Keauhou Lane partners get cash aid for extending affordability windowA partnership led by Kamehameha Schools will make a planned midrise Kakaako rental apartment complex affordable to residents with moderate incomes for twice as long as previously planned — 30 years instead of 15 — in return for general excise tax exemptions and state assistance financing the $90 million project.
The 209-unit Keauhou Lane complex, which is adjacent to a planned condominium tower called Keauhou Place, was approved for development last year by the Hawaii Community Development Authority to satisfy an affordable-housing requirement for the agency, which regulates development in Kakaako.
Under HCDA rules the rentals must be affordable to residents earning no more than 100 percent of the annual median income in Honolulu, which is $67,100 for a single person and $95,800 for a family of four. The affordability restrictions must be maintained for 15 years, after which the developer could convert the residences to market-rate housing.
This month Kamehameha Schools and its partner on the project, Portland, Ore.-based development and investment firm Gerding Edlen, received approval from another state agency to add another 15 years of affordability to the project at a higher, but still moderate, income limit in return for a $5 million low-interest loan and a state excise tax exemption on construction expenditures and residential tenant rental income.
The board of the Hawaii Housing Finance and Development Corp., a state agency that facilitates affordable-housing development, granted the exemption and loan in an 8-0 vote.
The additional 15-year affordability term won’t satisfy any additional HCDA affordable-housing requirements because the developer is receiving benefits under the state’s affordable-housing law through HHFDC.
Kamehameha Schools has an approved master plan to develop up to 2,750 homes, mainly in seven towers, on nine blocks in Kakaako. HCDA rules require that 20 percent of the homes, or 550 units, be affordable to residents who earn no more than 140 percent of the median household income for condos, or households earning no more than 100 percent of the median income for rentals.
The Keauhou Lane rentals will occupy about 1.6 acres of a 4.2-acre block owned by Kamehameha Schools and bounded by South, Pohukaina, Halekauwila and Keawe streets. The adjacent tower, being developed by Stanford Carr, occupies the other 2.6 acres.
Proposed monthly rent for the first 15 years ranges from $1,450 for 300-square-foot studios to $2,157 for two-bedroom apartments with 632 to 745 square feet of living space. Of the 209 units there are 47 such studios and 72 two-bedroom units.
There are also four 400-square-foot studios for $1,550 a month and 86 one-bedroom units with 451 square feet of living space for $1,797 a month.
For the second 15-year term, tenants may earn no more than 120 percent of the median income, which currently equates to $80,520 for a single person to $114,960 for a family of four. Rent under HHFDC rules will be tied to income levels in 2033, though if units were rented this year, the maximum rent would be $2,012 for studios, $2,156 for one-bedroom units and $2,588 for two-bedroom units under the higher income cap.
Rent includes electricity, water and sewer but no parking. Brent Gaulke, a Gerding Edlen partner, told the HHFDC board that about 180 parking spaces in the adjacent tower will be available to apartment residents for an additional cost that hasn’t been determined yet.
Carr’s tower also will provide 100 parking stalls for the retail and restaurants planned on the ground floor of the six-story rental complex.
Keauhou Lane residents, according to project officials, will have convenient access to a city rail station slated to be built on one side of the block, which will connect with a pedestrian promenade running mauka-makai through the rental complex above the retail space.
"The project’s close proximity to downtown, Ward district and Waikiki employment centers will benefit those who choose to live close to work," said an HHFDC staff report recommending the tax exemption and loan. "The project is based upon smart growth principles that will offer an alternative for residents to live, work and play all within a 20-minute sphere."
Keauhou Lane rentals are designed to provide housing for the local working class, according to the report. Typical apartment residents, the report said, are single people or couples starting careers as well as young families and empty-nesters.
If plans proceed smoothly, the developer anticipates breaking ground in January or February and finishing construction in April 2017 so that completion dovetails with Carr’s adjacent 450-unit condo tower, which is expected to break ground in the next month or two.
