State finalizes sale of affordable-housing tower in Kakaako for $35M

Local developer Stanford Carr and a California-based partner have completed a delayed purchase of a low-income housing tower in Kakaako from the state.

The $35 million purchase of Kamakee Vista by Carr and Standard Communities will allow renovation work budgeted for $14 million to likely begin next year on the tower with 226 rental apartments and the KCAA Muriel Preschool serving about 110 children.

Kamakee Vista, at the corner of Queen and Kamakee streets mauka of a Whole Foods store, was supposed to be part of a portfolio of six affordable-housing complexes sold by the Hawaii Housing Finance and Development Corp. last year to Komohale LP, the Carr-and-Standard partnership.

The state agency, which primarily helps finance affordable-housing projects, sought to sell the portfolio with 1,221 affordable rental homes under long-term land leases as a way to make overdue improvements to the homes at no cost to the state while retaining landownership. HHFDC said a private developer could make higher-quality upgrades faster and more efficiently.

Komohale was tentatively selected as the winning bidder among competitors in 2017, and negotiated a final $130 million purchase price last year. As part of the deal, Komohale was required to renovate the properties within three years at a cost of $85 million. Also under the arrangement, the buyer may raise rents only modestly while keeping rates within state limits for affordable housing.

However, Komohale sought a 75-year land lease at $1 a year for Kamakee Vista in line with the five other properties. Kamakee Vista was offered with a 37-year lease because The Atherton Family Foundation owned the land under this 28-story tower built in 1992 and wasn’t willing to modify the lease term.

As a result, Komohale only closed on the purchase of five properties.

In December, HHFDC was able to buy the land from Atherton for $17.6 million. Since then, disagreement arose over a revised sale price for Kamakee Vista to Komohale with a 75-year lease, and HHFDC considered trying to sell the tower to someone else.

Komohale ended up agreeing to pay $35 million for Kamakee Vista, up from $29.5 million.

The other properties sold earlier were Kauhale Kaka­ako, Pohulani Elderly and Kekuilani Courts on Oahu; Lailani Apartments on Hawaii island; and Honokowai Kauhale on Maui.