A private company selected to buy and manage the city’s 12 affordable housing complexes plans to spend more than $37 million on renovations and improvements, officials announced Wednesday.
The selection of Honolulu Affordable Housing Partners LLC to purchase and manage the properties was announced Wednesday by Mayor Peter Carlisle.
Details, including the purchase price, are being negotiated and a final agreement is expected next month. The agreement is subject to City Council approval. Under terms of the bidding guidelines for the properties, the buyer had to agree to lease the land from the city for 65 years and keep most of the units as affordable housing for the duration of the lease.
William Rice, chief executive officer of Arcadia, Calif.-based Highland Property Development LLC, one of the partners in the Honolulu company, said renovations would amount to about $30,000 for each of the more than 1,200 units.
"We’re very much looking forward to continuing to work with the community on this preservation effort," Rice said at a news conference in Carlisle’s office.
Renovations are expected to lead to rent increases for tenants, but city officials said increases were expected regardless of whether the properties were taken over by a private company.
The rent situation was explained to residents last year during a series of meetings at each of the 12 properties. Officials stressed Wednesday that rent caps are in place, limiting any increase to no more than 10 percent of the already below-market rent.
Tenants have been kept apprised of the developments through community groups, including Faith Action for Community Equity, or FACE.
"We feel like the process was basically a good one and it still has a ways to play out, especially when it goes to the City Council," said the Rev. Bob Nakata, a community activist and FACE board member. Tenants "have been players in it and they’ve had a chance to ask a lot of questions — some pointed ones, too — so we’re going to continue working with (the city).
"We’re intrigued. We will continue to look at it, examine it and decide how we respond when it gets to the City Council and they have a hearing."
In addition to Highland Property Development, other partners include Richard Gushman of Honolulu, who has more than 40 years of real estate experience in Hawaii and on the mainland, and Stephen Gelber, a Honolulu real estate and tax attorney.
Rice said Highland has experience in preserving similar properties having already worked on more than 2,500 units outside of Hawaii. Aside from improvements to living areas and kitchens, the new owners also aim to make units more energy efficient.
Residents are not expected to be displaced while the upgrades are being done.
"We specialize in trying to do the least invasive renovations that we can at the properties," Rice said.
Honolulu Affordable Housing Partners was among seven bidders for the properties. Bidding opened in February.
"Right now, the City and County of Honolulu, like all municipalities, we have very limited resources and we just simply do not have the means to raise $30,000 a unit to renovate," said Keith Ishida, city housing director. "But by partnering with the private sector, using their acumen and their financing skills and development skills, we really can create a better living environment for our residents."
The 12 complexes include 850 apartment units that qualify under the U.S. Department of Housing and Urban Development guidelines for low- and moderate-income households with incomes of 80 percent or less of the median; 189 "gap group" apartments for families with incomes of 80 percent to 120 percent of the median; and 218 market-rate rental units, according to the city.
