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A planned affordable rental housing project on Lanai won’t be quite as affordable as previously envisioned by the island’s management company owned by billionaire Larry Ellison.
Pulama Lanai, which owns 97% of the island, is seeking Maui County Council approval to develop a 150-home subdivision with just over half the homes qualifying as affordable housing under state law.
But the affordability of 76 homes is somewhat different from what the company described in an environmental assessment finalized in May for the estimated $115 million project called Hokuao, located just beyond the developed edge of Lanai City.
The prior plan called for making some of the 76 homes affordable for low-income households. Now all the affordable homes would be priced for households with lower-moderate to higher-moderate incomes.
The revised plan includes a new element representing a trade-off for the change: preserving low-income rental rates in perpetuity for the 39-unit Iwiole Hale townhome apartment complex, which Pulama owns, following expiration of a 30-year affordable term earlier this year.
Pulama said its plan will produce an overall benefit because there’s a greater need for housing for moderate-income households on Lanai.
“There are no affordable rental units available for income levels from 62% to 140% (of the area median income) on island,” the company said in a July application to the county.
The 76 affordable Hokuao homes, all two-bedroom units, would be reserved for households earning 81% to 140% of Lanai’s median income, instead of 51% to 140% in the earlier plan. In both versions of the plan, affordable rents would be maintained in perpetuity.
Keiki-Pua Dancil, Pulama’s senior vice president of government affairs and strategic planning, told the Council at a meeting Wednesday that above-moderate-income rental housing — homes reserved for households earning 121% to 140% of the median income — is a key to housing opportunities on Lanai.
“On Lanai it’s an inventory issue, not necessarily an affordability issue,” she said.
Dancil said Pulama owns 235 single-family homes in Lanai City — largely plantation-era homes with two bedrooms — that rent on average for $760 a month.
Pulama also has said many Lanai residents can’t qualify for low-income housing because of low poverty and high employment on the island. Lanai also has a low median income — $38,820, compared with $67,130 on Maui — which lowers maximum affordable-housing rents.
Household income at 81% of the median on Lanai equates to $31,060 for a single person, $35,490 for a couple and $44,370 for a family of four. At 140% it is $54,350 for a single person, $62,120 for a couple and $77,640 for a family of four.
Projected monthly rents for affordable Hokuao homes range from about $1,000 to $1,750 under county guidelines tied to income. The low end of rent under the earlier plan was about $625, based on this year’s income levels.
Market rents for the balance of Hokuao, 74 two-bedroom homes, would be over $1,800 a month, according to Pulama.
Pulama, the main employer on Lanai, has attracted much community support for its project.
Alice Granito, a Lanai resident since 2003, sent written comments to the Lanai Planning Commission in January relating her experience living with seven other people in an old plantation home that had only one bathroom.
Granito, who works for the state, said she looks forward to Hokuao because high demand makes it hard to obtain rental housing from Pulama’s existing inventory, while privately owned rental housing is expensive and limited.
“This will ease stress to families living in multigenerational and multifamily homes,” she said.
Elton Kinoshita, principal of Lanai High and Ele- mentary School, expressed support for Hokuao at the January Planning Commission meeting, saying he recently had to stop recruiting teachers to fill four or five positions because of the lack of housing despite Pulama allocating two more homes for school staff.
“This is a struggle for us to provide housing as we recruit,” he said, according to a transcript of the meeting.
Much support also has come from people depending on Pulama for work, including employees of two luxury hotels and a hydroponic greenhouse farm owned by Ellison companies.
“We are in desperate need of more housing on Lanai for our current residents as well as future residents,” Scott Ashworth, director of golf at the Four Seasons Resorts Lanai, said in written testimony to the commission in January. “With the two resorts being the main economic engine on Lanai, we need new, affordable housing for our future employees and to ensure the continued success of the resorts here on Lanai.”
Some community members have expressed a preference that Hokuao include homes for sale.
Gabe Johnson, chairman of the County Council’s Affordable Housing Committee, raised an idea during Wednesday’s meeting to make the project’s approval contingent on Pulama selling 20 homes, but the suggestion didn’t gain traction.
Kurt Matsumoto, Pulama’s chief operating officer, said the company wasn’t going to commit to selling any homes now, but will consider selling some plantation-era homes after the county produces two phases of long-planned affordable housing in Lanai City bordering the Hokuao site.
Matsumoto, who was born on Lanai, said Pulama will assess demand for homeownership after the county adds to the island’s affordable-housing inventory.
“It’s going to depend on what the conditions are when we get there,” he told the Council on Wednesday.
The county plan, which has been in the works for more than a decade, calls for developing about 425 affordable homes for sale or rent in five phases on land it received from Castle & Cooke as part of a condition for resort development in the 1990s that replaced pineapple farming as the island’s main industry.
Ellison, co-founder of software firm Oracle Corp., bought nearly all of Lanai from Castle & Cooke in 2012.
Pulama projects that it could start building Hokuao in late 2022 and have initial homes done in 2023 if approvals are obtained.
The company is asking the Council to approve several exemptions from county development rules under a state affordable-housing law, including an exemption to allow above-moderate rentals to be included in the affordable mix, a waiver to pay $581,000 in permit fees for affordable units and to fast-track permitting for affordable units.
The Council’s Affordable Housing Committee endorsed the exemptions Wednesday, and Pulama is hopeful that final Council approval will be given Friday.
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