Haggai Institute affordable housing proposal headed to Maui County Council for review

Another affordable housing proposal is headed to the Maui County Council, but this one is not “shovel ready.” It’s built already, although it’s going to be a multimillion-dollar fixer-upper.

During last year’s legislative session and before the wildfire disaster, the state set aside $45 million to transform the Haggai Institute, the former 216-room Maui Sun Hotel, into affordable and teacher workforce housing, and preschool classrooms. The 6.2-acre property is off of Lipoa Drive and Lipoa Street, kitty-corner from Kīhei Elementary School.

At its Feb. 8 meeting, the Hawaiʻi Housing Finance and Development Corp. board approved a staff recommendation to advance a proposal for the state to pay $38 million to acquire the property from the Haggai International Institute for Advanced Leadership Training Inc. The net cost may eventually drop $3.5 million below the purchase price after the federal government reimburses housing costs incurred at the Haggai property by Maui wildfire disaster first responders from Aug. 9 through Sept. 30, 2023.

The HHFDC will transmit a memorandum of agreement with Maui County to the Council for its review as early as late this month or early next month.

State Sen. Angus McKelvey (West Maui, Māʻalaea, Waikapū, South Maui) was instrumental in getting funding lined up for the Haggai acquisition. On Monday, he said he was pleased to see progress in the state acquiring the property. Some wildfire survivors have already been staying at Haggai rooms, he said.

“Let’s close this thing so we can do renovations and get people in there,” McKelvey said.

The memorandum agreement approved by the HHFDC board lays out how Maui County and the state agency would work together to create affordable housing at the former hotel and Christian missionary training center.

Under the proposed agreement, the HHFDC would acquire fee-simple interest in the property and contract a property manager to provide temporary housing and workspace to emergency workers and organizations responding to the August wildfire aftermath.

The HHFDC would lease the property to Maui County for $1 per year for 75 years “solely for the purposes of constructing, rehabilitating, operating and maintaining a dedicated teacher housing and affordable workforce housing project with public prekindergarten classrooms and ancillary nonresidential uses,” the HHFDC staff report says.

The unspent portion of the $45 million in state funding could be used for building repairs, renovations and upgrades, including about $1.5 million to fix elevators in the two-wing, six-story building completed in 1989.

The property has 168,000 square feet of floor space in two, six-story wings. Amenities include 288 parking stalls, meeting rooms, a library, a commercial kitchen, a dining area, a pool and a gym. The property’s location in central Kīhei makes it a short walk or drive away from two supermarkets, Maui Bus routes, schools, restaurants, the Kīhei community and aquatic centers, and the Azeka Place shopping center.

The current proposed transaction is the second to be approved by the board. In November, the board authorized the payment of $34.5 million, but Haggai did not accept that offer, according to a staff report to the HHFDC board.

The state housing development agency learned in October that Haggai had submitted to Maui County an invoice for approximately $3.6 million for providing housing to emergency first responders, including members of the Hawaiʻi National Guard, the American Red Cross and Southern Baptist Disaster Relief, from Aug. 9 through Sept. 30, 2023. As of Oct. 27, about 150 first responders remained at the property.

The invoice was forwarded to the Hawaiʻi Emergency Management Agency. The staff report says: “We understand that an invoice for October followed. To date—and to the frustration of Haggai’s leadership—no payments have been made for disaster response lodging.” The state emergency agency has informed the HHFDC staff “that the documentation required to support payment to Haggai for the lodging is nearly complete.”

In its current configuration, the Haggai property has 175 furnished rooms, including 148 studio units, 21 one-bedroom, four two-bedroom and two three-bedroom units.

Thirty-five units have kitchenettes with cabinets and a countertop, a sink, a mini refrigerator, and a small microwave oven; 32 units have a mini refrigerator and a small microwave oven; and eight units have full kitchens.

The eventual number of multifamily units projected for the project’s long-term housing is undetermined.