Aikanaha project could be first buildout of rental housing in Waikapū Country Town
February 8, 2024, 5:26 AM HST
* Updated February 8, 5:27 AM
A 212-unit, low-income rental housing project in Waikapū underwent review Wednesday morning by the Maui County Council’s Housing and Land Use Committee. If approximately $113 million in funding can be lined up for the project, it could soon be the first housing buildout within the master-planned Waikapū Country Town development.
Aikanaha project plans call for locating a three-story housing complex on former agricultural land east of Honoapiʻilani Highway. The apartments would be across the highway from existing homes adjacent and north of the Maui Tropical Plantation.
All residents will be low-income households, earning only up to 60% of the Maui County area median income. Monthly rent would range from $1,111 for studios to $1,651 for 3-bedroom apartments. Hale Mahaolu is expected to manage the housing complex. Deed restrictions will keep the housing affordable for at least 65 years.
Housing is desperately needed for residents unable to find an affordable place to rent in Maui’s high-cost market, especially after the Aug. 8 wildfires destroyed more than 2,200 structures, mostly homes, in Lahaina and Upcountry.
“There’s a huge need on Maui that’s exacerbated by the wildfires,” said attorney Jeffrey Ueoka, representing Aikanaha developer Pacific Development Group.
Last month, Pacific Development Group was awarded a $14 million loan for the Aikanaha project from the Maui County Affordable Housing Fund. But the loan funding will not be available to the developer until the project loan is listed as an appropriation in the county’s budget ordinance.
While Housing Committee Chair Tasha Kama deferred the Aikanaha project in committee Wednesday following discussion, a proposal to amend the fiscal 2024 county budget for the project’s loan may come before the full Council as early as Feb. 16. The matter could be referred to the Budget, Finance and Economic Development Committee for further review; or action could be taken on the Council floor.
Lori Tsuhako, director of the county Department of Housing and Human Concerns, told council members that the Aikanaha project went through a competitive application process for affordable housing funding, and it scored high enough to receive a notice of award from the Affordable Housing Fund program.
“We are supportive of this program and eager to see this project move forward,” she said.
The Council’s consideration of the Aikanaha project comes on the heels of a Budget Committee recommendation earlier this week that also impacted the Affordable Housing Fund. Committee members recommended approval of a proposed fiscal 2024 budget amendment to appropriate a grant of more than $4.9 million from the fund for the 28-home Kilohana Makai project in Kīhei. Project developer ʻĀina Lani Pacific said the county funding is needed to cover rapidly rising construction costs, particularly for cement and drywall.
Meanwhile, the Aikanaha project also is seeking tax credits from the Hawaiʻi Housing Finance & Development Corp.’s Low-Income Housing Tax Credit Program, Ueoka said.
The program is a financing tool for private developers to build or rehabilitate affordable rental units. The HHFDC awards federal and state tax credits that may be used to obtain a dollar-for-dollar reduction in income tax liability for 10 years for federal tax credits and five years for state tax credits. Or, it may be syndicated to generate project equity.
The HHFDC tax credit equity would amount to $46.3 million in project funding, according to a project overview submitted by Pacific Development Group to council members.
Other listed funding includes a $39.2 million loan from the HHFDC’s Rental Housing Revolving Fund, a tax-exempt permanent loan of $13.76 million and a deferred developer fee of $163,220. Total funding amounts to $113.49 million.
Projected project costs include $83.2 million for construction, $8.65 million for land, a developer fee of $8.35 million, nearly $6 million for “soft costs,” $4.7 million for construction loan interest and $2 million for financing fees and costs, according to the project overview.
The Aikanaha project already has appropriate residential zoning while a Development Plan Review is pending. The developer is working with the HHFDC to process an exemption for the project from doing an environmental assessment because state law allows such a waiver for construction of new affordable housing.
According to a project overview, Aikanaha will be developed in two phases, each with 106 units. However, there remains consideration to build both phases at the same time.
The first and second phases would each have three 3-story buildings with 15 studio apartments, and 38 1-bedroom, 51 2-bedroom and two 3-bedroom apartments. Maximum monthly rent for the units is projected to be $1,111 for studios, $1,190 for 1-bedroom, $1,420 for 2-bedroom and $1,651 for 3-bedroom apartments. Plans call for 327 parking stalls, outdoor gathering areas, a playground, an approximately 3,300-square-foot community building, a laundry, trash enclosures and an electric vehicle charging station.
If the developer receives government permit approvals as planned, construction could begin in August 2025, with rental unit occupancy starting two years later. The timeline assumes both phases would be developed at the same time.