A former Kihei hotel that became a Christian missionary training center and more recently was pursued for corporate housing and then state teacher housing is now on track to become homes for Maui fire survivors.

A state agency received board approval Thursday to buy the former 229-room Maui Sun Hotel as part of a plan to turn the property into apartments for people who lost homes in the Aug. 8 disaster, which destroyed most of Lahaina.

The property is being occupied by around 150 first responders, though that would shift to an interim use serving fire survivors in what is described as a dorm setting for about 18 months until an envisioned conversion to residential apartments and long-term ownership by a private developer takes place.

Under the plan, the Hawaii Housing Finance and Development Corp. would buy what is now a 175-unit complex on 6 acres for $34.5 million and have a boutique hotel management company operate it as a dorm for fire survivors until the residential conversion can be done.

HHFDC’s board voted 6-0 to approve the purchase with some urgency and an unusual role for the agency, which in recent years has shed nearly all ownership and operation of affordable housing.

The agency’s main purpose is to help private developers finance affordable housing. Chris Woodard, HHFDC’s chief planner, told board members that it typically takes three to four years to produce affordable housing after a developer seeks such financing.

“In a time of dire need for housing on Maui, this property is available now,” he said.

On top of the purchase price, HHFDC plans to spend $9.5 million on other costs including fees and $6.6 million in needed fixes that bring its total cost on the deal to $44 million.

If the Kihei property purchase is completed as scheduled in December, a convoluted shift will advance from an earlier state plan to convert the former hotel into teacher housing.

The Maui Sun was developed for about $30 million in 1991 to largely serve local residents, but in 1995 was sold for $12 million in a court auction due to overwhelming debt. The new owner, Atlanta-based Haggai International Institute for Advanced Leadership Training Inc., converted the 229-unit hotel into a Christian missionary training center.

Today, the complex features 175 units ranging from studios to three-bedroom units that have typical hotel furnishings but no televisions. The property also includes an oversized pool, a fitness center, a central kitchen, a bistro, meeting rooms, a 120-seat auditorium, laundry rooms, a library, a koi pond, a soccer field and parking.

Of the 175 units, eight have full kitchens, 35 have kitchenettes and 32 have mini refrigerators and microwave ovens.

According to HHFDC, Haggai marketed the property for sale in 2020 aiming to attract interest from premium-brand hotel operators.

In 2022, Pacific Rim Land Inc. agreed to a purchase in partnership with Paramount Hotels LLC with an intent to reposition the complex for transient workforce accommodations serving traveling nurses, construction workers and others, according to an HHFDC staff report.

Then in May, the Legislature passed the state budget bill with $45 million for HHFDC to acquire the Haggai property so Maui County could convert it to teacher housing, affordable workforce housing and prekindergarten classrooms under a land lease with HHFDC.

Pacific Rim and Paramount agreed to the rearranged sale in return for about $2.8 million, according to HHFDC.

Woodard told the board that lawmakers intended for HHFDC to be a passive landowner in the deal.

“HHFDC was basically supposed to be the vehicle to acquire and hold the real estate, nothing more,” he said. “We were not intended to operate it.”

But after the Lahaina fire, which killed at least 99 people and destroyed roughly 3,500 homes, HHFDC recognized that Maui County’s focus on fire recovery sapped its capacity to handle the teacher housing project, Woodard said. And with a need to house close to 8,000 people displaced by the fire, the state agency changed up the conversion plan.

Meanwhile, Haggai has made the property available to fire disaster first responders, including the Hawaii National Guard, American Red Cross and Southern Baptist Disaster Relief, HHFDC reported.

Woodard told the agency’s board that Paramount can operate the property for HHFDC, through a no-bid contract permitted under an existing state disaster emergency proclamation, until a competitive bid process can be completed to find a private developer to do the residential conversion and long-term operation under a land lease with HHFDC.

Woodard also said that operating expenses and revenue are uncertain for interim use, and that the nonprofit Hawaii Community Foundation appears willing to help cover a shortfall if one emerges.

If all goes smoothly, residential conversion work is projected to start in late 2025.

Pacific Rim, Paramount and a consultant, Maui-based developer Dowling Cos., estimated it would cost $28.5 million to convert the property into 117 residential apartments with a mix of one- and two-bedroom units, HHFDC reported. They also estimated it would cost $10.8 million to convert the library space into six prekindergarten classrooms.

HHFDC said it intends to reserve some apartments, or give a preference for some apartments, to households with teachers, which would align with the Legislature’s purpose for the acquisition.