The Anatomy of a Land Development: How a Housing Proposal in Waiehu Came About

It is almost universally accepted that Maui is in dire need of more affordable housing.

The Waiehu-based Hale Mahalou Ke Kahua initiative promises an ambitious solution to a pressing need.

How does a project like this come together? According to Mohannad H. Mohanna, principal and president of Highridge Costa’s development company, it is based on a series of relationships and multiple interconnected players.

So, in other words, this is how the sausage is made.

“Like many of our other communities elsewhere, Hale Mahaolu Ke Kahua came together as the result of various relationships we have established in Maui County, starting with our first project in Kīhei, Līloa Hale, on land owned by Hope Chapel,” he said.

Hope Chapel is an inter-denominational Christian church with multiple ministries and was already aware of the need for more affordable housing in the local area.

The Waiehu project, a partnership between the California-based Highridge Costa and Maui Economic Opportunity, will consist of 120 multi-family residential units, housed in 13 two-story buildings, including 28 one-bedroom units, 60 two-bedroom units, and 32 three-bedroom units, as well as a 3,477 square foot non-profit building, a 3,231 square foot clubhouse, landscaping, and related improvements.

It will sit on 11.5 acres with an estimated cost of $33.5 million.

A total of 264 parking stalls and two loading stalls will also be provided. Access to the project site is proposed via three driveway entrances off Kahekili Highway.

According to Mohanna, Highridge Costa was introduced to the leaders at Hope Chapel by John Patterson of JPI Realty Services who attends the chapel.

Mohanna said Patterson also made an introduction to Grant Chun, former Maui County Managing Director, and current Executive Director for Hale Mahaolu. Besides managing about 1,100 affordable housing units in Maui County, Hale Mahaolu also provides meals, personal care services and housing counseling.

In turn, Chun introduced Highridge Costa to Debbie Cabebe, CEO of Maui Economic Opportunity.

“Debbie told us about the site MEO held at the time in Waiehu, which they had not been able to develop on their own,” Mohanna said. “Given the mission of MEO and its services to the community, we thought it was a natural partnership with Highridge Costa and agreed to move forward in an attempt to convert the site into affordable housing.”

MEO and Highridge Costa are seeking county fast-track approval for the project that would be rented to adults of all ages who earn 60% or less of the area median income, which is $57,540 or less by 2021 county guidelines.

Besides owning the land for Ke Kahua (and which will be leased to Highridge Costa), MEO will staff its own on-site community center to serve not just the residents who live there, but also the surrounding community.

In addition, Hale Mahaolu will be managing Ke Kahua on behalf of Highridge Costa, which has developed multiple similar projects in 33 states and Puerto Rico since its inception in 1995.

According to Linda Munsell, Deputy Director of the Department of Housing and Human Concerns, “the county is not a partner in the project. The county’s role is as the receiving agency for their environmental assessment and possibly working with them on their entitlements and zoning through Chapter 2.97 should the project go forward.”

The Chapter 2.97 residential workforce housing policy was established by the County of Maui to encourage developers to build affordable housing in a timely manner for residents, although the County Council could certainly require that the land is truly vacant or ask for various modifications before issuing approvals.

According to Mohanna, “there was no broker involved in the vacant land for this deal, which was previously donated to MEO 16 years ago, and will be leased to Highridge Costa at $1 per year for 75 years. Highridge Costa and MEO opted to combine forces because they both bring different types of services and strength to the community.”

As part of the development, Highridge Costa will also be funding an estimated $2.5 million in infrastructure and utility improvements along Kahekili Highway and Waiehu Beach Road.

He said projects built by Highridge Costa are funded by tax credits and affordable housing bonds sold to investors, as well as the state’s Rental Housing Revolving Fund, better known as RHRF.

When will construction start and are there concerns about a shortage of workers and supply chain deficiencies?

“Plans are for construction to start in the third or fourth quarter of 2023,” Mohanna said. “The reason for the timing between now and then has to do with the process to submit for financing through the Hawaiʻi Housing Finance Development Fund. From the application once a year in February, it can take another year to win approval for these limited funds, for which demand often exceeds supply. Once approval is received, it takes more time to plan and start construction.”

Mohanna said there are no impediments in the way. “Our entitlement consultants, virtually all affordable housing projects seek this ‘fast track’ process, which allows for certain exemptions and reduces the typical lengthy review/approval process (especially since affordable housing has been identified as the greatest need in Maui County).”

Highridge’s attorneys said title to the property is not an issue. MEO has clean title to the land, and the deeds and the County’s previous subdivision of the property confirm this.

Mohanna said, “the persons identifying themselves as the heirs of Pehuino ʻOhana have made clear that they claim interests in LCA (Land Commission Award) 3386 only and were never part of the MEO property. This too is confirmed by historic deeds, LCA awards, and County records.”

He said if Highridge Costa does not receive approval in the next funding round, then construction would be delayed until funding is received, perhaps taking at least another year. Historically, Mohanned said Highridge Costa has been highly successful at receiving funds for its projects over the years, mostly because of the quality of its applications, keeping a close eye on costs and creating communities which serve the greatest need.

“If we were to start construction today, then, yes, supply chain and labor shortages might be an issue. However, we are quite confident that these challenges will be solved by the time we start construction in the latter half of 2023. Mohanna said Highridge Costa has partnered with a union contractor, Hawaiian Dredging Construction Co. (HDCC), for each of its new projects on both Oʻahu and Maui for several reasons. “Besides having deep relationships with sub- contractors throughout the Hawaiian Islands, HDCC also provides important input on design choices and scheduling options in order to control costs.”

According to the Hawaiʻi State Business Registration, Division of Department of Commerce and Consumer affairs, Waiehu Housing LLC. was registered Jan. 11, 2021 under the aegis of Highridge Costa.

Monte Heaton is the project manager for this entity. According to a published report, company founder and CEO Michael Costa said, the company has completed 29,000 units and about 290 communities in the 25 years it has been in business.