A tower of ‘mi­cro’ rental units gets $50M in state and fed­eral fi­nanc­ing

No­hona Hale will be 14 sto­ries tall and have 107 apart­ments priced as af­ford­able hous­ing

Honolulu Star-Advertiser - - FRONT PAGE - By Andrew Gomes agomes@staradvertiser.com

It’s been de­layed by about two years, but a rad­i­cally dif­fer­ent model of af­ford­able hous­ing in Honolulu took a big step for­ward Thurs­day. A de­vel­op­ment team led by a New York com­pany re­ceived more than

$50 mil­lion in state and fed­eral fi­nanc­ing to build a “mi­cro-unit” rental apart­ment tower in Kakaako. The project is slated to con­tain 107 stu­dios with about 300 square feet of liv­ing space plus 40-square­foot lanais. Pro­jected monthly rents are $941 for 95 units re­served for ten­ants earn­ing no more than 60 per­cent of the an­nual me­dian in­come in Honolulu, and 11 units for $466 re­served for ten­ants earn­ing no more than 30 per­cent of the me­dian in­come. One unit would be for a man­ager.

The me­dian in­come lev­els equate to $42,240 for a sin­gle per­son or $48,240 for a cou­ple at the 60 per­cent in­come level, and half that at the 30 per­cent level. The 14-story tower dubbed No­hona Hale will be built on a 10,409-square-foot lot, which is a typ­i­cal amount of land for one sin­gle-fam­ily home, at 630 Cooke St. near the cor­ner of Queen Street leased from the state.

No­hona Hale is led by New York-based af­ford­able­hous­ing de­vel­op­ment firm Bronx Pro Group LLC. The com­pany was se­lected by the Hawaii Com­mu­nity De­vel­op­ment Au­thor­ity — a state agency that reg­u­lates de­vel­op­ment in Kakaako and owns the property — over six com­pet­ing pro­pos­als from pri­vate de­vel­op­ers in June 2015. At that time Bronx Pro pro­jected that it could start con­struc­tion in 2016 and be fin­ished in 2017.

Now con­struc­tion is pro­jected to start in May 2018 and be fin­ished in Jan­uary 2020. Sa­man­tha Mag­istro, a Bronx Pro prin­ci­pal, said the ini­tial timetable was pushed back largely be­cause of time it took to reach a de­vel­op­ment agree­ment with the HCDA for a 60-year lease.

The agree­ment was signed in April and al­lowed Bronx Pro and its part­ners, which in­clude ex­pe­ri­enced Hawaii af­ford­able-hous­ing de­vel­oper EAH Hous­ing, to ap­ply for the gov­ern­ment fi­nanc­ing.

The board of the Hawaii Hous­ing Fi­nance and De­vel­op­ment Corp., a state agency that helps fi­nance af­ford­able hous­ing, unan­i­mously ap­proved that fi­nanc­ing Thurs­day.

The HHFDC ap­proved $27 mil­lion in Hula Mae bonds, $22 mil­lion from the state’s rental hous­ing revolving fund, $1.8 mil­lion in state tax credits over five years and $1.8 mil­lion in fed­eral tax credits over 10 years. All the fi­nanc­ing adds up to more than the project’s $48 mil­lion cost be­cause some pieces of fi­nanc­ing get re­placed by oth­ers as the project pro­ceeds. Dur­ing Thurs­day’s HHFDC meet­ing, some con­cerns were raised, in­clud­ing one about the tower’s lack of ten­ant park­ing.

“The re­al­ity is peo­ple need a car,” said board mem­ber Au­drey Abe. “I just hate to see peo­ple not hav­ing the op­tion of hav­ing a car.”

Mag­istro said the ex­pec­ta­tion is that ten­ants will ride mass tran­sit. A city rail sta­tion is planned about two blocks away, and a bike stor­age room is part of No­hona Hale. Mag­istro added that per­haps spaces for mopeds could be in­cluded but that adding a level of park­ing was cost­pro­hibitive for the project, which in 2015 was es­ti­mated to cost $33 mil­lion be­fore con­struc­tion costs soared on Oahu.

Mag­istro also ad­dressed the no­tion that peo­ple will be crammed into tiny liv­ing spaces. She said fea­tures in the apart­ments, in­clud­ing 9-foot ceil­ings, floor-to­ceil­ing win­dows and the lanais, cre­ate a liv­able space.

“We’re not just cram­ming boxes into a build­ing,” she said.

HHFDC board mem­ber Denise Iseri-Mat­sub­ara said she wanted to see the project move ahead promptly be­cause it will show whether the con­cept, which has not been done in Hawaii, works. If it does, Iseri-Mat­sub­ara said, it could help get home­less off the streets.

“We re­ally want to look for­ward to this com­ing to fruition,” she said. Board Chair­woman Leilani Pul­mano added, “This is exciting. This is an in­no­va­tive project.” Board mem­ber Mel Ka­hele raised a con­cern about how much profit is fore­cast to pass to general con­trac­tor Swin­er­ton Builders. He said the profit, $56 per square foot, is al­most dou­ble the typ­i­cal in­dus­try fig­ure of $33. The con­struc­tion cost of No­hona Hale is about $400 per square foot, in­clud­ing the $56-per-square-foot profit. Of­fi­cials rep­re­sent­ing the de­vel­oper and the HHFDC said the profit fig­ure looks high be­cause the build­ing con­tains about twice as many apart­ments as a typ­i­cal sim­i­lar-size build­ing. This means there are twice as many kitchens, bath­rooms and other el­e­ments that in­flate the cost and profit on a per­square-foot ba­sis. Mag­istro added that the com­pany has the abil­ity to put the work up for com­pet­i­tive bid­ding if re­views on con­struc­tion costs sug­gest a fair deal is not be­ing made.

“We’ll ab­so­lutely look at it more closely,” she said. Mag­istro said she is par­tic­u­larly ex­cited to de­liver No­hona Hale be­cause it could be­come a model for sim­i­lar projects that can pro­duce af­ford­able hous­ing quicker be­cause more homes can fit in a sin­gle project com­pared with typ­i­cal af­ford­able hous­ing.

“We’re very com­mit­ted to this con­cept of mi­cro-units,” she said. “We think it’s an in­no­va­tive tool for af­ford­able-hous­ing de­vel­op­ment, and ac­tu­ally it will be a tool that will be more preva­lent in our in­dus­try.”



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