Plans for a moderate-price condominium tower in Makiki launched in 2009 amid Hawaii’s real estate slump are being recast in an effort to get the stalled project moving forward.
The developer of the 176-unit condo called Holomua reduced unit prices and partnered with local affordable housing developer Peter Savio to relaunch sales efforts that if successful could allow construction to begin in July.
Sales for Holomua originally began in June 2009, but the developer failed to attract enough buyers to draw on its construction financing. As a result, the project has been on hold.
The developer, KRC Partners LLC, had run into difficulty with overdue loans used to buy the land, but a state agency that facilitates affordable housing agreed to pay off the loans by advancing KRC $3.5 million from a $25 million loan the agency committed to make to help finance construction.
The advance from the Hawaii Housing Finance and Development Corp. puts the agency in a position to claim ownership of the site if the project fails.
Serge Krivatsy, a principal with KRC, said the reduced prices, improving market and partnership with Savio should enable Holomua to become a successful condo project. "We think the market has improved dramatically," he said.
Savio, whose firm Hawaiian Island Homes Ltd. is serving as project sale broker and co-developer, predicts that Holomua will sell out in 30 to 40 days.
"It’s a good project," he said.
Holomua is being developed under state regulations that require at least half the units be reserved for local resident buyers with moderate incomes.
Under the state planning law that allowed the developer to build the tower 220 feet high, or 70 feet above the neighborhood’s normal 150-foot height limit, at least 90 units must be reserved for Hawaii residents who intend to live in the unit and who earn no more than 140 percent of Honolulu’s median income.
The median income limit equates to $91,500 for a two-person household or $114,380 for a family of four.
KRC needs to sell 65 percent, or 114, of the units to begin construction. For the past year, sales have been at about 25 percent as marketing efforts were on hold.
Prices range from $239,900 to $467,700 for units with 354 square feet to 752 square feet with one or two bedrooms and one or two bathrooms.
Those prices reflect reductions of between $5,000 and $68,000 per unit, with the bulk of units reduced by at least $40,000.
Krivatsy said the project’s contractor, Nordic PCL, was able to re-price significant work and achieve the savings. "We were able to reduce construction costs without changing the project at all," he said.
Krivatsy said existing buyers will have their prices lowered as well, in part because they stuck with the project during the delay.
Initially, Holomua was expected to begin construction in late 2009 and be completed early this year. If construction begins in July, completion would follow in early 2013.