 network. I'm your host, Kaylee Iakena and president of the Grassroot Institute of Hawaii. I've talked a lot on this program about making it easier to build more housing in Hawaii's existing urban areas. That doesn't mean sprawling out to every nature preserve. It means building where we already have people. There are a lot of bills right now in the state legislature and county councils that would help make that easier and we're pretty excited about that. But there are some ins and outs of the building process that need to be looked at more carefully. Today we're going to talk with someone who has the experience of doing just that. My guest is Abe Lee. He's a licensed realtor with more than 40 years of experience here in Hawaii. He frequently holds seminars teaching real estate and is the author of the book How to Become a First Time Home Buyer. Now that would be a value to everybody in Hawaii whether you own a home or not because if you don't own a home you need one and if you do own a home you can teach people. He has been called the CPR King for his experience with developing projects with condominium property regimes. So we're going to talk about those terms a bit today. But first please welcome to the program Abe Lee. Welcome Abe. Thank you very much Gili. It's an honor to be here. Well it's an honor to have you on the program and you have helped so many people. I just want to thank you and let's just get started on a more personal level today. How did you get involved in real estate and home building? Was it something that your parents instilled in you? Is it something as a little child you dreamed about or were there events in your life that shaped you into the path you've taken? You know how happenstance happens in life? Yeah and I have an agent degree in agent studies from the University of Hawaii which did not prepare me for business at all except I sold fire extinguishers in Kahala door to door as a college student and one day this guy calls me up and says hey you sold my wife three fire extinguishers and she says I should hire you. So I said what do you do? He goes I'm an insurance salesman general agent. So I interviewed with him and I thought life insurance is interesting. So I got a life insurance license not with him but with another company and then while I was selling insurance I said you know what I'm making people wealthier when they die for the families. I like to do something with real estate so they can be wealthy when they're alive so I can catch both ends before death and after that and so I got a real estate license and then I hooked up with a fellow named Bob Allen who developed Century Center, Executive Center and Century Square and he was probably one of the most prolific developers in Hawaii at that time in the 1970s 80s what happened to me had the good fortune of working for him in the real estate development sales for Executive Center and that's what got my interest in developing of course I couldn't borrow 80 million dollars like Bob did so I just started with two homes or one lot and 20 units that I converted from a one-owner building to a 21 20 unit apartment building that could be condominiumized and sold to individuals and that's what got me started in real estate development. Well that's quite a story Aime I've looked at what you've done over the last 40 years and I'm not sure whether you're a realtor or whether you're a home builder or both how would you describe yourself in terms of those roles? I'm not a home builder because I don't have a contract with license but I've hired a lot of not but contractors to build houses for me on these infill projects I built two homes on a lot where the zoning allowed it which we'll talk about later but my biggest project from scratch was a 40 unit project in Villalini town which is very unusual because Castleman Cook dominated that area but they had a property that they want to get rid of which is the first sales office it became a church and became an eyesore and then they put it off the bid and I had a Japanese partner who paid cash for the property and we just developed 40 townhouse units there so I did it from two units up to 40 but not hundreds like these big developers. Now Abe you have specialized in what is called CPR projects I'd appreciate it if you could explain a little bit about what that means and why you decided to focus on that it's my understanding that you've created more than 150 CPR projects which total to about 500 new homes here in Hawaii for our residents. Thank you yes correct not new maybe but what I call retrofit existing homes and convert the usage from one owner only 20 homes or 20 units and converting it to CPR so now we have 20 separate owners so basically we've created affordable housing for 20 owners whereas there was one rich person that owned the whole building so I'd like to see that we can do or do the infill projects like that. It sounds fascinating but before we go any further could you explain what CPR is? Sure okay CPR stands for condominium property regime doesn't make any sense well before then it's called HPR which is called horizontal property regime which made less sets so in the 1960s the legislation Hawaii created law under HRS Hawaii revised statutes by 14a to allow by magic by law that you could split out ownership by not subdividing but by condominiumizing which is really a very different kind of concept and Hawaii was one of the leaders in the CPR process so it went from see HPR to CPR and now it's under Hawaii revised statutes by 14b which is a remake of the old law into a new law and that happened in 2006. Abel where is your most recent CPR project and tell us a little bit about that. Sure we did 10 homes on William Henry road and it was owned by a local family and second generation of children were getting older and they had 10 homes on one lot it was 77,000 square feet of what we call our 7.5 zone land which is residential minimum lot size is 7,500 square feet they came on the market and I made an offer and they rejected me at first then we negotiated and they accepted so now we're able to take these 10 homes that was owned by one family and we're able to convert it into condominium homes and sell it to 10 different owners and we sold those at $600,000 a house which is kind of high but the market rate and the appraised value was 650,000 so we gave each of the buyers a $15,000 discount and they had equity immediately upon signing with us now we have 10 individual homeowners instead of one family owning all 10 homes that's wonderful it's uh an opportunity that you've created for people that otherwise might not have come to them now there's the bill that's going through our legislature right now it's HV1630 I don't know if you've heard about that or not or had a chance to review it basically what it would do is allow property owners to subdivide their properties without a lengthy hearing and we talked a little bit about that earlier what's the difference between subdivision and CPR dividing a problem sure when you subdivide a piece of property let's say in Honolulu because I'm most familiar with Honolulu let's say you have a 10,000 square foot lot it's r5 zone as residential minimum lot size is 5,000 so by the zoning code you're allowed to have two homes on the property if the lot is wide enough like 60 feet wide after 62 feet wide then you create a 12 foot driveway go to go back to the back of the lot and that'd be what they call a flag lot the front lot would be 50 feet wide whatever and so now you can have two 5,000 square foot lots and the city allows you to subdivide the two lots into two separate owners and two separate tax bat teams so it's subdivided legally at the city and county level and also register or record the documents at the Bureau of Conveyance well let's say the lot is 50 feet wide and it's 200 feet deep well you don't have enough width to have the 12 foot driveway and the 32 38 foot width frontage is not sufficient so the city would say you can't subdivide but the zoning code allows two homes to be built with or without the narrow driveway so now zoning code allows the two homes but the zoning code will not allow the lot to be subdivided but the zoning code will allow allow two homes to be built now the question is okay I got these two homes but I want to transfer a title to my children or to my cousin or to a stranger and you can't do that but comes a magic of CPR and the CPR says on a state law we'll let you slip these ownership rights and have two separate whole lots of record but it'd be a CPR unit one and two so on the tax map key it'd have one tax map a parcel number but it have two numbers for CPR which be zero zero zero one and zero zero zero two now for some of you not familiar with TMPAs you are who you're speaking Greek to me but just know all the CPR is is a way to transfer title to property that the counties allow you to build but they won't let you split out the ownership and transfer title but the CPR to the magic of Hawaii revised status by quoting B allows you transfer title all it is a transferring a title vehicle which is very is that simple that's how it is you say Abe that it's that simple in reality is it simple is that what people encounter ease of being able to do this transfer or are there obstacles that come in the way yeah maybe I'm making it too simple but if you think about if I have to subdivide this parcel I gotta go get the two lots be approved a lot which has to be perfect and you know dimensions have to be right a lot of properties in Hawaii on a wobble are 50 feet wide they're not 62 feet wide so by virtue of the mapping too narrow you can't subdivide but you can have permits to build two homes while by magic of 514 B now you can transfer title to the two homes and the lot is a little narrower and use share same driveway to the back but this allows you to put two homes and a lot by the city uh zoning policy but it also allows you to separate out ownership so the children could get a mortgage on their property parents would keep the mortgage on the other property or spray and clear or they can sell it to their children cousins strangers and you can basically transfer title to property so in a way it's simple if you know what you're doing okay you're such a good teacher now I asked you a little bit earlier if you had a chance to look at HB 1630 have you and do you have any opinions on that you know I I took a glance at it but I'm not a legislator nor an attorney but any way that you can reduce the time and speed up the process I'm all for it as long as you know people don't think that there's a violation of specific processes that have to go through which a lot of people are forced to say you can't just rush this thing through and forget all about the environment the archaeological studies etc but if all things are equal and you can't get a permit then why not speed up the process because you and I know clearly we've got bottlenecks everywhere right the building department I mean they were people waiting for the permits for one year or two years for a house I used to run it through a building department walking through each of the departments in one week and I got my permits this is when I first started today you can do that that's right babe we we could invite you back for an entire program on the Department of Planning and Permits in fact did you know there's the play about that that's been performed recently here in Honolulu anyway let's go back to the CPR question there's advantages for homeowners of getting the CPR property and there are advantages for home builder how would you sum up the advantages well first of all the as I mentioned to you the lots that are too narrow to subdivide and to have two homes split with two different lot numbers you can do that now with CPR but you can't do it for the zoning code so that's certainly a big plus second you can make the lots big or small in a CPR example we have a 10,000 square feet put lot and the that says you know I like a bigger lot and the kid goes but then I want a bigger lot and that says hey I control here I'm giving you 3,000 I'm gonna keep 7,000 you can't do that in a subdivision but you can in a CPR you can make the lot size any size you want and the city they don't recognize CPRs by the way which is really interesting state recognizes CPRs and allows the properties to be transferred on title and have separate lots of record as far as ownership is concerned but the city recognizes 10,000 square foot lot with two homes if it's CPR or not CPR they don't care the only department that cares is a tax office you're gonna they want to tax the two separate CPR units so they'll recognize the CPR units but the DPP department of planning permitting they recognize it as one lot with two houses now if you had a high rise of 500 units they recognize it as one building with 500 kitchens but they don't recognize it as 500 separate readable units the state does but the counties don't which is a very interesting you know situation here well that is it's apples and oranges in one sense now if you could just do wave of magic wand and create CPR projects here in Hawaii on a much easier level what would make the process easier what could be done that would really help both the homeowners and the home builders the problem is the building permit lies with department planning permitting and that's the bugaboo of how do you speed up the process there the CPR process will not speed up that process unfortunately but what they will speed up is you have a lot that can have two homes of one lot but you can't subdivide but you can transfer title by virtue of the horizontal property regime the 514b so once we get the permits in place then we can transfer title much faster and much easier but the key is how do we you know get through getting the permit process and that's at the city level and not at the state level right well that's a great project for our council people to be working on now so in general what i think we're talking about is what has sometimes been called infill home building yes we're constructing homes on lands that were already zoned urban or even residential another component of such housing are accessory dwelling units what kind of experience do you have in helping people to acquire or to build their ad use accessory development units sure if we go back in history a little bit and killing you might remember this i'm not sure but in 1982 the accessory dwelling unit law passed at the state legislature to say that every county is mandated to allow two homes to be built on one lot even if the zoning code does not allow it hence mayor aileen anderson in 1982 proposed that they do what they call ohana homes so ohana home history is very different from the adu home which is under kirk codwell so if you don't mind let me go back in history a little bit but i'm old enough to remember all this but 1982 the mayor said we can have two homes on one lot you have 50 percent lot coverage and you can allocate either unit the main house of the ohana unit and have it equal or unequal so let's say we take a six thousand square foot lot and our five zone land okay residential lot is minimal 5000 and you can't build two homes but with the ohana you could so you do 50 percent lot coverage which would be 3000 square feet under the roof on the first floor and you can build a second floor and possibly have five or six thousand square feet of home how the homeowner allocates the square footage to the ohana unit and the main house they didn't it didn't matter and the other thing was you could cpr the unit and sell the unit separately so that went along from 82 to about 88 uh eight and then the neighborhood boards went to the city and said you know this ohana thing is killing our neighborhood we got too many cars in the street and people are making money of cpring and selling them separately so they had a size limit at that point with 700 900 and a thousand square feet for the ohana unit so that stopped ohana a little bit then in 1992 came the clincher and the city council passed a law that said from now on ohana units must be rented to relatives only they have to be attached and you cannot cpr but at that point in 1992 basically ohana stopped because no offense but sometimes people don't want to rent to relatives because relatives don't pay rent and you can't kick your nephew out you know then your sister would get after you so they said that was the ohana law until now so currently under 1992 and thereafter you got to permit and you have to rent to relatives only and you cannot cpr and the size limit by the way it was lifted somewhere along the way they lifted the size limit right so that's cpr along comes per call well and on the september 14 2015 he puts into law the adu law that adu is totally different concept is the same you can put a second house on but here's the way it works 3500 square foot minimum to under 5 000 square feet so 4999 square feet you have to you can build a 400 square foot adu with a full kitchen and you only need one parking stall whereas before with ohana you needed two parking stalls then if your lot is more than 5 000 square feet then you can have a second adu or adu in it but it has to be no more than 800 square feet so the lot size determines whether you have a 400 square foot house or an 800 square foot house maximum still need only one parking and they don't have to be attached they can be detached and you don't have to rent to relatives so there's different nuances with the ohana versus the adu today what are some of the major roadblocks at the state or city level for a person who wants to put an adu in their backyard okay well one again is the permit process right i'm not sure the adu process has speeded up the permit process second you have to have sewer adequacy a lot of people don't talk about this but if you want to build a second kitchen on any residential lot of record or anywhere else for that matter you have to have the city wastewater department say that we have adequate sewage so they have a chart i guess and let's say i'm in uh nuano because this actually happened recently we have an r10 lot 10 000 square foot minimum lot size are client as 20 000 square feet in theory they could have two homes detached or attached and 50 lot coverage and liquid cpr except when we applied for the sewer adequacy form we got rejected and they said inadequate sewage so our client has this huge lot what a waste and they can't put a second house on now in the old days when i used to develop i still do but when i used to we could put a holding tank in the ground and the sewage would flow into this holding tank at 2 a.m. in the morning it pumped up automatically when no one else was pushing the toilet wastewater management did away with that holding tank so now you can't do a holding tank and they won't let you put up a second house which i think is retrograding and i don't know why they did that because this you know holding tank and they pump it out at 2 in the morning and i did several homes that way when the sewage is inadequate so that's one drawback plus of course the building permit process they also charge you fees to put the second house on mm so in a regular project that we used to do it'd be a six or seven thousand for sewer adequate sewer check and sewer hookup another six or seven thousand for water meter so you're out 12 grand to build that second unit but if you're trying to create affordable housing that 12 grand could be a big number right and i don't know if they remove that fee or not they did for a while and i'm not sure they did away with it permanently or they still brought it back and say you still have to pay those fees so those are the kinds of issues that are still i think fronting the adu and ohana well you know a but if i dealing with some of those issues we could readily increase the supply of housing without having to go out and actually build more housing so to speak but this is something we call up zoning that to some extent and it involves different processes like greater mixed use development or adaptive reuse of older commercial buildings that were business buildings that can be turned now into residences or allowing more multifamily housing in neighborhoods and so forth so what are your thoughts about up zoning in general you know i think if they went back to the old ways of if you could have an integrated business use and residential use like you know you have to store in the bottom modern pop store and then they lived upstairs but they don't let you do that in business zone anymore except there is a rule that says that you can have a living quarters for the caretaker or the owner in a business zone but you can only have one unit well if the lock's big enough why can't you have more homes and have a mixed use of homes on top and a business on the bottom because you know i mean that's i mean that's what we used to do in the old days you know you didn't have to catch a bus take the car and drive 10 miles you could just walk around the neighborhood and get everything you wanted and i think if we could go back to those kinds of creative ideas and have more emerging of the two concepts of business commercial and residential that would certainly help right in fact right now a great deal of telework is taking place inside of residences already so the dividing lines between work and home are getting dimmer and dimmer now i want to go back before we close and mention the book you wrote how to become a first time home buyer that was back in 2018 what have you seen change in the hawaii housing market and is there anything you might revise or say differently than you did back then well back then the interest rates are a little lower than it is now and so we had higher rates went down during the you know i guess the COVID era and then now we're back up pre-COVID era and we can't control the interest rates but boy that really helped the people be able to afford a house because if you had a million dollar loan at three percent interest is 30 000 or today at six percent is 60 thousand dollars so how do you control interest rates you know unfortunately i don't think we can but that certainly would help if we could control the interest rates a little better and second of course we have to figure out how do you keep the prices down and how do you limit the inflation rate and of course the city is trying to do that with a buyback program with you know 50 percent of owner occupants or 60 percent they cannot sell their house for 10 years and i think that's a good concept but at least it keeps the housing market to the affordable market which we really do need desperately well a by really appreciate your insights as you know at the grassroot institute we're concerned about overall policy but we've got 30 seconds left and so i just want to switch gears what do you tell the individual or couple in hawaii who doesn't have a home yet what should they be doing in order to qualify for a home okay i tell people look for a bigger lot 7500 square feet on r5 zone land and you can put a duplex two people friends or not friends can actually buy the lot build a duplex split it you split the cost of the rent there you go or you have a rental unit to help you pay your more rent exactly well a i want to thank you so very much for being with us on the program today and for all you've done for people in hawaii and helping them get into homes i also hope our government pays attention to some of your ideas as well thanks so much for being here hey and thank you for your wonderful work i have great respect for what you do and what your group does thanks very honored to have you on the program my guest today has been Abe Lee a realtor and somebody who's helped people get homes built over the last 40 years here in hawaii you can see his book on amazon or anywhere books like this are sold how to become a first-time home buyer much aloha to all of you i'm kelly akina with the grassroot institute for hawaii together on the think tecawaii broadcast network until next time aloha