State agency of­fers apart­ment build­ings to pri­vate in­vestors

The Garden Island - - Morning Briefing -

HONOLULU — A Hawaii agency has de­cided to lease six of its apart­ment prop­er­ties to a pri­vate in­vestor, prompt­ing af­ford­able-hous­ing ad­vo­cates to worry that the state’s short­age of space for low-in­come fam­i­lies could be­come worse.

The prop­er­ties in­clude a to­tal of 1,221 rental units on Oahu, Maui and Hawaii is­land, which are cur­rently oc­cu­pied by hun­dreds of low-in­come ten­ants who rely on state and fed­eral rent sub­si­dies, The Honolulu Star-Ad­ver­tiser re­ported.

The Hawaii Hous­ing Fi­nance and De­vel­op­ment Corp. is so­lic­it­ing bids for the prop­er­ties un­til to­day. The prop­er­ties are be­ing of­fered with­out an ask­ing price un­der what would be long-term ground leases — up to 75 years for five of the prop­er­ties and 40 years for one prop­erty.

The six projects were de­vel­oped in the early 1990s to cater to mod­er­ate-in­come fam­i­lies earn­ing up to 80 and 100 per­cent of so-called area me­dian in­come. And while the agency has a mis­sion state­ment “to in­crease and pre­serve the sup­ply of work­force and af­ford­able hous­ing statewide,” it stated that own­ing and man­ag­ing af­ford­able hous­ing is not part of its core func­tion.

The agency stated it is mak­ing an ef­fort to min­i­mize dis­place­ment, though. It will im­pose af­ford­abil­ity re­quire­ments on any new owner, cap­ping an­nual rent in­creases at 2 per­cent for the first five years for cur­rent ten­ants. But af­ter that, rent could in­crease up to the max­i­mum in­come caps for five of the six prop­er­ties.

“HHFDC is not seek­ing to profit from the sale . but to pre­serve the af­ford­abil­ity and sus­tain­abil­ity of the port­fo­lio, and fo­cus on our core mis­sion of fa­cil­i­tat­ing the de­vel­op­ment of hous­ing,” said Kent Miyasaki, an agency hous­ing in­for­ma­tion spe­cial­ist.

The agency plans to pay off $76 mil­lion in bond debt that was used to de­velop the prop­er­ties. Any net pro­ceeds will be used to fund rental as­sis­tance sub­sidy pro­grams, the agency stated.

Vic­tor Gem­ini­ani, co-ex­ec­u­tive di­rec­tor of the Hawaii Ap­ple­seed Cen­ter for Law and Eco­nomic Jus­tice, said the plan raises con­cerns about the long-term af­ford­abil­ity of the units.

“I ques­tion se­ri­ously this move within the con­text of the cri­sis we have with af­ford­able hous­ing in the state and in view of the pro­jec­tions that we need 25,000 units, of which the ma­jor­ity are needed for 60 per­cent be­low (area me­dian in­come), in or­der to be able to sta­bi­lize our rental hous­ing sit­u­a­tion,” Gem­ini­ani said. “Any low-in­come rental hous­ing is next to nonex­is­tent.”

Just fewer than half of the ten­ants at the six prop­er­ties, or 581 units, are re­ceiv­ing state-funded Rental As­sis­tance Pay­ment sub­si­dies of $175 a month. Some 140 ten­ants re­ceive Sec­tion 8 hous­ing vouch­ers de­signed to as­sist low-in­come fam­i­lies.

Gov. David Ige em­pha­sized that the state would con­tinue to own the prop­er­ties.

“To be clear, we’re not giv­ing up the port­fo­lio,” Ige said. “The state would con­tinue to own the land. We’re look­ing for some­one to make in­vest­ments and up­grades and man­age.”

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