Between 350 and 450 Maui wildfire survivors in early May should begin moving into a former hotel in Kihei now owned by the state.

A state agency purchased the former Maui Sun Hotel in a $38 million deal that closed Thursday and was arranged more than a year ago to provide affordable rental housing for teachers and other members of Maui’s moderate-income workforce.

The 175-room property has been renamed Hale ‘O La‘ie and will open in phases starting early next month for interim fire survivor use.

Interim use of the South Maui property is expected to reduce the state’s expense for sheltering fire survivors in West Maui hotels.

Maui County Mayor Richard Bissen said in a statement that he is grateful for the assistance from state leaders making the property available to the local community.

“Hale ‘O La‘ie adds to Maui’s housing options at a critical time, fulfilling the immediate need for stability for fire survivors while eventually providing much-needed rental units for our residents, including teachers and other essential workers,” he said.

The Hawaii Housing Finance and Development Corp., a state agency that mainly helps private developers finance affordable housing, bought the property from a Christian missionary training organization with funding appropriated by the Legislature last year.

State lawmakers arranged the purchase so Maui County could convert the property to teacher housing, affordable workforce housing and prekindergarten classrooms under a 75-year land lease with HHFDC.

The conversion plan by the county will involve soliciting a private partner to renovate the property perhaps beginning in the summer of 2026. In the meantime, Paramount Hotels LLC will make some improvements and operate the property for HHFDC to accommodate fire survivors.

Gov. Josh Green said in a statement that the reuse of the former hotel achieves short- and long-term objectives helping Maui fire survivors to rebuild their lives and expanding the inventory of affordable housing.

HHFDC intends to use the property to house fire survivors who are currently in hotels but aren’t eligible to have the Federal Emergency Management Agency cover the cost, which is $1,000 per day per household and includes food and services.

Green last week said the state is incurring the $1,000- a-day hotel service cost for under 500 households, down from about 1,000 households a few months ago. People who aren’t eligible for FEMA coverage include undocumented immigrants. Citizens of the Marshall Islands, Micronesia and Palau under the U.S. Compacts of Free Association were not initially covered, but now are.

As of last week, there were 3,109 fire survivors staying in 11 hotels, down 60% from 7,796 survivors in 40 hotels shortly after the Aug. 8 disaster that destroyed most of Lahaina and killed at least 101 people.

The Maui Sun was developed in 1991 as a hotel catering largely to local residents. Four years later with the hotel struggling financially, the Atlanta-based organization Haggai International Institute for Advanced Leadership Training Inc. bought the property and turned it into a Christian missionary training center.

Haggai in 2020 tried to interest premium-brand hotel operators in purchasing the property, which includes lodging units ranging from studios to three-bedroom units, an oversized pool, a fitness center, a central kitchen, a bistro, meeting rooms, a 120-seat auditorium, laundry rooms, a library, a koi pond, a soccer field and parking on 6 acres of land.

Paramount Hotels with a partner agreed to a purchase in 2022, and intended to reposition the complex for transient workforce accommodations serving traveling nurses, construction workers and others. Then the state negotiated a new sale involving Haggai, Paramount and its partner, Pacific Rim Land Inc.

In the aftermath of the Maui wildfire, Haggai made the property available to disaster first responders.

According to HHFDC, units in the complex have typical hotel furnishings but no televisions, and only some have kitchens or kitchenettes. Of the 175 units, eight have full kitchens, 35 have kitchenettes and 32 have mini refrigerators and microwave ovens.

Paramount, Pacific Rim and a consultant, Maui-based developer Dowling Cos., have estimated it would cost $28.5 million to convert the lodging units into 117 residential one- and two-bedroom apartments, according to HHFDC. They also estimated it would cost $10.8 million to convert the library space into six prekindergarten classrooms.