State housing agency approves acquisition of wildfire-demolished Front Street Apartments

The Hawaiʻi Housing Finance & Development Corp. Board of Directors approved last month a proposed public acquisition of the Front Street Apartments destroyed in the Aug. 8-9, 2023, Lahaina wildfire disaster, although there was some uncertainty about rebuilding in the burn zone.

The redeveloped property could have as many as 200 rental units, priced for residents earning up to 140% of the area median income.

If the deal goes through as planned, the state would purchase property located at 1050 Front St. and Front Street Apartments Subdivision Lots 2 and 3 for $856,200 cash at closing from Weinberg Foundation entities.

The purchase price is equal to Maui County’s assessed fair market value of the properties, but “uninformed by the impacts of the wildfires.” The proposal was approved by a unanimous board vote on Sept. 12. (See YouTube video beginning at 2:20.)

During board discussion of the proposal, ex-officio board member Luis Salaveria, director of the state Department of Budget and Finance, said that rebuilding in Lahaina “is a very sensitive, emotional, touchy subject.” He asked: “Realistically, when do we think this property can be redeveloped?”

HHFDC Executive Director Dean Minakami said that, even with expedited permitting, “it’ll be several years before we can break ground on the project.”

Hale Mahaolu has been selected as the project developer, Minakami said, but the agency has not made progress with project design because it hasn’t been able to secure a commitment of water or sewer capacity from Maui County.

However, “we’ve had recent discussions with the county, though, and I think we finally have a path forward where the county can commit a certain amount of capacity for the project, which will allow Hale Mahaolu to move forward with design and permitting,” he said.

Minakami said another “hang-up” in moving the project forward will be obtaining a special management area permit, which would be reviewed by the Maui Planning Commission. Even before last year’s wildfires, it was taking more than a year to get an SMA permit, he said. And, “it’s only gotten longer since the fires.”

HHFDC has requested expedited SMA permitting for the Front Street Apartments redevelopment, Minakami said.

Salaveria said he questioned redevelopment of the property because “I’m still unclear whether or not the county has really come to a conclusion on what they want Lahaina to be rebuilt as.”

“Basically, it sounds like we’re committing to redeveloping the Front Street Apartments by doing this. Is that a fair kind of statement?” Salaveria asked.

“That’s a good point,” Minakami said. “I think there’s a lot of uncertainty about the commercial area of Front Street and what’s going to happen there. We’re on the fringe of that, though. So, I don’t want to speak for the county, but I believe we’re outside of the area where there’s a lot of uncertainty; probably less change to occur where we are located, except for further setbacks from the shoreline . . . I think we’re outside of that area where they’re really looking at changing the pattern of what might be rebuilt.”

Originally completed in 2000 on the northern side of Lahaina town, a half-mile south of the Lahaina Cannery Mall, the 142-unit affordable rental project was developed on land leased from 3900 LLC, an entity controlled by the Harry and Jeanette Weinberg Foundation. The project was financed in part with federal and state low-income housing tax credits.

Under the tax credit program, the project was required to have 141 units set aside for households earning as much as 50% (70 units) and up to 60% (71 units) of the area median income. One unit was for a resident manager.

In 2019, the HHFDC acquired the lease-fee interest to land under the Front Street Apartment property for $14.93 million.

After the wildfire, the property owner exercised its right to surrender the ground lease, and HHFDC has free-and-clear, fee-simple title to the apartment project, giving the corporation control over its redevelopment.

Now, the HHFDC is also working toward acquiring the abutting 60 Kenui St., 1050 Front Street and 1067 Waineʻe St. properties to allow for more efficient project planning and greater housing density. In April, the HHFDC board approved acquisition of the 60 Kenui St. property for $1,379,400. Closing of that purchase is expected sometime this month.

In other action at the Sept. 12 meeting, board members approved a resolution authorizing the issuance of a $27.5 million Hula Mae multifamily tax-exempt revenue bond for the Hale O Piʻikea II project, located off of Piʻikea Avenue in Kīhei. (See YouTube video beginning at 23:00.)

Other project financing includes $4.4 million in federal and state low-income housing tax credits. The overall project cost is $57.7 million.

The 97-unit elderly rental housing project is being developed by Ikenakea Piikea II on property owned by Krausz Kihei Two. Monthly rents are expected to range from $558 to $1,213 for studios and from $586 to $1,288 for one-bedroom units. There’s one manager unit. The length of affordability is 66 years.

Project amenities include a picnic area, a community meeting room, elevators, a laundry room, a community garden and a ground-level commercial retail space. Unit amenities feature a range, refrigerator, garbage disposal, ceiling fans, storage and coat closet, and high-speed internet access.

The project contractor is Moss & Associates, Hawaiʻi; and property manager is Mark Development Inc.

The project is expected to be completed in the fourth quarter of 2025.