State plans $1.8 billion housing and commercial development for East Kapolei

A thousand affordable rental homes could rise on state land in East Kapolei as part of a new long-range development plan also featuring a hotel, retail, offices and warehouses.

The ambitious $1.8 billion plan, if developed as envisioned over the next few decades, is primarily intended to generate revenue for the state Department of Land and Natural Resources but also would produce affordable housing, jobs and tax revenue on 168 acres of vacant DLNR property next to the rising Ho‘opili community and the University of Hawaii-West Oahu.

“The site has tremendous potential,” Rodney Funakoshi, planning program administrator for the state Office of Planning, told members of the Board of Land and Natural Resources during a meeting Friday.

At the meeting, the board unanimously endorsed the draft plan produced for DLNR by local planning consultant R.M. Towill Corp.

Ian Hirokawa, a DLNR official working on the project, told the board that some of the rental homes are intended for households with very low incomes and that the most expensive apartments are expected to be below market rental rates.

“Hopefully, we can address some of the state’s critical affordable-housing needs,” he said at the meeting.

The draft plan calls for delivering an initial phase with 720 of the more moderately ­priced rental homes, a 180-room hotel, 50,000 to 64,000 square feet of retail space and 20,000 square feet of office space on 51 acres next to a city rail station and the western edge of Ho‘opili already populated by homes.

This initial phase, which is expected to also feature 1,000 parking stalls for rail riders, would be developed through 2029, according to the plan.

A second phase mauka of the first includes 180 more rental apartments, including low-income residences, and a light-industrial park separated from the housing by Kaloi Gulch. This phase on 58 acres is projected for development from 2030 to 2039.

DLNR anticipates working with a state agency that helps finance low-income affordable housing, the Hawaii Housing Finance and Development Corp., to produce the most affordable apartments.

The third phase would be developed beyond 2040 with additional warehouse and other industrial business space on 60 acres just mauka of UH-West Oahu.

Industrial buildings on the second- and third-phase parcels are expected to total about 1 million square feet.

Hirokawa said much demand for industrial space is expected two decades from now as such use increasingly gets pushed out of Hono­lulu’s commercial core.

“We feel there will be a long-term demand,” he said.

Ho‘opili also has an industrial park planned as part of its project and a separate business park intended for development next to DLNR’s third phase site.

To provide for improved access to major roads in the area, DLNR and Ho‘opili’s developer, D.R. Horton, are negotiating to exchange about 11 acres of land with each other. Horton would get more land next to its business park site, and DLNR would get more land next to its first phase for homes, retail, office and hotel use.

DLNR aims to find developers willing to carry out the project on parcels to be sold or leased, and recognizes that developing the area presents challenges given the need to extend sewer, water and drainage infrastructure to the parcels.

The master plan estimates a cost for this at $214 million.

The agency also projects that the full estimated $1.8 billion development cost would produce needed affordable housing in a growing area while also creating 2,390 long-term jobs and $176 million in state and county tax revenue.

DLNR’s next step toward advancing its plan is to hire a consultant to prepare an environmental impact statement. The agency said it has $1 million that was appropriated last year for this work.