Maui Council passes two housing projects on first reading; a third sent to Budget Committee

The Maui County Council advanced two affordable housing projects on first reading Friday and referred a third to the Budget, Finance and Economic Development Committee for further review.

All three projects would tap the County’s Affordable Housing Fund after developers applied for funding and came out on top of a competitive review process. However, the three selected projects are not located in West Maui, and this fact rankled West Maui Council Member Tamara Paltin and Molokaʻi Council Member Keani Rawlins-Fernandez. They pointed out no special consideration was afforded in the selection process for West Maui’s desperate need for housing following the Aug. 8 wildfires that destroyed more than 2,200 structures, mostly homes.

Council members took up and advanced two of three projects — Hale Pilina in Kahului, and Kilohana Makai in Kīhei — to second and final reading Feb. 28. Those approvals came earlier in the Council meeting — before a disagreement about the transparency of the selection process went from simmer to boil on the Council floor.

Bill 35 for the Aikanaha Phases I and II was held up and eventually referred to the Budget Committee. Developer Pacific Development Group is seeking a $14 million loan from the Affordable Housing Fund as part of $113 million needed to build 212 low-income rental units within the master-planned Waikapū Country Town development.

Earlier, Paltin had referred to the three-member reviewing panel as a “secret” and “less than transparent” committee. “I’m very concerned about transparency,” she said.

Paltin asked for further information, including the names of the committee members, their employers and whether they had filed financial disclosures with the county Board of Ethics. Bill 35 went to the bottom of the Council’s meeting agenda, it wasn’t until the lunch hour when Department of Housing and Human Concerns Director Lori Tsuhako was available to respond to questions via video conference call.

Tsuhako identified the private citizens who participated in the project selection process as Robyne Nishida Nakao, Jason Economou and Carolann Guy. Nakao and Economou are self-employed, and she was unsure about Guy. One Housing Division staff member assisted, she said. The panel members were not required to submit financial disclosures to the ethics board, she added.

She also explained the criteria used in the selection process. These included a demonstrated need for housing in alignment with Maui County’s affordability goals; readiness to build; access to other financing resources; and a demonstrated experience, ability and capacity to carry out a housing project, Tsuhako said.

Rawlins-Fernandez said the selection process for housing fund projects was “flawed” because it didn’t take into consideration “the greatest need right now, which is West Maui.”

She said she couldn’t face the West Maui community and say, “I’m sorry. We didn’t put any consideration for the greatest need, which is West Maui.”

Tsuhako acknowledged the process did not give weight to housing in fire-impacted areas, but she said the selection process was competitive and unbiased. She took exception to Paltin’s remark about the panel being “secret.”

“We had a team of evaluators that have had experience doing this process,” she said. “They have developed housing before. They’ve been involved in other development processes before on a larger scale. None of them work for any of the developers who applied.”

Tsuhako said: “I disagree with Member Paltin that it was hidden process or, you know, there was some attempt to be secretive. I challenge that… We didn’t do it secretly. We had people who didn’t work for the department evaluating these proposals.”

She pointed out that there’s a limited amount of funding in the Affordable Housing Fund, and it wasn’t possible to provide money to all of the applicants.

Proposed by Catholic Charities Housing Development Corp., the Hale Pilina project would be on 4.8 acres at 150 South Pu‘unēnē Avenue, next to the Kahului Post Office. Under Bill 34, the project would use up to $10 million from the county housing fund the build 178 units for households earning below 60% of Maui County’s adjusted median income. An additional unit will be provided for a resident manager.

The 28-home Kilohana Makai project advances to second and final reading. Bill 4 would amend the county’s fiscal 2024 budget to include a grant of more than $4.9 million for developer ʻĀina Lani Pacific. The funding would help pay for sharply rising construction costs.

Tsuhako said the developers of Aikanaha and Hale Pilina are applying within a week or two for low-income housing tax credits from the Hawai‘i Housing Finance and Development Corp.

“They were hoping that the Council would approve the budget amendments to further demonstrate the county’s commitment to the total financing package for these two developments,” she said. “Developers’ chances of being approved on… housing tax credits are improved exponentially with the county’s commitment.”

The next full Council meeting is at 9 a.m. Feb. 28.