Council reviews plans to convert Maui Sun, a former Kīhei hotel, into affordable housing

While thousands of wildfire survivors remain displaced, Maui County Council members heard Tuesday a proposal for the state to purchase the Haggai Institute, the former 216-room Maui Sun Hotel, in central Kīhei; and for Maui County to hire a developer to convert it into long-term affordable workforce housing.

A revised plan also now calls for housing wildfire survivors, at least temporarily, along with American Red Cross staff.

An intergovernmental agreement between Maui County and the Hawaiʻi Housing Finance and Development Corp. will be on the full Council agenda Friday for first reading as Bill 44. The agreement sets out how Maui County and the state agency would work together to create affordable housing at the former hotel and Christian missionary training center.

“This matter is time sensitive; (the agreement) has to be signed by a certain date,” said Council Chair Alice Lee. And, she said that, because of the urgency of the state moving forward quickly with the property purchase, the Haggai Institute acquisition will be the sole item on an agenda when it comes before the Council for second reading on March 22. Other Council business will be on a separate agenda later that day.

Last year, the Legislature appropriated $45 million for the project several weeks before the Aug. 8 wildfires devastated Lahaina and a portion of Kula. On Tuesday, members of the Council’s Budget, Finance and Economic Development Committee heard that the state plans to make rooms available to wildfire survivors within about a month of purchasing the property. The housing would be for those who do not qualify for Federal Emergency Management Agency assistance.

The Red Cross has its disaster response headquarters at Haggai, and its staff currently occupies about 60 rooms, but the Red Cross plans to scale that down in coming months, said Chris Woodard, HHFDC chief planner.

West Maui Council Member Tamara Paltin reminded everyone that there have not been affordable housing projects advanced for people whose homes were destroyed in the Lahaina wildfire disaster.

“This is the fourth affordable housing rental project not in West Maui where the need is; where everybody says and knows the need is,” she said. “Nothing, nothing permanent affordable for West Maui where 10,000 people became homeless overnight.”

As of the end of February, officials reported there were still 1,744 families (4,185 individuals) living in 14 hotels through the non-congregate shelters program.

The HHFDC will purchase the property in fee simple for $38 million from the Haggai International Institute for Advanced Leadership Training Inc. While work is ongoing with Maui County for development of permanent housing, HHFDC will contract with Paramount Hotels, owner of the Maui Coast Hotel, to provide property management services.

The 6.2-acre property is off of Līloa Drive and Līpoa Street, kitty-corner from Kīhei Elementary School.

A 75-year ground lease with Maui County is expected to start in May 2025, according to Woodard. With HHFDC’s technical assistance, the county will issue a request for proposals for a developer to enter into a sublease for the property and convert it into permanent housing and pre-K classrooms planned to take up the building’s current library and reading room areas.

HHFDC might have $3 million to $4 million leftover from its $45 million appropriation to provide as a grant to the project developer for renovation work, he said.

A timeline shows a publication of requests for proposals in June of this year, followed by an award to a developer in the first half of next year and a yearlong design and permitting process beginning in May 2025. Construction could happen from June 2026 through July 2027, according to Woodard.

Maui County has set aside $7.5 million for renovation of the former hotel. Of that amount, $5.5 million is from the Affordable Housing Fund and $2 million from the General Fund. Renovation costs are expected to be significant. For example, HHFDC staff estimated it would cost about $1.5 million just to fix elevators in the two-wing, six-story building completed in 1989.

The facility already has 27 apartment units created by combining two or more rooms, nearly all with kitchens or kitchenettes, he said.

After conversion to permanent housing, a third of available units will be set aside for families earning no more than 80% of Maui County’s median income, he said. Another third would be for families making from 81% to 100% of median; and a final third would be set aside for families earning from 101% to 120% of median.

A quarter of the units are dedicated to teacher housing, Woodard said. That means households in which at least one co-tenant is a pre-K, primary school or secondary school teacher employed at a public school or accredited private school.

Mayor Richard Bissen expressed strong support for the project.

“This transformative initiative represents a remarkable opportunity to address pressing needs in our community, including dedicated teacher housing, affordable workforce housing and public pre-K classrooms,” he told committee members. “At the heart of this project lies a commitment to supporting our educators, our essential workers and families who are the backbone of our community.”

Budget Chair Yuki Lei Sugimura said the mayor’s introductory remarks show that “we understand the seriousness and the commitment of this; I can’t tell you how important this project is.”

Council Member Gabe Johnson said the Haggai project should be used as a model for other housing conversion projects, especially, if possible, in West Maui.

“I love this idea of us purchasing these properties and then turning them into affordable housing,” he said. “Within a month after some of those American Red Cross people leave, you can start housing people… This is a model we should be doing all over the state.”

Woodard said it would be necessary to find available properties, such as former hotels.

“This is a unique situation, council member,” he said. “That’s not to say it couldn’t be replicated.”

The Haggai 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, a koi pond, soccer fields 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 Shopping Center.