A nonprofit developer seeking to build rental apartment lofts for low-income artists on state land in Kakaako will have at least another year to obtain financing and a land lease for the project proposed about three years ago.
The Hawaii Community Development Authority, the state agency governing development in Kakaako, agreed Wednesday to extend lease negotiations with the project’s developer, Artspace, for 12 months to provide more time to secure financing that is inherently difficult for low-income housing construction.
Artspace has been discussing the project with HCDA for more than three years, and in April 2011 was given exclusive rights to negotiate a lease for a 30,000-square-foot lot the agency owns on Waimanu Street makai of the Pacifica Honolulu condominium tower.
Minneapolis-based Artspace proposes developing 80 live/work lofts plus commercial and community space in a nine-story building.
| WHAT IS ARTIST HOUSING?
Federal fair housing law supports housing for artists as a special group.
Artspace uses a committee of artists to help select tenants who are engaged in the creative arts, which can include painting, sculpture, literature, photography, architecture, singing, dancing, filmmaking and acting, among other disciplines. Workers such as technicians, administrators and teachers who help produce or support art also qualify.
The quality of art by prospective tenants is not judged.
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Rental units would be reserved for artists earning 50 to 60 percent of Honolulu’s median income. An Artspace representative said monthly rent could range from about $437 for one-bedroom units up to $1,334 a month for three-bedroom units, and that households earning from about $20,000 to $71,000 a year could qualify.
The project, called Ola ka ‘Ilima Artspace Lofts, also would include 4,000 square feet for Native Hawaiian art performances and education in partnership with local nonprofit PA’I Foundation, and a gardening area and a community room available to nonprofit and community groups.
Obtaining financing for the estimated $40 million project, however, has been challenging.
The backbone of the anticipated financing is low-income housing tax credits from the Hawaii Housing Finance and Development Corp., a state agency helping facilitate affordable-housing development.
Artspace had been hampered by HHFDC shifting the timing and criteria of its tax credit program, and the developer wasn’t selected last year to receive tax credits that HHFDC allocates on a competitive basis. HHFDC, however, has encouraged Artspace to reapply this year.
"We believe we are well positioned for this project," Greg Handberg, Artspace’s senior vice president of properties, told the development authority board. Handberg said the company has backup plans to rely on a different financing mix if it can’t obtain the coveted tax credits.
Anthony Ching, HCDA executive director, recommended that agency board members continue working with Artspace given the project’s uniqueness and considerable effort the developer has made, including producing an a draft environmental assessment and completing an archeological inventory survey.
"I do believe this project still has merit," he said.
Some HCDA board members expressed concern over whether holding out hope for the Artspace project might be foreclosing other opportunities to use the property. However, board members voted unanimously to extend their commitment to the project largely based on the need for low-income rental housing.
"I really commend you for what you are trying to do," said board Chairman Brian Lee.
Mary Alice Evans, another agency director, called Artspace’s plan "unprecedented" and a great benefit to the community if realized.
Artspace, which has built more than 30 projects in 14 states, has previously said that developing low-income housing for artists usually takes three to five years because of the reliance on tax credits.
