Chinatown building’s renovation helps preserve affordable rentals

An extreme home makeover that included removing a gambling den at a low-income apartment complex on city land in Honolulu is being celebrated today as part of a $13 million project to preserve affordable housing.

Local development firm Ahe Group is holding the blessing and rededication ceremony to celebrate the completion of a three-year effort to acquire and renovate the 38-year-old River Pauahi apartment building, where monthly rent among 49 households is as low as $45.

“It’s a simple little building,” Makani Maeva, Ahe president and CEO, said in an interview Tuesday. “I think we’ve done what we can to extend its life and make it nice for the people who live here.”

River Pauahi, a four-story building facing Nuuanu Stream at the corner of River and Pauahi streets on the edge of Chinatown, was in disrepair previously.

Problems included substandard apartment interiors, deferred building maintenance and a liquor store outfitted with a hidden gambling room that attracted undesirables and crime on the street corner outside.

Ahe and a partner, Southport Financial Services, bought the building in December for $7 million, amended the land lease with the city to last for 75 years and is bound to keep rental rates affordable for low-income residents for 61 years.

Maeva’s team spent roughly $3 million making improvements that included plumbing and electrical upgrades, new landscaping, a new roof, paint and security enhancements. New flooring, paint and lighting were added inside apartments, and kitchens and bathrooms were renovated with new fixtures and appliances.

The liquor store was converted into a manager’s office to give the property a new on-site management presence.

Sapolu Meli, River Pauahi’s new “community manager” who also lives in the building, said replacing the liquor store and its illegal activity improved residents’ safety.

“Our tenants feel so safe, but before used to be so much problems,” he said.

Linda Velles, who has lived at River Pauahi for 32 years and is raising her grandson there, loves the changes. “Everything is new,” she said. “They really did a good job.”

Maeva started working on a plan to buy River Pauahi from its longtime owners in 2014 after learning that a contract between the owners and the federal Department of Housing and Urban Development that helps tenants pay rent was set to expire in August 2017 and likely would not be renewed.

Without that contract the owners could raise rents to market rates if they wished.

“We talk about building new housing and there being an affordable-housing shortage, but at the same time if we let assets deteriorate or let them go to market (price), we’re losing housing,” said Maeva, who has been involved in several Hawaii projects building new or improving old affordable housing. “We need to build, but we also can’t let what we have deteriorate and go out of the (affordable housing) program.”

Maeva said River Pauahi’s longtime owners were willing to sell, even though their land lease with the city ran until 2035. The seller was a partnership established by the building’s original developer, George Fan, now led by two local families.

Fan, a local developer whose projects included Kapiolani Gardens, Country Club Plaza and Bellevue Tower, was found dead in a Makiki park with his mouth taped in 1990 before being put on trial for threatening a former business partner with a shotgun. A medical examiner attributed Fan’s death to a self-administered lethal mix of drugs.

To help finance the purchase and renovation of River Pauahi, Maeva obtained $9.3 million in tax-exempt Hula Mae revenue bonds and about $660,000 in state and federal tax credits through the Hawaii Housing Finance and Development Corp., a state agency. A new contract with HUD also was made to provide Section 8 vouchers under which HUD ensures that tenants don’t pay more than 30 percent of their income for housing.

River Pauahi rental rates average $348 a month and range from $45 to $1,413 for one- and two-bedroom units including utilities.

Rents and tenants did not change under the acquisition and rehabilitation, according to Maeva. Renovation work was done in several phases, which allowed tenants to spend three weeks in a hotel or other accommodations at the developer’s expense before returning to their transformed homes.