The city has closed a $51.5 million deal to purchase the Iwilei Center, the Mayor’s Office announced Friday.

This transaction will convert the existing center — now home to warehouses, loading docks, offices for lease as well as more than two dozen commercial tenants — to a new, city-owned affordable housing development, the city says.

The development will be close to the city’s pending rail line in the Iwilei and Kalihi areas.

Acquired by the city’s Department of Land Management from Iwilei Center LLC, an affiliate of Blacksand Capital, the purchase of the 3.8-acre property — which the city deems an investment in affordable housing and transit- oriented development — includes addresses at 850 and 866 Iwilei Road and 505 Kaaahi St., respectively.

The city says it will honor current leases for existing Iwilei Center tenants.

“There are approximately 30 tenants remaining at Iwilei Center,” Scott Humber, the mayor’s communications director, told the Honolulu Star-Advertiser via email. “They are all commercial tenants, in a range of industries.”

He added “the city will honor the tenant leases currently in effect, which each included a 3-year extension option, while we undergo planning and design efforts.”

“The city has also offered relocation assistance and benefits to qualified tenants,” Humber said, adding that relocation assistance is being offered in “accordance with federal law.”

“This may include relocation advisory services and relocation payments for moving expenses and reestablishment,” he said.

The Iwilei Center property was identified in the Downtown Neighborhood TOD Plan — first adopted in 2017 — as the site of “critical infrastructure, and acquisition will support upcoming affordable housing and TOD initiatives in Iwilei,” the city says.

It notes that the property will be near Skyline’s future Kuwili Station, part of the third segment of the city’s rail line, which is expected to be finished by 2031.

Meantime, a second property — once owned by First Hawaiian Bank — also has been obtained for conversion into affordable housing, the city says.

On Dec. 29, the city says, it completed an $8.4 million purchase with First Hawaiian for a vacant former branch at 445 N. King St.

“Residents across Oahu have made clear that the availability of affordable housing is among their most important priorities,” Mayor Rick Blangiardi said in a written statement. “And we are excited about the opportunities these two key strategic properties present for future development, especially within walking distance of our rail system.”

The mayor added that the city “will continue to be aggressive with regard to our plans for affordable housing development.”

“As rail construction progresses further into the heart of Honolulu’s urban core, we must take advantage of opportunities like this to transform our housing landscape and provide vital spaces to live for future generations on Oahu,” Blangiardi said.

Likewise, Council member Radiant Cordero, who represents District 7, which includes parts of Kalihi and surrounding areas, said the city’s actions will benefit those living in urban Honolulu.

“The acquisition of these properties is a tremendous accomplishment because not only will it increase opportunities for the development of affordable housing for our residents, but the Iwilei Center parcel will improve connectivity between communities by linking Iwilei with Kalihi, Palama and Liliha,” Cordero said in a written statement.

According to Humber, now that the city owns these two properties, planning and design efforts will begin “so that we construct mixed-income and mixed-use housing projects, which may combine low- and moderate-income affordable housing, or mixed income housing with governmental, educational, commercial, cultural, institutional or industrial uses, to the extent allowed by law.”

He added, “At this time we do not have specific information on unit numbers, unit size, eligibility criteria or rental amounts” for these future developments.

“However, conceptually on the 3.8-acre Iwilei Center parcel, the city envisions between 750 and 1,000 affordable housing units with mixed-use retail, community services, open space and rail parking for the urban Honolulu community,” Humber said. “Working with HART, the city will ensure a direct connect between the Iwilei Center parcel and the Kuwili Skyline station in Iwilei.”

He said the city’s current plan is to offer rail “kiss and ride” accessibility by creating a future direct connection to North King Street for motorists, bicyclists and pedestrians.

“All in all, the city plans to think big and fully activate this transit-oriented community bringing economic development, resource efficiency, outdoor spaces, safe neighborhoods and affordable housing,” he said.

And Humber also noted that as far as new housing on the island was concerned, the “mayor has gone on record stating that he hopes to bring 18,000 total units over his two terms.”

Blangiardi, still in his first mayoral term though now facing an election year, took office Jan. 2, 2021.