Low-income rental housing breaks ground

About a year from now, 128 Hawaii families with low incomes will have some brand-new, really affordable housing close to a planned city rail station and Ala Moana Center.

Local developer Stanford Carr held a construction blessing Thursday for the Kakaako project called Hale Kewalo where apartments are projected to rent for as little as $516 a month and serve some households annually earning around or less than $25,110 for a couple or $31,380 for a family of four.

“We really want to emphasize the housing need for workforce families,” Carr said, explaining that the project, largely financed by the state, will feature apartments with one, two and three bedrooms.

Hale Kewalo, scheduled to open in March 2019, is the product of a state affordable- housing requirement tied to the nearby Waihonua condominium tower, which opened in late 2014.

Under rules of the Hawaii Community Development Authority, a state agency regulating development in Kakaako, the equivalent of 20 percent of Waihonua’s 341 condos needed to be produced at prices affordable for moderate-income residents.

Waihonua’s developer, Honolulu-based Alexander &Baldwin Inc., announced in 2011 that it planned to meet the requirement by building 72 one-bedroom rentals in a five-story building on the corner of Piikoi and Kona streets a block from Waihonua. The company also said it would exceed HCDA requirements by setting rents well below allowable levels, by keeping rents low for 50 years instead of 15 years and by reserving the homes for seniors earning no more than 60 percent of Honolulu’s median income instead of for median-income households.

A&B, however, encountered difficulties with its plan and proposed transferring the project to Carr.

Though HCDA required that Hale Kewalo construction start by the end of 2016, the agency gave Carr extra time to arrange state financial help and overcome other delays as part of a trade-off for increasing the number of homes in the now 11-story project and making the apartments affordable for households with incomes as low as 30 percent of the median income. In addition, Carr’s project will keep apartments affordable for 60 years.

As part of the deal, A&B gave Carr the Hale Kewalo site and $1.9 million. Another state agency, the Hawaii Housing Finance and Development Corp., is providing $29 million in bonds, $4.4 million in federal and state tax credits and a $14 million loan. The tax credits, which are sold to investors and can be claimed for 10 years, provide Carr with about $22 million in proceeds. The total cost of the project is $53 million. The financing adds up to more because some pieces of financing get replaced by others.

Monthly rent would range from $516 to $1,522 depending on income level and unit size if based on 2017 incomes. Of the 128 units, 13 will be reserved for households earning up to 30 percent of the median income. Another 65 units will be for households earning up to 50 percent of the median income, and 49 units will be for households earning up to 60 percent of the median income.

Honolulu’s median income last year was $83,700 for a couple and $104,600 for a family of four. At the 30 percent level, those respective figures are $25,110 and $31,380. At the 60 percent level, they are $50,220 and $62,760.

Carr said management firm Hawaii Affordable Properties Inc. should begin to solicit and accept tenant applications around January, or about two months before Hale Kewalo is ready to open.