Mortgage Connects an MGIC Podcast

PAL Kaua’i founder Jim Edmonds on affordable housing and financial services in Hawai’i

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Concepcion Guerrero (00:04):
Welcome to Mortgage Connect by MGIC, bringing you the latest insights from top mortgage professionals around the industry. I'm your host, Concepcion Guerrero. In today's podcast, we're celebrating Asian American Pacific Islander or AAPI Heritage Month here at MGIC. And as part of this wonderful celebration, MGIC coworkers, nominated and selected permanently affordable living or PAL Kauai as our 2023 AAPI grant recipient. This grant will be used for the development of housing and programs that support Kauai's most vulnerable families. For today's conversation, I've invited my colleague, Heidi Roberts, manager of MGIC'S Delivery Services of Customer Technology Experience. To conduct this unique interview, Heidi has over 20 years of experience in the mortgage banking, technology and digital market in marketing industries. She started her career at MGIC, where she held a variety of positions in technology and web development.

Concepcion Guerrero (01:02):
During her 12 year tenure at MGIC, she was also an adjunct web design and development instructor at Waukesha County Technical College for six years. In 2013, Heidi joined Waterstone Mortgage Corporation as the web applications manager, where she built out the web development team and was promoted to vice president of information services. After 10 years at Waterstone Mortgage, she found her way back to MGIC, where she is now responsible for the customer experience technology and B2B teams in the information services department. Heidi, welcome. I'm very glad to have you join us today.

Heidi Roberts (01:39):
Thank you so much for having me. Um, I'm excited to be here today, and I'm honored to be part of this month's Diversity, equity and inclusion committee as we focus on Asian American Pacific Islander Heritage Month. As an Asian American myself, I think it's important to bring awareness and exposure for the AAPI heritage and culture. I'm really thrilled to put a spotlight on an organization that represents this group. So today our guest is Jim Edwards, executive director and founder of PAL Kauai. PAL stands for permanently affordable living. Um, Jim has called the island of Kauai home since 1985, where he and his wife raised a family and started several businesses. In 1988, Jim got his real estate license and founded Emerald Isle Properties. Jim's experience includes completing more than 25 subdivisions and projects personally and for clients. Jim's belief in the new, in the need for truly affordable housing and services for residents of Kauai led him in 2015 to form Permanently Affordable Living Kauai with a dedicated team of staff and board members. He's an innovator and sustainable approaches to portable housing on Kauai, and he's passionate about making a difference for Kauai's local generational residents. So, welcome, Jim.

Jim Edwards (02:59):
Well, thank you for having me.

Heidi Roberts (03:01):
Yes. I wanna start off by having you tell us a little bit more about PAL Kauai's mission and what your journey has been like that led you to start the organization.

Jim Edwards (03:11):
Well, in Hawaii, we usually introduce ourselves in a certain way. Um, I would say that I am a husband, a father, uh, to three sons, all of whom live on the island after leaving for many years and came back my grandfather to five, ranging from the age of two to 14 now, and founded Emerald Isle Properties in, which is a boutique real estate office in a small town on the North Shore of Kawaii town. Uh, founded this in, um, 33 years ago and began to realize, well, I've always worked to try to help the local people, um, to try to help them get into homes. I began to realize that I was a part of the problem probably about 10 years ago and began to try to help solve it, because what's happening is, this is a very small island. Uh, 73,000 is our population.

Jim Edwards (04:10):
The island at the longest distance is about 35 miles long. The narrowest part is about 17 miles wide. There's really one highway that goes around most of the island. We don't go onto the North Shore, uh, because it's a radical, um, mountainous area and very, very beautiful and classic. We will not ever develop that area of the island. I guess I, the the way this really got started was, um, seven, almost exactly seven years ago. A beautiful young lady who was part Hawaiian, um, came to me, Taylor Kalu Luk Reed. She is now married. She is Taylor Kluk Lonnie. Um, she came to me straight outta college and said she wanted to hang her real estate license with me and I in Hawaii brokerage, I'm the broker I own, I run own and run the company and, and other agents hang their licenses under my license as for guidance.

Jim Edwards (05:19):
So she said she wanted to hang her license with me. And after talking with her a bit, I said, so, why did you get a real estate license? You've been, you just got your degree with honors from, uh, and she said, I wanna help my generation and my people get property on Kauai. And I said, wow. In Hawaii, we would call that a chicken skin moment. Um, I said, well, it sounds to me like we should focus on that rather than focus on bringing in all the multimillionaires and billionaires who are trying to buy property on the island. Um, the rumor is that right now we have 42 billionaires who own property on this island, and who knows how many multi-millionaires. So we started focusing on trying to figure out how to bring housing to her friends and her generation, and her lo her family, her, uh, the local people on the island.

Jim Edwards (06:22):
My very bad dad joke is it took us about 20 minutes to figure out that there was nothing that we could do for the local people. Seven years ago, the prices had already left them in the dust. This is seven years later, during which time the prices have probably doubled twice on this little island or more. But, um, so eventually we began to, uh, realize that we weren't getting anywhere. And I said, so, um, let's build affordable housing. Can't be that hard. That's what I said in my naivety. Now having, uh, I said, surely we can break ground in a year or two. Um, actually, we broke ground last year, almost exactly six years later. Little did I know that developing affordable housing is almost impossible. <laugh>, I'm a dinosaur, so I don't give up easily. Someone likened me recently to Sisyphus, and you'll understand if you don't know that analogy, you'll understand it from what I say.

Jim Edwards (07:30):
I said, listen, I'm willing to push roll that boulder up the hill, but I'm not gonna do it forever. I know that there'll come a time when I can see the hill begin to level off, and eventually it'll start to roll downhill and gather moss, and we'll be extremely successful <laugh>. I think we're standing at the top of the hill now. We're no longer pushing the boulder up the hill, but we are definitely not rolling it down the hill yet. This is a long and difficult arduous task and, and, um, we built quite a powerful team and we're working on it.

Heidi Roberts (08:04):
Can you talk a little bit more about the difference between affordable housing and affordable living? Um, you know, what, what do you see the difference being?

Jim Edwards (08:14):
There are so many levels of affordable housing. There are giant corporations that develop affordable housing for profit, giant profit. We're a little bit different. We're a, so far, still a tiny organization, one of the fastest growing or organizations in Hawaii, I would say. But by the same token, we're still re really small and our focus is not profit. Our focus is housing. When you talk about affordable housing, most people may not understand this, but affordable housing is based on standards that are published by the federal government. Every year. Every year they put out a guideline that called the AMI tables. AMI stands for area Median Income. And every year they, they study the incomes on a particular lo in a particular location, and they publish the area median income tables. On this island, as I mentioned, 73,000 people. This is one county.

Jim Edwards (09:19):
So the area median income is the middle income of all of the incomes of the however many people work. Maybe 45,000 people are, you know, have jobs or work on the island, and they picked the absolute, not the average. The middle income is quite high on this island because as I mentioned, we have a lot of wealthy people here. We also have our local population who've been here for generations who are really struggling now to try to hold on to the island, and I'll talk more about that as we go. But essentially, affordable housing, uh, is based on the AMI tables and the AMI tables say that a family of four on this island would qualify a hundred percent of AMI is a little over a hundred thousand dollars. So, to give you a frame of reference of how that works in affordable housing, we co-develop with habitat, Kauai habitat is Habitat for Humanity.

Jim Edwards (10:20):
And in actual fact, habitat on this island is one of the most successful in the nation because of a dear friend of ours who has become a consultant for us to help us get off the ground also. And, um, habitat serves people under 80% of AMI. So if I say a family of four, the income is not exactly a hundred thousand. I think it's like 104 now, but let's just use a hundred thousand for a guideline of a family of four. So if a family of four went to Habitat and wanted to buy a Habitat house, not only would they have to be able to qualify to pay them, make the payments on the loan to buy the house, but they would also have to qualify under the AMI tables. So their area median income could, their me, their income, could total income in that household, could be no more than 80% of the AMI, which would mean around $80,000 a year.

Jim Edwards (11:19):
At PAL, we try to serve people between 80 and 120% of AMI we call up to 140% of AMI, which is 120, $140,000 a year for a family of four this year based on the AMI tables, which change every year. Usually they come out in the spring. We'll be getting new ones soon. So basically what we're doing is we're trying to serve the workforce, the people the families who are not receiving help from habitat or from the government or any, uh, sustenance in any way. We're trying to serve the GAP group that doesn't get help from the government, but also does not qualify to make a loan, to borrow money to buy a house. So, right. Uh, we're trying to serve that, uh, gap group that in between group. But what, what does affordable living mean? Well, I mean, it's pretty clear if you actually think about it, there's a lot of difference between having an affordable house and being able to live affordably, being able to have a comfortable life.

Jim Edwards (12:38):
So we work, um, we do all kinds of different projects. We're gonna talk about this in another of your questions later on. But we serve people who are homeless. We serve people who are renting, and we work with people who are trying to buy a home. So we're, we're always, uh, trying to figure out how to keep their lives so they don't have to have three, three jobs. Uh, on this island, the standard joke is you have to have three jobs before you feel like you're a local. Uh, we're trying to change that paradigm. We're trying to move it, uh, to, so our mission statement is to provide homes and sustainable living solutions within reach, restoring hope for the people of Kauai. We're actually redoing our mission statement now. We're studying it right now, and we're going to move restoring hope to the front of it, because that's really what we're trying to do here.

Jim Edwards (13:42):
People of this island are very frustrated and concerned that they're not gonna have a home. Many of 'em are leaving the island. Many of 'em go to the big island, to an area on the big island, which is Hawaii island that is much less expensive to live. But Hawaii is very expensive. So, uh, many of 'em go to the mainland. Uh, this past year, it was, uh, determined that there are more, uh, Hawaiians. Now, I'm not talking about local people now. I'm talking about Hawaiians. There are more Hawaiians on the mainland than there are in Hawaii. Uh, many of 'em are in Vegas where they can find jobs and find, uh, inexpensive places to live. So what is affordable living? When we develop a project, we analyze it and study it to see what will work. But we do everything we can to keep it as affordable for the families as possible.

Jim Edwards (14:34):
That includes, obviously solar power, you know, solar hot water. Yes. Low flow, flush toilets. Anything that we can do to try to keep the cost down. We also are analyzing all kind, all sorts of other ways to try to help them. And those include where possible, we try to do what we call edible landscaping. So instead of planting palm trees and beautiful bushes, we try to put in, um, fruit trees and things that they can pick the fruit off of, because we've learned that there are three major expenses that the people in Hawaii face, and those are housing first, food and transportation, and the food and transportation. It depends on the family's, uh, situation as to what their greatest expense is there. Uh, but I'll give you, you'll, you'll maybe gasp when I give you this, um, statistic, which I just learned recently. What, uh, percentage of, um, the pre-tax income mortgages lenders like to have for a person to qualify to borrow their, the money to buy their home? Do you know what that rate is?

Heidi Roberts (15:52):
I, I do not know. Um, I wish I had an answer.

Jim Edwards (15:57):
It's 30%.

Heidi Roberts (15:58):
Yeah,

Jim Edwards (15:59):
It's 30%. If you go to the bank, they'll say, okay, your pay, this mortgage will be 50% of your loan, so we can't make this loan to you.

Heidi Roberts (16:09):
Sure.

Jim Edwards (16:10):
Right. It's 30%. I have seen affordable projects where they, they allowed us to go up to 35%, you know, be a little flexible. Hawaii has the highest rate of, um, the percentage of income that we pay toward our, um, mortgages. It's 62%. You look at that and you go, what's leftover for the food?

Heidi Roberts (16:34):
Right. The

Jim Edwards (16:35):
Schools, the books, the clothes, the housing, I mean the, the car, the, the, uh,

Heidi Roberts (16:41):
Well in the, in the job market as well. So I, I, you know, I, I do have a question in regards to just what's been happening in the last three or four years, you know, with COVID and how that's changed the way people work. Um, you know, has that changed in, you know, where you live as far as being able to work remote and, and get jobs where they can work from home versus, you know, in the community or locally or going into an office? Um, has that changed at all?

Jim Edwards (17:13):
It's changed a lot for people who have, you know, skills that they can use online. But the local people are usually laborers. Yes, they're doing carpentry or cleaning the hotels or painting houses or cleaning houses. They can't do that online. So yeah, it's changed for a lot of people. But it has, I mean, it, it's helped, it's helped me <laugh>, COVID. I, I hesitate to say it, COVID helped me because it forced the government to get online and a lot of the big corporations to get online who never had done that before. And so it enabled me to be able to communicate more easily. And instead of getting 10 people together and driving to town to meet with a politician, we can make a, uh, a Zoom meeting and, and, you know, get online with them. But to, to finish the discussion about affordable, how living, uh, the things that we do to try to help the, the people in their, uh, living situations besides, as I mentioned, you know, solar up and, um, edible landscaping.

Jim Edwards (18:21):
We try to put in community gardens where possible so that they can work together and raise their food, because that can often be the second biggest expense. As I mentioned. The third biggest expense, and often the second biggest expense is transportation. We have a complex that's 45 minutes from the town where, um, most of the jobs are available. That complex has, uh, we have 13 families in that complex now. When we brought out of, um, poverty that we, they were living on, they were, they were living in the streets. They were homeless, uh, living in their cars, living on the beaches. Our first 10 tenant that we brought in was full-blooded Hawaiian, and he was living on the beach and he had health issues and we're fairly sure we saved his life. So, but basically that complex is 45 minutes from jobs. So a lot of those families feel like they have to have two cars so that one person can drive to town and get a job, and the other person does all the running around that's necessary.

Jim Edwards (19:24):
And picking up kids from school and whatever that second car is often what drives them homeless or drives them into poverty. If that car breaks down, what do they do? So what we're doing is we're putting in electric vehicle charging stations. We're doing, we're preparing to begin to sh to, uh, provide them with a shared electric vehicle and shared bicycles shared, uh, cargo, tricycles electric, so that, um, so that they don't need, they don't need that second car. If they need to go take a one hour errand, they can, they'll have a, an app on their phone that they can schedule the car that belongs to the whole community there, 13 households, and they can take their electric vehicle and drive to the next little town and be shopping or pick up the kids in school or whatever. Uh, so that's another way we're trying to provide for affordable housing, affordable living.

Jim Edwards (20:25):
And then, um, probably one of the most important things is we're doing what we call Beyond Housing program. And that includes all kinds of services, you know, to try to help them understand what, um, services are available to them, where they can get help. Um, but, and we're also putting in where possible business incubation centers that includes computers, printers, uh, sometimes people to help them. The kids can use the computers to do their homework. If they don't have one, the adults can come in and use the computers to begin to build their businesses, and they'll have the space to actually run their business. So, uh, we're building one of those right now that we've gotten a grant for it. And we have a lady who's been building her business in our location really quite successfully as a, it's kind of ironic, it looks like she might, might not, she might be making so much money next year that she won't qualify to stay in our affordable rentals anymore.

Jim Edwards (21:26):
So, which is good news and bad news. But, uh, that's kind of a, a overview of what afford the way we see affordable living. And we are constantly, uh, reviewing the standards there and trying to improve it and asking other people for suggestions. Uh, like for example, a commercial kitchen, cuz people can then, you know, make value added, uh, food products to, uh, offer to the community legally and, uh, have a licensed kitchen. So that, that's the difference between affordable housing and affordable living from the, per our, our stand, our perception of it at this stage of game. Well,

Heidi Roberts (22:07):
Yeah, thank you for, for explaining that. Um, and the difference, it, it's very interesting. Um, and I like how you kind of separated out with, you know, housing the food and the transportation. Um, many people forget about how expensive transportation can be just owning a car. So, um, or

Jim Edwards (22:28):
It breaks down,

Heidi Roberts (22:30):
Right? Yeah. And then, and what you do with that car, I mean, that is one thing that I've noticed visiting, you know, um, Hawaii, is there are cars on the side of the road. I mean, how do you, how do you get rid of vehicles that are broken down and the expense of actually finding a place to take it and dispose of it.

Jim Edwards (22:52):
That's right. Um,

Heidi Roberts (22:53):
Yeah, so thank you for explaining that. Um, my next question is, um, around the fee simple home ownership and lease hold home ownership. Can you tell us a little bit about how those pathways work?

Jim Edwards (23:10):
Well, actually, we use a lot of different methods of, um, it's a little bit confusing because I'm a real estate broker and in, in real estate leasing is actually a kind of a watered down version of ownership. Mm-hmm. <affirmative>. Uh, but basically we are now, we, we start with, um, we lease properties. We, what we've been doing is we've been struggling to build, it's really hard and expensive to build, particularly on this island. I, uh, sold some affordable homes, uh, back in 2000 that we sold for $159,000 for nice three bedroom, two bath homes. We're building homes right next to them today that are much less expensive, relatively to build. And those are costing us, by the time we get them built, they'll cost us $450,000 each, more than three times as much to build than we actually sold them for, uh, in 20 years ago.

Jim Edwards (24:08):
So we decided that we, that was taking too long and it was too expensive. So we, we bought some apartment buildings. We bought two apartment buildings so far. We have another one in escrow now. Uh, one is 13 units, two bedroom units, and the other one is 14 studios. The second when the 14 studios are in the business center of the island. So they're within walking distance of 5,000 jobs. So when you talk about affordable living, it's also important to try to locate people in their hometown where their job is so that they don't have to have that car to, to drive, uh, if possible. So, um, so we are, we're renting those and we are offering min most of them on, um, HUD section eight certificates. So the county pays the rent and the tenant pays 30% of their income, whatever that is. And that can be, I think we have one tenant who's paying $300 a month rent, which may sound like a lot to some of the people listening, but on this island, $300 a month is <laugh>.

Jim Edwards (25:14):
That's how much you pay a day <laugh> on this island. I mean, it's insane. I'm being facetious, of course, but to see a studio for $2,500 a month is not unheard of. Uh, I mentioned earlier we have a lot of wealthy people who've moved to this island and who are moving to this island all the time. And they do not come by themselves. They bring an entourage with them. That would be their employees, their friends, their relatives, uh, even hangers on. Come to find out where they are. You know, I'm sitting within 200 yards of one of the wealthiest people on the planet right now where he owns 1700 acres. Not gonna mention his name. I know he's brought hundreds of people to the island over a period of years. So basically, all of those people have more money than the people who live here, the local people.

Jim Edwards (26:04):
And, uh, so the rents, they'll come in and rent something while they wait to see what they can buy. And they're buying probably about 75% of the homes and, uh, renting many of the apartments and houses. We talked to a landlord recently who had put his house on the up for rent, his three bedroom, two bath house, up for rent, uh, put it on Craigslist. He got 150 calls in two days. Most of them came from the continent, from mainland United States, not from this island. So we're in, we're a deep, we, we say in deep kimchi over here. We're not in deep trouble. We're in deep kimchi, uh, on this housing thing. So we're using every possible method to try to figure out housing. So, as I said, we bought housing, we bought apartment buildings, and we're trying to buy another one now that'll provide a total, uh, if we get the other one together, it'll provide a total of over 50 units.

Jim Edwards (26:59):
We're in the process of building now. We're co-developing with Habitat. We will be built, we have, we built a, a construction company, pallet construction, and we will hopefully start construction on, um, 11 houses next in next month, or two and 17 houses this summer, and 17 more houses in the fall in different locations on the island. And the ownership o of those is several different methods. There is not very much leasehold ownership in Hawaii, or certainly not on this island, but we have, uh, created a land, a community, land trust, the PAL Community Land Trust, which will own the land under some of the houses. We are raising funds for that now, so that we can do more and more. We actually just got a $200,000 grant from the state. Yes. A couple days ago. We'll add that to the hundred 50 we already have.

Jim Edwards (27:59):
So we'll have $350,000. And when we build these 11 houses, we should be able to take at least three or four of those lots and put them in our land trust. And what that means is when the people buy the house, they don't have to buy the land. We keep the land, they own the house on the land. They buy the house, they get a mortgage, they live in the house, they own the house, but they're leasing the land from PAL and they're leasing it. It'll be probably $10 a month or something like that. And the lease will continue for 99 years. And it is renewable for another 99 years. That's one way we sell the houses. And then another way we sell the houses is just to sell them the house and the land. And that's a little bit more expensive because they have to buy the land.

Jim Edwards (28:51):
And the way we provide funding for them generally, is we try to raise funds. And I, my email is jimpal-kauai.org. If any of your listeners need a write off or want to help in any way, please email me. We're always reaching out to people to help, because any money we can get donated, we can lower the cost of the houses by that amount of money, almost exactly that amount of money, as long as we have enough money to keep the doors open. But we're a very small and very efficient organizational. So basically, uh, the way we, nor if we can't raise enough funds, donations to be able to, um, build the homes and buy the ho buy the land, we, um, we use what's called the USDA 502 Section 502 Loan Guarantee Program. So once we get the house and we're getting close to having it completed, we sort through the county's first time home buyer list of people who are, who are educated and understand what it takes to buy a home.

Jim Edwards (29:55):
And we choose the buyers, and then they go to the bank and get a loan based on that fir that, uh, 5 0 2 loan guarantee program. And that loan then builds the house and rolls into their final mortgage when they actually move into the house. So it's a kind of a magical federal program that really helps us help the people who are struggling. And I'm gonna tell you on this island, I'm guessing as a broker, se, 75% of the homes that are being bought are being bought by newcomers, people who are coming here and wanna live here. It's a beautiful place to live. We understand. We came here 50 years ago, we came here and we understand, uh, so there's a, you know, I feel a certain amount of nibi, don't we? <laugh> don't, don't come buy our homes and rent our homes, but there's nothing we can do about it. It's America. Yeah. They can buy the homes.

Heidi Roberts (30:44):
I mean, there's pros and cons. Like, you know, as you know, MGIC, we're headquartered in Milwaukee, Wisconsin, and there was a recent article in our local, um, newspaper, the Milwaukee Business Journal, indicating that home prices in Milwaukee are on the rise and faster than anywhere else in the country, which is great. But, you know, for the state of Hawaii that isn't good <laugh> because they're pushing out, you know, the future generations. You know, that's really sad. This, you know, and, and there isn't enough awareness. I didn't know about this before meeting you, so I really appreciate you talking through this. And I, it's very, very interesting.

Jim Edwards (31:27):
I, I know you're going to go on to a question about the inventory, and, and I, I would like to address it now, if that's okay. Yeah.

Heidi Roberts (31:34):
Yes. Please

Jim Edwards (31:35):
Get right into this conversation. So, you know, when, when I say local people, that can mean, um, any, anyone of any race, uh, people who've been here for a long time, or local people, most people think of it as the people of color. I don't know if you know this, but in Hawaii, I think the population is 20 per 21% or 22% Japanese American. Mm-hmm. <affirmative> probably 10% Chinese American. Uh, lots of Filipino Americans. So when we talk about the local people, they use a kind of a pejorative term for, for white people who've come here, you call 'em Hollys. I don't consider myself a holly. I consider myself a local person. But by the same token, the, the white people are, I'm guessing 15% of the population. It's a very mixed pop population. And so when these super wealthy people come here, it's a little different from moving to Milwaukee, although Milwaukee, I'm sure is very much a, a mixed community, but they don't realize that they're coming to a, a culture.

Jim Edwards (32:38):
They're coming to a place that has been established as a certain type of culture based more or less on aloha, which is not just hello and goodbye. It means so many things, including sacred prayers and powerful love and deep trust and respect. And it goes on and on and on. But, um, this, this is a not a, this is not just a pretty island. And most of the people who come here don't take the time to get in involved in the culture, and they do not understand the cultural and the economic imperative of helping with the situation that they're helping to. Cause you think of an island of 37, of 73,000 people. We have the most crowded bedrooms in America on this little island that's documented. We have the worst homeless crisis on this little island per person. And that's documented, and that's based on the homeless current count.

Jim Edwards (33:37):
And our chief operating officer ran the homeless count. And he will tell you that it's badly flawed. It probably catches half or less of the homeless people. So when people come here, they think they're moving to a beautiful place, and what they're doing is they're displacing one more local family. And it's really hard for us. So, you know, when, when you say it causes a problem for me, it's more than a problem for me. It's a, I don't even call it a crisis anymore. Now I'm calling it a full-blown tragedy. And we're struggling to try to figure this out. We need, essentially, we need two and a quarter billion dollars to solve this. That's not to say that anyone who's willing to donate should try to donate that amount, although if you could <laugh>, uh, but basically we need two and a quarter billion dollars to solve the, the tragedy that we're working with here on the island, and what it amounts to is our workforce is being driven off the island.

Jim Edwards (34:35):
So our, the president of our board keeps saying, who's gonna do the work? So when you ask about the inventory, I'm a realtor. I can tell you about the inventory. We live on the north shore of Hawaii. It's about a 25 mile stretch and maybe six communities. And last 10 days ago, the last time I checked, the cheapest house on the North Shore was 1,000,800 $75,000. There were four houses under 2 million. This is a worker community. The town I live in was a sugarcane plantation community. When the plantation closed down the plantation gave the homes to the workers for $200. Those homes now rent for $4,000 a month and are worth a million in a quarter. The last time I checked, they were 14 homes onto the entire island, on the entire island of Kauai, under a million dollars. 14 homes. And realtors have sold probably 950 of those in the last three years.

Jim Edwards (35:36):
So that gives us about a 30 minute inventory to be facetious. You know, it's like, it keeps, it keeps, uh, rolling. More people list their houses because they realize, Hey, I can sell my house for $800,000. And it was only worth 205 years ago. Uh, we actually, I have a radio show on a volunteer radio station here, and one of our shows we ran was, don't sell your home until you know where you're gonna go. Until you know what you're gonna do. Because if you think you're gonna move on this island, the, if you can't buy something else, then your rent is going to eat up your little nest egg that you just got, um, from selling your home. So anyway, when you talk about inventory, uh, the last time I looked, there were 630 realtors on this island, and 270 hou properties for sale. And when I say properties, that's houses, condominiums, land businesses, commercial, fantasy, anything <laugh>, anything. So there are less than half as many properties for sale as there are realtors on the island. We're, we're in. Once again, deep kimchi, pardon me if I go on too long, Heidi. I'm pretty passionate.

Heidi Roberts (36:50):
No, I, I really enjoy it. And I, I, I feel your passion. It's great. Um, obviously that's why you've been involved in this. Um, so I don't know if you knew this, but this, um, this year's theme for the Asian American Pacific Islander Heritage Month is advancing leaders through opportunity. Um, so Jim, what, what comes to mind for you when you think of opportunities for the AAPI community in Hawaii? You mentioned a couple leaders. Are there leaders from the AAPI community you partner with and that you work with?

Jim Edwards (37:23):
Absolutely. Absolutely. Actually, it's kind of unique here. Um, I'm not an expert, so I don't wanna speak out of turn, but I will tell you that the, uh, Asian American community has done quite well here in spite of the fact that we are a, a blended culture, and we get along really well, and we have a lot of fun together. And there's very, relatively speaking, very little crime here. Although there are drugs that are coming into the communities and that are making it worse. But, uh, we still stay kind of in clicks. So Japanese-American people are socialized with Japanese-American people usually are, although there are a lot of mixed, mixed families now, of course, um, I know, uh, that the Japanese Americans own, uh, control a lot of the government positions here, and I don't have a problem with that. They're hardworking, very smart people.

Jim Edwards (38:17):
They don't go, they don't go surfing when every time they surfs up. So they get the work done. <laugh>, the Filipinos have come in and done quite well. They, they all, they're really hardworking people. They've gotten good jobs, and many of 'em are moving into leadership. So yes, there are a lot of, actually, if, if you were to go and and Google leadership in Hawaii, I think you would find that, well, as I said, I think the, the white people are maybe 20% of the population, 15, 20% of the population. I haven't read that for years. So it may have changed quite a bit. But, uh, you'll find that the Asian, Asian-American people, and are very much in leadership here, and very much in ownership of the businesses here, and quite, that's great. Quite successful. Unfortunately, there are many of them who are not, of course, who are homeless and struggling. It, it, it's, uh, there's, you know, there's no way to categorize it. It's, it's, uh, it depends on the luck of the draw, as you know, and the how hard someone works and how much help they get.

Heidi Roberts (39:20):
During Black History Month in February, MGIC focused on generational wealth through home ownership. Does that concept resonate with you from where you sit in Hawaii? Are there any unique barriers to generational wealth through home ownership in your community? You spoke a little bit about it, but can you expand that a little bit more?

Jim Edwards (39:41):
Well, we all know that home ownership makes all the difference. If people can get a home, it gives them not only pride of ownership, uh, predictability in their future, a comfort. That's one of the biggest issues most people don't realize with homelessness is the, the fear factor. They never can relax. They can never be comfortable that they're safe. Uh, so when we work with homeless people, the first thing they say is, oh, I have a safe. They don't say, I have a comfortable place to sleep. They say, I have a safe place to sleep. Home, home ownership is very important to, uh, people being able to build their wealth and, uh, particularly being able to pass it down to their friends. Um, family. This has actually become a, a, a little bit of a controversy for permanently affordable living, because we always want to make the houses, the people buy from us permanently affordable.

Jim Edwards (40:44):
So we wrestle with concepts of how to do that without limiting their ability to build equity in their homes. They're human beings, just like anybody else. If they bought a home, they should be able to develop equity in that home. So it's a little bit of a struggle to figure out how does that fit in with our putting rules on it to say that it has to be permanently affordable. And what we're doing is we're setting up guidelines that say that people who buy our homes, if they buy it, remember I described AMI, if they buy it at a hundred percent of AMI, when they get ready to sell it within a certain period of time, say 50 years or 70 years, that family gets ready to sell it. They have to sell it at that same AMI that they body that.

Jim Edwards (41:31):
Now theoretically, the AMI always rises theoretically, as long as the country is doing well and and incomes are growing, the AMI will grow and therefore they will grow equity in their homes. But some of us are beginning to say, well, should we cut them loose to grow, gain equity in their homes sooner than that? Should we limit them to 50 years of not being able to, you know, freely gain equity in their homes? I sold a, an affordable community in Kellaway at my hometown of 38 years. I sold an affordable community of 49 homes here. And the county had put 10 year affordability restrictions on it. You had to live in it, and you couldn't sell it for 10 years because you bought it under affordability guidelines. But they only made 'em 10 years. That was 20 years ago. I sold them, I was so home sold for $159,000.

Jim Edwards (42:23):
And right now they're worth a million in a quarter. So it's really a tough decision as to how to keep the house affordable for the next generation, who wants to buy a house, but also give the family the right to build up generational wealth. So that's a really interesting question. It's a question that even though I've been doing this full-time for seven years and have a lot of consultants are working with me, I don't have a real answer for it. Now, one thing I will tell you is that we are working, doing the very best that we can to make sure that the houses that we build are rented and sold to the people from this island. We have newcomers moving here every year, every day. I've been a broker for 38, 37 years. I know how many people wanna move here. I've always said that half the people who come here wanna live here, half of those people try to live here.

Jim Edwards (43:18):
Half of those actually make an effort to move here. Half of those stay and half of those buy a house. But a million people come a year, do the math. Half of all of those people cuts it down to a number of people, people equal to all of the houses on this island. So we're in really in a struggle to try to figure out that generational wealth and passing on the wealth to the local people. And I'll tell you, one of the things that we've learned is that when I told you how important restoring health is in our mission statement, what we've finally realized is that the local kids on this island go out and buy a 50, $70,000 pickup truck and spend 10,000 on Chrome and stuff to make it look cool and jack it up and do all of this stuff. And what we began to realize is that they're doing that because they're pretty sure they're never gonna own a home.

Jim Edwards (44:17):
They want something that they can have pride in a vehicle is one of the worst forms of investment, at least up until COVID <laugh>, it was one of the worst forms of investment that you could possibly make a, a new car, you'd drive it off the lot, it goes down in value. Something like 15% the first day. Uh, that's kind of changed because of COVID, but it will come back. And so we are always helping these kids to understand that they have these payments on these trucks that ruins their ability to get a home. They, their credit is ruined if they don't take care of this truck. I mean, it's really, really been a battle to try to figure out how, right, how to help these skids understand that they need to prepare for home ownership and learn what it takes and save money. And, you know, we always,

Heidi Roberts (45:07):
Yes, it's about the education. It's about the education. And it sounds like that's right. You know, you, you're aware of that and your community is aware of that. So

Jim Edwards (45:16):
Educating

Heidi Roberts (45:17):
Is

Jim Edwards (45:17):
Well, some, some of the <laugh>. Yeah.

Heidi Roberts (45:19):
Yeah. Well, so I have one last question before we kind of wrap up. Um, do you have a success story? I mean, you've told us a lot of stories, but do you have one story or a takeaway that you'd like to leave our audience today about affordable living?

Jim Edwards (45:36):
Uh, PAL Kauai <laugh>, our Permanently Affordable Living, uh, is changing the standard of nonprofit development. Uh, we have come up with so new, so many new concepts that most of the nonprofits are watching us now and saying, what the heck are you guys doing? We're only four and a half years old since we got our charter. And we own, uh, you know, apartment buildings. We're building lots of houses, we're expanding to another island. We are, our mission statement is restoring hope. And that's what we're doing. Not only that, we built a construction company and we also, one of the main things that we're doing that I hope will be a success story is we are, we're learning that working with institutional financing, um, don't take this personally, <laugh> and working with government financing is very slow, very difficult, very expensive. And all of the, both of these institutions are very risk averse.

Jim Edwards (46:36):
In order to develop affordable housing, we need need to be able to have it less expensive, faster, easier, and less risk averse so that we can move and get this done. So what we are doing is we are, we formed a group we called KAHA, Kauai Affordable Housing Alliance. And that alliance is made up of all of the affordable housing developers who build on Kauai. And we're working together to try to create a private fund. We're hoping that giant funders will step up to the plate, who knows, maybe MGIC could step up to the plate and help fund it and basically put in funds that would be, uh, not under the control of the affordable developers, but we would have a say in what happens with them, and it would be much easier to qualify for them. See, I understand if I go to the state now and try to borrow money to, to or ha get a grant to do an affordable housing project, it takes us a year and a half to two years to get ready for the application.

Jim Edwards (47:42):
And it costs us between one and $200,000 to prepare for the application to do the studies and get ready for the application. So all that does is slow us down, cost us money, and make the affordable housing more expensive. And we did that. We spent two years and $200,000 to find out if we can get the money not to get it. If we don't get it, we could go down, we could collapse, we lost all that time. A little organization all that time and all that money. So we are hoping to change the entire standard of affordable housing, uh, funding by putting together this, um, privately funded fund that will be able to move quicker and serve the needs of the people of Hawaii. And we actually, um, real quickly, I won a good, the what's called the Good Neighbor Award last year from the National Association of Realtors.

Jim Edwards (48:47):
And they brought me to the, um, uh, national, uh, convention in Orlando, Florida, and made a big deal out of it. And I'm using my, I'm going to try to use that 15 minutes of fame to grab the attention of all the realtors nationwide. I'm writing a book on it, and I'm going to try to speak at the next convention and see if there's some way that we can catch their attention and help them realize that they can help solve this problem in their community. And I'm living proof. They can also make themselves feel more comfortable about the work they're doing. They can make a, have a much better relationship with the people in their community because they really respect what they're doing. They can help solve one of the most difficult crises America faces now, and they can improve their career. We get all kinds of clients now who come to us and say, thank you so much for the work you're doing.

Jim Edwards (49:41):
Will you please list my house? Or will you please find a property from me? So that's one of my goals. I'm, I'm writing a book. The working title is Chicken Little was Right, Scott, his Fault. Love. I love it. And as far as we can tell, the only people who can stop it are the realtors, if they will band together and pick this up as a national, uh, goal. So that I'm working to expand PAL statewide. Now we're re rebranding from PAL Kauai to PAL Hawaii. And we would like to see PAL Nationwide, or not PAL, but some, you know, realtors start their own nonprofits. I'm actually supporting several realtors in other areas of the country now who are trying to do just that to tr try to build their own nonprofit to solve this crisis. So there's anyone list listening who needs help or who wants to help?

Jim Edwards (50:37):
I'm Jim Edmunds. I'm at Jim at PAL. That's p a l permanently affordable living. But it's jim@palkauai.org. K A U A I is Kauai reach out, offer help, or ask for help. We're having a lot of fun, but we're working really hard to try to solve what we consider to be a full-blown tragedy on, on this little island. That's what it looks like to us. I know in other areas where things are bigger, they see a homeless encampment. It doesn't seem to be so, so bad, right? Mm-hmm. <affirmative>. But on this island, it's a tiny little place. We see everybody <laugh>. You know, it's like you see all your neighbors, you know that they, the highway's 75 miles long and it's got maybe 20 pounds on it. You know, you're, we're always driving back and forth together, so,

Heidi Roberts (51:26):
Wow. It was really, it was really great. No, it was really great to hear about the Mission, PAL Kauai's mission, the journey. I, I love your passion. I loved hearing your stories. Thank you for taking the time and, and sitting with us and, and explaining what your mission is. And, and obviously you have your growing this and your outreach is just expanding, and I think that's great. So thanks for, for being with us today.

Jim Edwards (51:56):
Thank you Heidi.

Concepcion Guerrero (51:58):
Heidi and Jim, thank you both very much for your time today. And thank you everyone for listening. For all the latest industry insights, subscribe to Mortgage Connects on Apple, Stitcher, Google Podcast, Spotify, Amazon Music, or go to mortgageconnects.com.