Chapter 11 Housing Article 1. Affordable Housing.

In September 2022, OHCD issued written policies and procedures and updated them in July 2025 and April 2026, to support implementation of Chapter 11. These procedures provided standardized templates for affordable housing agreements, specified required project information, and established standard enforcement terms, including severability.

The policies also define a Five-Phase Affordable Housing Process for implementing Chapter 11: (1) identifying an affordable housing condition (Chapter 11 trigger), (2) executing an affordable housing agreement, (3) monitoring compliance, (4) satisfying the agreement, and (5) releasing the obligation. Each phase includes defined guidance, key terms, and supporting resources.

II. Chapter 11 Housing Article 2. Housing Production Funding.

In March 2023, OHCD published Administrative Rules for the Affordable Housing Production Program⁹, with updates in April 2023 and April 2025. Established under Hawaiʻi County Code 11-21, these rules are intended to support, expand, and sustain affordable housing production in Hawaiʻi County through the Affordable Housing Production Program and its associated appropriations.

Exhibit 2: Five-Phase Affordable Housing Agreement Process

^{Source: OHCD Policies and Procedures for Implementing Chapter 11}

Conclusion

We determined that OHCD has taken the necessary actions to address the intent of this recommendation, based on our review of the Affordable Housing Production Program website¹⁰, administrative rules, OHCD policies and templates, training materials, ordinances, communications, and committee records and actions. We encourage OHCD to update its administrative rules when future amendments to Chapter 11 are adopted.

Status Recommendation 3: Update and Enforce Policies and Procedures

Recommendation 3 Completed

Clarify and enforce policies and procedures to ensure consistency throughout the department and industry best practices.

OHCD Rec3 Exhibit 3

^{_{Exhibit 3: OHCD Policy & Procedures for Implementing Chapter 11}}

Status Update

OHCD issued its Chapter 11 Policies and Procedures in September 2022 and revised them in July 2025 and April 2026 to strengthen internal controls, improve consistency, and align with best practices for implementation.

OHCD maintained documentation demonstrating that updated policies and procedures address key internal control areas, including segregation of duties, fraud reporting, management review, reconciliations, and project close-out.

The July 2025 policy revisions further clarify roles and strengthen controls by enhancing the Five-Phase Affordable Housing Process (Exhibit 2) providing notice, agreement execution, compliance monitoring, satisfaction, and release. Updates include guidance obligation calculations, standardized templates, defined monitoring procedures, credit reconciliation and Certification, Authentication Verification (CAV), and formal close-out requirements.

The April 2026 policy revisions were made to align with state and federal best practices. Specifically, the Affordable Housing Agreement Compliance Monitoring Procedures (Appendix A) were established to provide assurance that developers meet agreed-upon terms and that affordable units were constructed, rented, and occupied by the eligible income groups.

OHCD recognizes the need to maintain clear compliance standards for affordable housing credits and excess credits while reducing restrictions, where appropriate, to better align with property management practices.

In response to developer feedback and review of Hawaiʻi Housing Finance and Development Corporation’s Low Income Housing Tax Credit requirements, OHCD updated its procedures to align with state monitoring programs administered through Spectrum.

Conclusion

We determined OHCD has taken the necessary actions to address the intent of this recommendation, based on staff interviews, a review of policies and procedures, and information available on OHCD’s Affordable Housing Developer Resources website¹¹.

Status Recommendation 4: Increase Monitoring and Program Oversight

Recommendation 4 Completed

Perform ongoing monitoring of their internal control system’s design and operating effectiveness as part of their operations. Continuous monitoring includes reviews of adjustments, discrepancies, reconciliations, supervisory activities, comparisons, final affordable housing agreements, and other routine activities.

Status Update
In July 2025, OHCD revised policies and procedures to strengthen monitoring and oversight. The division head assigns a housing specialist to track project progress throughout construction. Monitoring activities include coordinating permit review, tracking milestones and projected completion dates, conducting documented site visits, and maintaining regular communication with developers to ensure projects remain on schedule and compliant. For County projects, a separate housing specialist serves as construction project manager and provides independent updates through
project completion.

OHCD has made substantial progress in strengthening post-construction and occupancy monitoring of affordable housing projects. Rental projects are now monitored annually through the affordable housing agreement compliance
monitoring process. Under this process, a housing specialist conducts audits of tenant files to verify that occupants of affordable housing units continue to meet eligibility requirements throughout the affordability period.

Conclusion
We determined OHCD has taken the necessary actions to meet with the intent of this recommendation, based on staff interviews and review of Affordable Housing Agreement Compliance Monitoring Procedures.

^{Exhibit 4: OHCD Phase 3 AHA Compliance Monitoring Procedures}

Status Recommendation 5: Use Software and Technology

Recommendation 5 Completed

Use software and technology as monitoring tools to improve managing affordable housing agreements and credits.

Status Update

In July 2024, OHCD worked with the County’s Department of Information Technology to develop an Affordable Housing Dashboard¹² to improve monitoring and management of affordable housing agreements and credits. The interactive mapping and data tool displays the location, status, unit count, and applicable income limits of affordable housing projects on Hawai‘i Island, including existing developments and projects under development, providing a centralized view of current inventory and future supply.

We commend OHCD for using software and technology as a monitoring tool. In their next phase, OHCD is developing an expanded dashboard that will include information on the location and transferability of affordable housing credits.

Exhibit 5: Affordable Housing Dashboard

^{Source: OHCD Affordable Housing Dashboard}

Exhibit 5.1: Affordable Housing Dashboard

^{Source: OHCD Affordable Housing Dashboard}

Conclusion

We determined OHCD has taken the necessary actions to address the intent of this recommendation, based on staff interviews and review of the dashboard. The dashboard has also received local and national recognition for its effectiveness.

We commend OHCD for the following achievements:

Invitation to present dashboard at the 2025 National Geographic Information System (GIS) Environmental Systems Research Institute (ESRI) Conference in San Diego, California
Feature on Hawaiʻi Future’s Instagram page
Collaboration with the Hawaiʻi Housing Finance and Development Corporation (HHFDC) to share lessons learned from the dashboard development process
OHCD’s dashboard served as a model for other municipalities

Status Recommendation 6: Segregate Incompatible Duties

Recommendation 6 Completed

Manage separate incompatible duties. One individual should not oversee key elements of the affordable housing process. Compensating controls should be implemented to reduce the risk if duties cannot be sufficiently segregated.

Status Update

In July 2025, OHCD revised policies and procedures to ensure proper segregation of duties. Critical tasks, such as drafting, awarding, or redeeming affordable housing credits require review by at least two staff members and final approval by the housing administrator, in accordance with Hawaiʻi County Code §11-15(d).

Additional review also includes housing specialists, a division head, and consultation with Corporation Counsel. These controls provide checks and balances intended to reduce the risk of errors, fraud, or unauthorized actions.

Conclusion

We determined OHCD has taken the necessary actions to address the intent of this recommendation, based on staff interviews and review of segregation of duties policies and procedures.

^{Exhibit 6: OHCD Segregation of Duties Procedures}

Status Recommendation 7: Provide Training

Recommendation 7 Completed

Provide ongoing training to employees involved in affordable housing, including specialized training to support competency.

Status Update

OHCD incorporated training into its bi-weekly staff meetings, including project updates and instruction on Chapter 11 requirements, administrative rules, policies, and procedures.

In 2023 and 2024, staff completed training in complaint handling, subpoenas, Subpoena Duces Tecum (SDTs), contract management, ethics, and Chapter 11 requirements related to affordable housing obligations, eligibility, sales, and incentives. Additional training covered affordable housing programs, an overview of HRS §201H-38, challenges associated with 201H affordable housing projects, affordable housing credits, rulemaking, and fair housing requirements. OHCD also engaged internal and external legal experts to provide targeted training on legal requirements and best practices.

Conclusion

We determined OHCD has taken the necessary actions to address intent of this recommendation, based on our review of training records, sign-in sheets, and staff interviews.

We encourage OHCD to continue ongoing training.

^{Exhibit 7: American Planning Association Hawaiʻi Chapter 201H Affordable Housing Credits}

Management Response

Objective, Scope, Methodology

Objective, Scope, and Methodology

Objective

Did the Office of Housing and Community Development (“OHCD”) implement the 2023 affordable housing credit audit recommendations?

Scope

This follow-up review of Affordable Housing Credits Program covers the period from March 2023 to May 2026.

It is limited to assessing the implementation status of the 2023 audit recommendations and does not address new issues or matters outside the original audit scope. Quarterly Affordable Housing Credits reports were not reconciled as part of this review.

Methodology

To verify the status of the audit recommendations, we:

Obtained and reviewed sufficient and appropriate evidence
Worked with staff to verify management responses
Reviewed applicable laws, regulations, and governance requirements
Tested internal controls and selected transactions
- Internal controls are the rules, processes, and checks that help ensure work is done correctly and help prevent or detect errors and fraud
Conducted site visits to assess monitoring and oversight practices
Remained alert to indicators of fraud, waste, and abuse
Identified exceptions and areas for improvement

Appendix A & Endnotes

Appendix A – Excess Credit Transfer Procedure

Endnotes

1	Chapter 11 of Hawai‘i County Code, is designated as the County’s Affordable Housing Policy.
2	Keyser Marston Associates, Inc. (2024, July). Analysis and Recommendation in Support of Updates to Chapter 11 of the Hawaiʻi County Code Prepared for: County of Hawaiʻi. (COM 935.1 [2022-24]). https://records.hawaiicounty.gov/weblink/0/doc/1080748/Page1.aspx. Accessed 3/27/2026.
3	Kierkiewicz, Ashley. (2024, July). Formation of an Ad Hoc Committee Relating to Updates to Chapter 11. (COM 948 [2022-24]). https://records.hawaiicounty.gov/WebLink/DocView.aspx?dbid=0&id=1081515&page=1&cr=1. Accessed 3/27/2026.
4	Kierkiewicz, Ashley. (2024, October). Chapter 11 Ad Hoc Committee Recommendations. (COM 948.2 [2022-24]). https://records.hawaiicounty.gov/Weblink/0/doc/1089015/Page1.aspx and (2024, November) Attachment to Chapter 11 Ad Hoc Committee Recommendations (COM 948.3 [2022-24] https://records.hawaiicounty.gov/Weblink/0/doc/1089593/Page1.aspx. Accessed 5/20/2026.
5	Kierkiewicz, Ashley. (2024, December). Formation of an Ad Hoc Committee Relating to Updates to Chapter 11. (COM 63 [2024-26]). https://records.hawaiicounty.gov/Weblink/DocView.aspx?id=1091894&searchid=e7bbfda1-3faf-416f-8447-548de0c0245e&dbid=0. Accessed 5/18/2026.
6	Hawai‘i County Council. (2023, February). Ordinance No. 2023-020 (2022-2024). An Ordinance Amending Chapter 11, Article 1, Section 11-19, of the Hawai‘i County Code 1983 (2016 Edition, As Amended), Related to Affordable Housing https://records.hawaiicounty.gov/Weblink/0/doc/1052337/Page1.aspx. Accessed 5/18/2026.
7	Hawai‘i County Council. (2023, November). Ordinance No. 2023-077 (2022-2024). An Ordinance Amending Chapter 11, Article 1, Sections 11-3 and 11-13 of the Hawai‘i County Code 1983 (2016 Edition, As Amended), Relating to Affordable Housing. https://records.hawaiicounty.gov/Weblink/0/doc/1067217/Page1.aspx. Accessed 5/18/2026.
8	Hawai‘i County Council. (2024, March). Ordinance No. 2024-018 (2022-2024). An Ordinance Amending Chapter 11, Article 1, Section 11-15, of the Hawai‘i County Code 1983 (2016 Edition, As Amended), Relating to Transfer of Excess Affordable Housing Credits. https://records.hawaiicounty.gov/Weblink/0/doc/1074326/Page1.aspx . Accessed 5/18/2026.
9	Office of Housing and Community Development. Administrative Rules for Affordable Housing Production Program. https://www.housing.hawaiicounty.gov/home/showpublisheddocument/309126/638811741520670000. Accessed 4/9/2026.
10	Office of Housing and Community Development. Affordable Housing Production Program https://www.housing.hawaiicounty.gov/grants-funding/affordable-housing-production-program-ahp. Accessed 4/9/2026.
11	Office of Housing and Community Development. Affordable Housing Developer Resources. https://www.housing.hawaiicounty.gov/development-preservation/affordable-housing-developer-information. Accessed 5/20/2026.
12	Office of Housing and Community Development. Affordable Housing Dashboard. https://experience.arcgis.com/experience/f62052d0da604de79fa2b3e1e36370ea/page/Maps/. Accessed 4/23/2026.

Hawaii County, HI

Follow-Up Report: Office of Housing and Community Development Affordable Housing Credits

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