A city plan to retain affordable housing at a 32-story high-rise in Chinatown by using a private development partnership and hundreds of millions of dollars in tax-exempt bonds moved forward last week.

With only one item on the agenda of a special meeting held Wednesday, the Honolulu City Council voted unanimously to approve Resolution 65, granting the issuance, sale and delivery of a not-to-exceed principal amount of $105 million in multifamily housing revenue bonds toward a mortgage loan for a 379-unit, low-­income complex called Maunakea Tower Apartment Homes at 1245 Maunakea St.

The Council’s action will allow Honolulu-based Stanford Carr Development LLC and Los Angeles-based Standard Communities — doing business here as Komohale Maunakea Venture LP — to advance a $130 million fee-simple purchase agreement to acquire the property. The city says the purchase would allow the private developer to do an estimated $28.8 million in renovations to the affordable rental property, with about $76,000 worth of work to be done per unit.

Currently, Maunakea Palms LP — with a mailing address in Colorado and a business phone number in Texas — owns that Chinatown property, a state records search indicates.

“We are looking forward to the closing of this transaction that will preserve Maunakea Towers as an affordable rental housing community for the next 61 years at minimum,” developer Stanford Carr told the Council prior to its vote. “And we’re excited to deploy over $30 million in renovations to upgrade and modernize the elevators and units as well as the common areas.”

Since its construction in 1977, the Chinatown rental complex of one- and two-­bedroom units has always been 100% affordable, covered largely under a Section 8 Housing Assistance Payment multiyear contract, according to the Hawaii Housing Finance and Development Corp.

Due to its potential purchase and because the same project used low-income housing tax credits for a renovation in 2000 — which requires project owners to maintain the property for low-income individuals or families — the project’s status as affordable would be renewed for another 61 years, beyond a pending 2035 expiration date that might convert the whole of the building to market-rate rentals, the city said.

And since the complex is Section 8 low-income housing, this acquisition will support an additional 20-year renewal of that housing assistance contract, the city said.

Current tenants living at the Maunakea Tower Apartments — who generally pay about $1,400 for a one­-bedroom unit and roughly $1,600 for a two-bedroom unit — would be able to stay at the property once it’s acquired and remain there, even while renovation work begins later this year, the city said.

That renovation work will include electrical and plumbing upgrades and repairs, life safety upgrades, fire sprinklers installed in all apartments, appliance replacements, new cabinets and countertops, interior and exterior painting, facade repairs and waterproofing, roof repairs, accessibility upgrades and elevator modernization, the city said.

According to developer Carr, the project would rent to households earning 60% and below the area median income for Honolulu. In 2022 the 60% AMI for a family of four living in Hawaii was $78,400, state data indicates.

To achieve the renovation project, private activity bonds — a federal tax-­exempt bond program used by local governments to promote the development of new or rehabilitation of existing rental housing projects — would be utilized. The last time Honolulu issued such bonds was in the early 2000s.

“This program has been responsible for over 3.5 million apartments that have been built over the last 36 years across our country,” Carr said at the meeting.

He added the bonds — allocated to states on a per capita basis — have a life span of three years.

“Here before you under the resolutions is the 2020 series. So these bonds must be awarded and deployed before the end of 2023, or they evaporate and disappear,” Carr said. “And to have that happen is a travesty, because 40% of every dollar is being subsidized on these projects by the federal government. So, it’s something that we should be exploiting to its optimum use in the creation of new workforce rental housing as well as the preservation of existing housing and rehabilitation of affordable workforce rentals.”

Due to the Council’s vote, Carr said he anticipated bond financing should close by the end of May.

“And we have our contractors — Hawaiian Dredging and related subcontractors and suppliers — ready to start and commence renovations starting next month,” he said.

He added that much of that work would last through November 2024, though “modernizing four elevators sequentially” inside the tower complex would not be completed till 2025.

Meanwhile, the bond repayment will begin by early 2025, while tax credits the developer aims to receive as part of this project would not be delivered until all work is completed, the city said.

At the meeting, Kathleen Orlandi, the city’s bond counsel, said the city receives its annual allocation of private activity bonds via a federal “volume cap” — the maximum amount of tax-exempt bonds that may be issued in a calendar year — which is set at $120 per capita for all 50 states. For Hawaii that means $350 million — an amount that changes yearly due to cost-of-living adjustments.

Of that population-based amount and pursuant to state law, 50% — or $175 million — goes to the state of Hawaii, while the City and County of Honolulu receives 37.55%, or $131.4 million. Likewise, Hawaii County receives 5.03%, or $17.6 million; Maui County receives 5.01%, or $17.5 million; and Kauai County receives 2.41%, or $8.4 million, the city said.