The Honolulu City Council is scheduled to hold a special meeting Wednesday over the potential financing, acquisition and rehabilitation of an existing 32-story high-rise tower in Chinatown that the city seeks to keep as affordable.

The proposal involves a 379-unit apartment complex called Maunakea Tower Apartments at 1245 Maunakea St., the city states.

If approved, the Council’s vote would authorize the issuance, sale and delivery of a not-to-exceed principal amount of $105 million in multifamily housing revenue bonds for the purpose of providing a mortgage loan for the property to Honolulu-based Stanford Carr Development LLC and Los Angeles-based Standard Communities — developers working under Komohale Maunakea Venture LP. The meeting is 10 a.m. Wednesday.

Built in 1977, the rental complex of one- and two- bedroom units has always been 100% affordable, covered under Section 8 low-income housing, according to the Hawaii Housing Finance and Development Corp.

And because the project used low-income housing tax credits for a renovation in 2000 — which requires project owners to maintain the property for low- income individuals or families — the project’s status as affordable housing would be renewed for another 61 years, beyond a pending 2035 expiration date that might convert the whole of the building to market-rate rentals.

According to HHFDC, under the Council’s potential approval, the property would undergo a new rehabilitation program totaling $28.8 million, with about $76,000 of renovation work done per unit.

According to the city, current tenants living at the Maunakea Tower Apartments — who generally pay about $1,400 for a one- bedroom unit and roughly $1,60o for a two-bedroom unit — would be able to stay at the property once it’s acquired and the actual renovation work begins.

On this project, Council Chair Tommy Waters said the panel’s potential actions would mean issuing private activity bonds in order to continue to have lower- income households in the urban areas of the city.

“Except for one manager’s unit, the apartment units will be rented to households earning 60% and below of the area median income for Honolulu. Housing for our local families at 60% AMI and below is critical, and the financing tool will address that need without costing the city any money,” Waters told the Honolulu Star- Advertiser via email. “The bonds will be part of the city’s 2020 federal volume cap allocation for tax-exempt bonds, and must be issued prior to the end of 2023.”

Maunakea Tower Apartments, according to Waters, is currently occupied and supported by the U.S. Department of Housing and Urban Development Section 8 housing assistance payment multiyear contract.

“The acquisition and rehabilitation of Maunakea Tower Apartments will support an additional 20-year renewal of the (Section 8) contract,” he said.

He added that the last time the city issued private activity bonds — which allow governments to borrow on behalf of private developers — was in the early 2000s.

“This is an important financing method that can expand our affordable housing inventory without spending city dollars. I am committed to working with my fellow Council members, the city administration, our federal and state partners and developers in our community to find creative ways to finance affordable housing projects and provide much-needed affordable housing opportunities for Oahu residents of all income levels,” he said. “This is a perfect example of how we can be creative in finding solutions for our affordable housing needs.”

Michael Formby, the city’s managing director, said the city took over this project in late 2020, after the prior mayoral administration filed a form with the Internal Revenue Service stating that it was going to retain its “volume cap” — or maximum amount of tax-exempt bonds that may be issued in a calendar year — for its private activity bonds program.

Formby asserted the Blangiardi administration was unaware of that status — or, he added, even what private activity bonds were — until after the city’s leadership transition.

“The challenge was when a municipality elects to receive its volume cap, that’s like a one-way street at that point; if you don’t issue them, you lose them,” Formby said. “You don’t have the ability to go back and say, ‘Oh, we change our mind.’”

At that time, he said the city had $125 million in private activity bonds as a “conduit issuer” — meaning the city has no liability or risk for these bonds though individual project developers do.

“And these bonds are basically a way for private development to incur less overhead in whatever the private development is. It’s not just affordable housing; there’s many different types,” Formby said.

As far as this project goes, he added that the city — through its Department of Planning and Permitting — sought to gain developers to renovate the apartment complex for use of the private activity bonds, prior to an imposed deadline of Dec. 31.

“What we were looking for was ‘shovel ready’ projects generally,” he said. “In other words, they’re ready to go because we knew we had to get these bonds issued by the end of 2023 … so these had to be ‘shovel ready’ projects that were just teed up and ready to go.”

Formby added that if this administration’s top priority is affordable housing, “then we need to reduce the demand by building more inventory; then if we don’t keep some of the older buildings from coming out of affordable status, then we never make headway.” And he stressed that the city continues to look at older affordable housing projects for future use to ensure that they remain in “affordable housing status.”

Meanwhile, the City Council is expected to review a similar affordable project — a townhouse development in Waipahu that will reportedly use $30 million in private activity bonds — in the near future.