State OKs loan for midrise in Kakaako

The state has agreed to help finance construction of an affordable midrise condominium in Kakaako and might also provide a general excise tax exemption for the project known as 803 Waimanu, where prices for the smallest units will be about $225,000.

The Hawaii Housing Finance and Development Corp., a state agency that helps produce affordable housing, approved making a $9.2 million loan to help private developer Franco Mola build the $40 million project.

HHFDC’s board approved the loan, which carries a 4 percent interest rate, in an 8-0 vote earlier this month.

Mola’s California-based firm, MJF Development Corp., received a development permit for the seven-story condo on Waimanu Street, near the corner of Cooke Street, adjacent to the Imperial Plaza condo tower, last year from the Hawaii Community Development Authority after that agency rejected a prior plan by Mola to build a tower that exceeded height and spacing limits for the site.

The financial assistance from the state helps Mola position the 153-unit project to break ground early next year.

“We are excited about this opportunity and about working with the HHFDC to create long term solutions to meet Hawaii’s affordable housing objectives,” Mola said in a letter to the agency accompanying his loan application.

Mola’s plan for 803 Waimanu calls for producing condos for sale mainly at prices that are lower than anything on the market in Kakaako, though units are small and many won’t have parking.

The cheapest existing condo in Kakaako listed for sale earlier this month was a 542-square-foot unit at Royal Capitol Plaza for $395,000. Upcoming new condos in the area include the 400 Keawe midrise, where prices range roughly from $390,000 to $775,000, and the Vida at 888 Ala Moana tower, where prices start at $988,000 and run over $4 million.

At 803 Waimanu, 62 units will have 384 square feet of living space, no parking and a maximum price of $227,500 assuming a 5 percent mortgage rate. These units will be reserved for residents with household incomes of no more than 80 percent of the median income for Honolulu, which equates to $53,680 for a single person or $61,360 for a couple.

The maximum price for these units under HHFDC guidelines is about $10,000 less than what a consultant for Mola described as an “achievable” price in an environmental assessment published in May.

Another 55 studios with the same amount of living space plus one parking stall would be priced between $270,000 and $307,200.

Other 803 Waimanu units range from studios with 434 square feet of living space priced at $312,800 to one-bedroom units with about 700 square feet of living space for $424,425. There also is one unit with two bedrooms and 1,029 square feet of living space with a maximum price of $513,124. All the units except for the 62 studios at the lowest price include one parking stall.

Under HHFDC regulations, half the units in a project must be affordable to residents earning no more than 140 percent of the median income to qualify for financing assistance or other benefits that can include zoning exemptions. To qualify for a general excise tax break, at least 60 percent of the units have to meet the same affordability.

At 803 Waimanu, 101 condos, or 66 percent of the units, qualify. The other 52 units can be sold without income or price restrictions.

HHFDC indicated in a staff report that Mola intends to apply for a general excise tax exemption under the state’s affordable-housing law.

To break ground, American Savings Bank, which is providing a $26 million construction loan, is requiring that the developer obtain binding purchase contracts for at least 65 percent of affordable and market-priced units, along with all the studios without parking.

List International Realty, which also does business as List Sotheby’s International Realty, will serve as the project’s exclusive broker. The Japanese-based parent company of List International, LIST Co., is providing equity financing for 803 Waimanu, according to HHFDC.

Novogradac & Co. LLP, an accounting firm retained by Mola, said in a market study for 803 Waimanu that the project, even with limited parking, should compete well in Honolulu’s urban condo market given its location in a walkable neighborhood within a quarter-mile of a rail transit station planned by the city.

“We anticipate the (803 Waimanu) units will be well-accepted in the market,” the study said.

If List International obtains sufficient sales, construction is anticipated to begin in February. Completion is projected for April 2017.