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The Honolulu Advertiser
Posted on: Sunday, February 25, 2007

Back on the Map

By Andrew Gomes
Advertiser Staff Writer

Palehua Terrace, Phase 2, in Makakilo has 64 family rental units. HCDCH assisted with financing the privately-owned project.

Photo by HHFDC

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KAPOLEI

Multiple projects are planned for the area.

  • Villages of Kapolei —Kaupe'a

  • Villages of Kapolei —Village Center

  • Villages of Kapolei

  • Senior Residence at Kapolei

  • East Kapolei II

    Plantation Town Apartments

  • In Waipahu on six acres of state land

  • 330 for-sale condominiums

  • Units being sold for $131,000 to $291,000

    220 California Ave.

  • In Wahiawa

  • 42 rental units for seniors

  • Recently completed using low-income housing tax credits provided by HHFDC

    Mokuola Vista

  • In Waipahu on one acre of state land

  • 70 for-sale condominiums

  • Units being sold for $259,000 to $275,000

    Pohukaina

  • In Kaka'ako on a 1.25-acre state parcel

  • About 200 rental units

  • Developer expected to be selected next month

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    KAPOLEI PROJECTS

    A bevy of developments are planned for the Second City.

    East Kapolei II

  • On 39 acres of state land below the University of Hawai'i-West O'ahu site

  • About 600 homes for sale and rent

  • A request for developer proposals is expected soon

    Villages of Kapolei — Kaupe'a

  • In Kapolei on 53 acres of state land

  • 326 single-family homes

  • This Department of Hawaiian Home Lands project, which used HHFDC financing, is under construction

    Senior Residence at Kapolei

  • In Kapolei on 4.5 acres of state land

  • 60 rental units for seniors

  • Slated to begin construction next month

    Villages of Kapolei

  • In Kapolei on 21 acres of state land

  • 476 homes for sale and rent

  • Sales expected to begin later this year

    Villages of Kapolei — Village Center

  • On 20.5 acres of state land

  • About 250 homes for sale and rent

  • Developer to be selected next month

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    AGENCIES PAST

    A history of state affordable housing agencies:

    1935 — Hawai'i Housing Authority created by the Territorial Legislature to provide safe and sanitary housing for low-income residents.

    1987 — Housing Finance and Development Corp. formed as part of a Gov. John Waihee initiative to create a streamlined organization for producing affordable housing.

    1998 — HHA and HFDC consolidated into the Housing and Community Development Corp. of Hawai'i under the leadership of Gov. Ben Cayetano. New agency tasked with managing federal and state public housing programs as well as developing and financing low- and moderate-income housing.

    2006 — HCDCH and its two main roles are split under Gov. Linda Lingle into the Hawai'i Public Housing Authority and Hawai'i Housing Finance and Development Corp.

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    After years of meager activity, the state is pumping up its pipeline of affordable housing projects constructed by private developers using public land and financing incentives.

    The Hawai'i Housing Finance & Development Corp. is on pace to help deliver nearly 5,000 homes for rent and sale to low- and moderate-income residents over the next five years — a production level not achieved by the state since the early 1990s.

    In addition to that, nearly 1,600 more homes could be built during the same period if agency trust funds are infused with roughly $120 million as is being proposed via several bills before the Legislature.

    "We're kind of in a new paradigm," said agency director Orlando "Dan" Davidson. "We're going to get a lot of housing built."

    The agency's plan for delivering 4,689 homes, or 6,293 with additional funding, between fiscal years 2007 and 2011 should mean significant relief for Hawai'i's affordable housing crisis and the many residents who have difficulty affording a place to live.

    "The state needs to get more involved because they aren't doing enough," said Yvonne Ortiz, a Honolulu resident who said she almost became homeless last year because of rising rents. "People are having a hard time. A lot of people are becoming homeless."

    The Hawai'i Housing Finance & Development Corp., or HHFDC, was formed last July after lawmakers split apart another agency that was charged with affordable housing development but was consumed by its other major task, managing public housing, because years of public housing neglect threatened a federal government takeover.

    The Legislature also raided various affordable housing funds to the tune of $212 million between 1995 and 2005, which hobbled efforts to produce affordable units.

    As a result, the state's prior affordable housing agency, the Housing & Community Development Corp. of Hawai'i, delivered only about 1,100 affordable units from 2002 to 2006 as home prices about doubled and rents became the highest in the nation. The result was an affordable housing crisis despite a thriving state economy.

    WHAT LED TO CRISIS

    Not since the early 1990s, when state efforts for developing affordable housing were the purview of a different agency, was there comparable production to 5,000 units in five years.

    Charles Wathen, a developer and affordable housing advocate who is one of several HHFDC board members, said raiding affordable housing funds was shortsighted and has made Hawai'i's affordable housing crisis more acute.

    The raided funds, he said, should have been used to buy rental buildings in the late 1990s when real estate was not hot, giving the state valuable inventory that would have softened today's affordable housing crisis.

    "That old agency was sort of kicked around a little bit," he said. "That money was so valuable."

    Today, Wathen sees that agency staffers who survived the bureaucratic consolidation and division are reinvigorated by their refocused mission and new leadership under Davidson, a former private industry development executive and attorney who was hired to lead the HHFDC in August.

    "He brings to the table such a vast knowledge of development and land use," Wathen said of Davidson, who also has been director of a private Hawai'i landowner and developer trade association as well as deputy land director for the state Department of Land & Natural Resources. "I think he has fully energized that agency to produce housing."

    The HHFDC produces affordable housing with two main tools, land and financing.

    The agency's development branch solicits proposals from private developers to build affordable housing on state land. Free land greatly reduces the cost of homes, which are sold or rented at prices affordable to people usually earning 60 percent to 140 percent of a county's median income.

    A financing branch allows developers to use forms of public financing, including tax credits and below-market loans, to subsidize the cost of building affordable housing.

    Often land and financing programs are combined to deliver homes for a lower cost to tenants and buyers. The agency also is able to expedite permitting and provide general excise tax exemptions for developers, and provides mortgage assistance for first-time home buyers.

    PROJECTS UNDER WAY

    Among the more than 25 projects in the agency's development and financing pipelines:

  • Plantation Town Apartments, a 330-unit condominium project on six acres of state land in Waipahu. Condo units are for sale and priced at $131,000 to $291,000 for buyers earning 80 percent to 110 percent of Ho-nolulu's median income.

  • Pohukaina, a planned rental complex with about 200 units on a 1-acre state parcel in Kaka'ako. A developer is expected to be selected next month.

  • East Kapolei II, an envisioned roughly 600-unit subdivision on two parcels of state land totaling 39 acres. A request for developer proposals is expected soon.

  • The Courtyards at Mililani Mauka, a project with 48 rental units that used HHFDC-provided tax credits. Construction is ongoing and slated for completion by mid-2008.

  • Senior Residence at Iwilei, a 160-unit senior rental project using tax credits and other HHFDC financing. Completion is expected by mid-2009.

  • Keahuolu, a Big Island project planned for about 1,100 homes for rent and sale on 272 acres of state land within the Lai'opua subdivision in Kailua, Kona. A request for developer proposals is expected in September. About half the homes would be delivered after fiscal year 2011.

  • Kalepa Village-Phase III, a Kaua'i project with 40 rental units financed with tax credits and a construction loan through the agency. Completion is expected by mid-2009.

  • Hale Mahaolu Ehiku, a Maui project with 34 rentals for seniors financed in part with tax credits through the agency. Completion is slated for this year.

    Davidson said the HHFDC's creation last year sparked renewed interest from developers pursuing affordable housing projects with the state.

    The agency's Rental Housing Trust Fund used to finance rentals has a $22 million available balance and developer applications for $59 million.

    In the past, the agency and its predecessor have been criticized for not making use of all trust fund money, but Davidson said proposed projects will tap out the rental fund and the agency's Dwelling Unit Revolving Fund, which provides below-market construction loans.

    "We're not going to leave any money in the (funds) laying around," he said.

    Davidson added that if the Legislature stokes the funds over the next two fiscal years, all additional money should easily be used up.

    Of still-pending bills, the richest potential boost for HHFDC funding is proposed in House Bill 668, which would appropriate about $120 million to the agency's two main funds as well as $20 million to a fund providing construction financing for rental projects and $8 million that could provide down-payment loans to first-time homebuyers.

    Another bill, House Bill 150, would deliver $60 million into the Rental Housing Trust Fund over the next two fiscal years, and would increase to 65 percent the share of conveyance taxes that go into the fund. The rental fund's share of conveyance taxes last year was increased from 30 percent to 50 percent but only for one year.

    Gov. Linda Lingle's administration in its budget is also requesting that $50 million be put into the rental fund over the next two fiscal years.

    Reach Andrew Gomes at agomes@honoluluadvertiser.com.

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