An affordable-housing developer who has struggled to finance a 301-unit rental complex in Mililani Mauka for low-income seniors over the last three years has rearranged ownership of the project site in an effort to obtain state financing this year.
GSF LLC, led by Gary Furuta, has been working on the project called Meheula Vista since 2010, when the firm arranged to buy 7.5 acres zoned for commercial use from Mililani’s master developer, Castle & Cooke Homes Hawaii.
The project, which also involves Catholic Charities Hawaii as a partner, was viewed by affordable-housing advocates as serving a dire need providing homes for low-income seniors.
Monthly rent for one-bedroom Meheula Vista apartments is expected to be between $700 and $1,000 for seniors earning no more than 60 percent of Honolulu’s median income, which equates to $40,260 for a single person or $46,020 for a couple.
However, many Mililani Mauka residents opposed the project on grounds that it would increase congestion on roads and schools. Residents also complained that Castle & Cooke had long intended for a performing arts center and businesses to occupy the site, and said Castle & Cooke should have adhered to that plan.
Castle & Cooke has said that commercial tenant interest in the site vanished after Walmart opened in Mililani in 1994 and Costco opened in Waipio in 1998. The company also said a nonprofit organization, the Oahu Arts Center, failed to meet a deadline to demonstrate it had financial means to build and operate the planned performing arts center, though the nonprofit disputes this claim.
GSF obtained a $9.7 million loan in 2010 from the Hawaii Housing Finance and Development Corp., a state agency that facilitates affordable-housing development, to buy the land for $6.75 million and help pay for planning and design work. The purchase closed in 2011.
In seeking the loan, GSF indicated that it would need other financing to pay for construction and repay the land acquisition loan.
GSF applied in 2011 for about $11 million to help finance construction of a 76-unit first phase through an HHFDC tax credit program and rental housing trust funds, but was turned down by the agency’s board because the project was not deemed ready for construction.
In 2012, GSF was turned down again by HHFDC’s board, despite a staff recommendation, because a competing plan to acquire and rehabilitate some affordable housing in Hilo was deemed more important in part because sloping ground needed stabilization.
GSF, in a November letter to HHFDC, noted that work on the Hilo project has yet to begin, while Meheula Vista is "shovel ready."
Last year, HHFDC again turned down GSF’s funding request after changing the criteria for scoring projects seeking financing.
Darren Ueki, HHFDC’s finance manager, said competition is "fierce" for tax credit and rental housing trust fund money, with the amount requested being roughly two to three times what the agency has available to award.
GSF plans to reapply for HHFDC financing this year but also recently asked the agency to take ownership of the project site and lease it back to GSF for $1 a year for 70 years in return for forgiving $6.75 million of the land acquisition loan.
The developer said that if the agency owns the property, it will result in a higher score on its financing application. GSF also noted that HHFDC would likely get the property back anyway if the financing is rejected this year because the land acquisition loan expires in February along with a county zoning exemption allowing the project.
"We respectfully request your serious consideration and approval of our proposal," the developer said in its request. "We believed this (project) was in alignment with HHFDC’s priority as evidenced with HHFDC’s board approval of the land acquisition and planning (loan). We are willing to work with HHFDC to best finalize this situation."
HHFDC’s board approved the sale and lease-back deal Thursday.
If the developer is successful obtaining HHFDC financing, construction on the 76-unit first phase could begin in the fourth quarter and be finished in early 2016.
Finishing three other phases would be subject to financing and is projected to be done by early 2019 if additional financing can be obtained.
