Alexander & Baldwin Inc. is handing off a delayed affordable-housing project in Kakaako to another local developer, who intends to increase the number of low-income rentals produced.
The A&B project was announced in 2011 as a five-story apartment building with 72 one-bedroom units for low-income seniors on the corner of Piikoi and Kona streets.
The rental complex was proposed to satisfy a state requirement for A&B to provide moderate-priced housing tied to its development of a nearby condominium tower called Waihonua under construction between Hawaiki and Ko‘olani towers on Waimanu Street.
Instead of proceeding with the senior rental plan, A&B reached out last year to another developer who has been active in Kakaako, Stanford Carr, to see if he was interested in doing something similar to his recently completed low-income rental tower Halekauwila Place.
Halekauwila Place was Carr’s first high-rise housing project and first development in Kakaako. He also has approval to build a 43-story tower as part of a Kakaako project called Keauhou Lane expected to break ground next year.
Carr said he felt that the experience he gained doing Halekauwila Place, which involved difficult-to-obtain federal and state government financing, would allow him to produce more affordable units than A&B planned with nonprofit operating partner Pacific Housing Assistance Corp.
"There is a big demand for affordable rentals," he said.
Carr plans to build an 11-story apartment building with 128 units including one-, two- and three-bedroom units.
The Carr project dubbed Hale Kewalo would not be only for seniors, but would still be restricted for and affordable to tenants meeting the same maximum income as A&B had intended: 60 percent of the annual median income for Honolulu.
The maximum translates to $34,692 for a single person or $49,560 for a family of four as calculated by the Hawaii Community Development Authority, the state agency regulating development in Kakaako.
Rental rates are tied to median income levels when the project is built. If built today, maximum rents would be around $1,100 for one-bedroom units, $1,300 for two-bedroom units and $1,500 for three-bedroom units.
Another difference between Carr’s plan and the former A&B plan is how many years the rentals will remain affordable and restricted to low-income tenants. The affordability term for Carr’s project is 30 years. A&B had proposed 50 years. HCDA’s minimum is 15 years.
Under the deal between A&B and Carr, A&B will deed the 27,000-square-foot property to Carr for free. In return, A&B would have its moderate-housing requirement for Waihonua satisfied.
The requirement tied to Waihonua is 72 units, and HCDA rules allow developers to earn credits for delivering more moderate-priced homes than required. However, Carr said he will not seek or take credits for Hale Kewalo.
The land Carr is receiving is valued for property tax purposes by the city at $4.7 million. Carr said low- income rental housing projects need free land to be developed.
For Halekauwila Place, Carr received a 75-year land lease at $1 per year from the Hawaii Housing Finance and Development Corp., a state agency facilitating affordable-housing development.
To finance Halekauwila Place, a 19-story tower with 204 units that opened in April, Carr relied on a complex mix of government financing.
The $70 million project used short- and long-term financing that included $40 million in Hula Mae bonds, $28 million in federal and state low-income housing tax credits, a $26 million loan from the federal Department of Housing and Urban Development, a $17 million loan from HCDA and a $16 million loan from Housing Finance. The funding adds up to more than $70 million because some of the loans are used to refinance other loans.
Carr said he is pursuing the same tax-credit financing along with HUD financing to pay for the new rental project, roughly estimated to cost $50 million. Carr said it may be possible to start construction by the end of next year if the financing can be arranged.
A&B’s former partner, Pacific Housing Assistance, had anticipated the senior rental project could break ground in late 2012.
A&B is supposed to fulfill its moderate-priced housing requirement within two years of finishing Waihonua, according to HCDA. Waihonua, a 341-unit tower sold out at prices from $375,000 to $1.9 million, is expected to be finished by the end of this year.
