DHHL buys urban Honolulu apartments for beneficiaries

Native Hawaiians on a wait list for homesteads should have a first-ever opportunity later this year to rent affordable apartments from the state Department of Hawaiian Home Lands.

William Aila, the agency’s director, signed a deal Tuesday to buy a pair of vacant apartment buildings in Moiliili from Kamehameha Schools for $7.8 million.

DHHL plans to renovate the 31 apartments on the site and have them ready for occupancy by the end of the year.

The project represents the first rental home offering from DHHL, which historically has largely provided residential land leases to beneficiaries for $1 a year.

Last year the Hawaiian Homes Commission, which oversees DHHL, approved an administrative rule change after beneficiary consultations so that DHHL can provide rental housing at affordable rates.

The change will allow the agency to serve beneficiaries who cannot qualify for a mortgage to build homes or buy turnkey homes that DHHL also sometimes offers with homestead leases.

Offering rentals also is intended to help the agency reduce its chronic backlog of more than 28,000 beneficiaries who in many cases have been waiting decades for homesteads that also include leases for subsistence agriculture and ranching uses. DHHL beneficiaries must be at least 50% Hawaiian.

DHHL holds 203,000 acres in trust, but relatively little of that land is on Oahu, where roughly 9,000 beneficiaries are on the wait list. Even less DHHL land on Oahu is suitable for residential development, so the agency has made it a priority to acquire land on the island to provide affordable housing to Hawaiians.

“We are so grateful for this partnership,” Aila said after the Hawaiian Homes Commission approved the purchase from Kamehameha Schools. “This acquisition will allow one more product in the line of products that the Department of Hawaiian Home Lands offers.”

Jack Wong, CEO of Kamehameha Schools, participated with Aila in the deal-signing ceremony at DHHL’s Kapolei headquarters, and said he was honored and humbled that the charitable trust serving Hawaiians was able to sell the Moiliili site to DHHL.

“We know affordable housing is a big issue, and we know it’s an urgent crisis for our Hawaiian families,” he said. “We know that our families are paying too much of their incomes on housing.”

DHHL received $6.9 million from the Legislature a couple of years ago for land acquisition and applied this sum to the purchase from Kamehameha Schools.

The trust had long leased the land under the two Mo­iliili buildings at 793 Isenberg St. and 728 Coolidge St. to a company affiliated with local developer Peter Savio. Kamehameha Schools reclaimed the property earlier this month after the land lease expired and remaining tenants moved out late last year.

Kamehameha Schools explored options for the property with developers but said selling to DHHL was ideal in part because of the shared mission to help Hawaiians.

The $7.8 million purchase price represented a recent tax-assessed value of the property. Renovation costs are not expected to exceed $850,000.

DHHL plans to eventually redevelop the nearly 1-acre site, which includes a large grassy area between the two buildings, into a high-rise rental apartment complex as part of a longer-term vision that could produce rental homes for a couple hundred or so beneficiary households.

The agency has a similar development plan for a neighboring 1.9-acre site that it has owned since 1995. This site at 830 Isenberg St. was once home to a bowling alley called Stadium Bowl- O-Drome. DHHL issued a request for proposals in August for developers to build a rental apartment tower on the site. Selection of a developer is expected within the next few months.