Finding Paradise

Hawaii Lives up to Reputation for High Costs

EAH Housing recently completed the third and final phase of Villages of Moa‘e Ku on Oahu, Hawaii’s most-populous and -visited island. The 52 units bring the total development to 192 apartments.

The one- to three-bedroom units are home to teachers, tourist-industry workers, and others earning 30% to 60% of the AMI. All three phases were leased up in less than two months.

Without affordable housing, it’s just about impossible for a low-income family to make ends meet in Hawaii, one of the nation’s most-expensive housing markets. The state has the highest “housing wage” in the country, reports the National Low Income Housing Coalition (NLIHC) in its most-recent Out of Reach study. That means a worker in Hawaii must earn $35.20 per hour to afford a modest two-bedroom apartment without spending more than 30% of his or her income on housing costs.

In other words, a minimum-wage worker would have to work 152 hours out of a 168-hour week to afford a two-bedroom rental home at fair-market rent or 116 hours to afford a one-bedroom rental home, according to the NLIHC.

It’s also a big challenge to develop affordable housing in Hawaii. To develop Villages of Moa‘e Ku, for example, the nonprofit developer purchased about 24 acres in Ewa Villages from the city and county of Honolulu as part of a master-planned effort to turn a former sugarcane field into a community with a mix of housing types, including affordable homes. EAH Housing subdivided the property and broke it out into three phases, according to Marian Gushiken, EAH’s director of real estate development in Hawaii.

Each phase of the Villages of Moa‘e Ku was financed with tax-exempt bonds, 4% LIHTCs, and Rental Housing Revolving Fund financing from the state. Each also used Community Development Block Grant (CDBG) and HOME funds from the city and county.

“I think the challenge in many communities, including Hawaii, is that the land cost is very difficult to overcome,” says Gushiken, noting that Villages of Moa‘e Ku would likely not have been accomplished without the city’s assistance in providing financing.

Rather than develop the property as one large project, the team had to split it into several phases to secure the needed financing.

A limited amount of subsidy is available in Hawaii, particularly the Rental Housing Revolving Fund, which provides gap low-interest loans or grants to developers building affordable housing.

The $22.9 million third phase was financed with approximately $9.3 million in LIHTC equity from Alliant Capital.

The development also uses $3.7 million in permanent financing from Citibank; $5.6 million from the state Rental Housing Revolving Fund; and $2.9 million in HOME funds and $1.4 million in CDBG funds from the city and county of Honolulu.

EAH Housing began its housing work on Oahu, home to Honolulu, Diamond Head, and Waikiki Beach. The company now works on three islands and has developed and manages affordable housing communities on Oahu, Maui, and Kauai. After the firm had worked on several notable redevelopment projects, the Villages of Moa‘e Ku launched EAH’s new-construction pipeline.
EAH Housing and its affiliate Hui Kauhale are building Ola Ka ‘Ilima Artspace Lofts in Honolulu, an 84-unit development including one- to three-bedroom units that will be ready in summer 2019. A joint venture with Minneapolis-based Artspace, the Lofts will provide a preference for artists and will house the PA’I Foundation, a nonprofit entity promoting native Hawaiian arts and culture.

EAH is also working with the Bronx Pro Group, based in New York City, to develop Nohona Hale in Honolulu, which will feature 111 micro units, the first ever in Hawaii, and is scheduled to be occupied in 2020. —Donna Kimura