Four planned affordable-housing projects received state financing help Thursday under a new program to produce rental apartments for middle-income residents.
A board overseeing the Hawaii Housing Finance and Development Corp. unanimously approved $142 million in low-interest state loans to subsidize financing costs for 759 apartments.
More than half the units will be in two neighboring towers in Kakaako. The other two projects are in Waipio on Oahu and in Hilo.
Projected monthly rental rates, based on county median income levels this year, range from $1,500 for one- bedroom units in Hilo to $3,549 for three-bedroom units in Kakaako.
Eligible tenants may not earn more than the annual median income, which on Oahu this year is $91,500 for a single person and $130,600 for a family of four. On Hawaii island the median income is $66,700 and $95,200, respectively.
HHFDC, a state agency that helps finance affordable housing, recommended the four projects from among 11 applications submitted in September to tap $150 million provided by the Legislature earlier this year to help finance middle-income rental housing.
Historically, appropriations to HHFDC’s rental housing revolving fund helped finance predominantly low-income rental housing.
There was some concern that the decision by lawmakers to reserve half of a $300 million appropriation to the fund this year for middle-income rentals would come at the expense of low-income rental housing production, though HHFDC said new middle-income rental housing hasn’t been developed in recent decades locally due to a lack of subsidized government financing.
“Historically, development of affordable rentals for this workforce gap has not been feasible,” Denise Iseri-Matsubara, the agency’s director, told lawmakers in written testimony on House Bill 2513 in February. “The subsidies will encourage more development, thereby providing more housing options to our state’s working families.”
HHFDC declined Thursday to say how it recommended the four projects to its board from among the 11 applications seeking $331 million, or more than twice what’s available. All 11 met minimum criteria and received scores that were not publicly disclosed.
Scoring criteria include producing housing for households with incomes lower than residents in the area of a project, and producing homes for households with lower incomes.
It’s hard to gauge whether the new program will produce any additional affordable housing, and whether homes resulting from the special financing will be produced at the expense of low-income housing production.
All four projects were in the works before lawmakers provided the special funding.
For instance, one project called Koa Vista II, is a new version of a planned two-phase project at Koa Ridge, a master-planned community in Waipio where developer Castle & Cooke Homes must make 30% of the 3,500 homes in the community affordable largely to middle- income households as part of city zoning conditions.
A nonprofit led by local affordable-housing developer Gary Furuta planned to produce 190 rentals for seniors at Koa Ridge in two phases. Koa Vista I, a 96-unit first phase reserved for seniors earning no more than 60% of the median income and featuring monthly rent ranging from $679 to $1,359 for one-bedroom units, received tax-exempt bonds and low-income housing tax credits through HHFDC earlier this year.
Now, Koa Vista II with 97 units under the new loan program, would serve general households earning up to 80% of the median income in one-bedroom units renting for $1,500 a month.
To help finance the $40 million Koa Vista II project, HHFDC agreed to provide a $25.3 million low-interest loan.
The largest approved loan is $67.5 million to help build a $220 million tower on state land in Kakaako where Pohukaina School existed decades ago and a few prior development plans failed over the past decade.
California-based developer Highridge Costa intends to use the loan to help build a tower dubbed Pohukaina Commons with 434 apartments, of which 87 would be reserved for households earning up to 80% of the median income and 345 would be reserved for households earning up to the median income. Monthly rent is projected to range from $1,757 for studios to $3,549 for three- bedroom units.
A third approved loan, for $24 million, would finance 124 apartments in a two-tower project with 859 units called Kahuina about a block away from the Pohukaina Commons site.
The 124 rentals include 80 units for households earning up to 80% of the median income and 43 for households earning up to the median income. Projected monthly rents range from $1,606 for one-bedroom units to $3,199 for three- bedroom units.
Kahuina, to be built by Honolulu-based Stanford Carr Development, previously was slated to include a 125-unit affordable rental housing component aimed at households with incomes between 30% and 100% of the median income, with the balance of residences being for-sale condominiums priced for households earning the median income or more.
The fourth approved project, Hualalai Court, is in Hilo, where Texas-based Tango Development once aimed to produce 105 homes for households earning no more than 60% of the Hawaii County median income.
Now a new development entity plans to build a 104-unit Hualalai Court on the same site where 21 apartments would be for households earning up to 80% of the median income and 82 for households earning up to the median income. Projected monthly rents range from $1,569 for two-bedroom units to $2,293 for three-bedroom units.
A $25.5 million low- interest loan would help Hualalai Court LLC build the $55.2 million project.
Construction on all four projects is projected to start in 2023 or 2024 and finish between 2024 and 2026.
