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La’ilani Apartments among 1,221 affordable rentals state selling
KAILUA-KONA — Two hundred family units at La’ilani Apartments are among 1,221 affordable housing units being sold by the state to a Hawaii and California real estate development partnership. Hawaii Housing Finance and Development Corp. (HHFDC ...
KAILUA-KONA — Two hundred family units at La’ilani Apartments are among 1,221 affordable housing units being sold by the state to a Hawaii and California real estate development partnership.
Hawaii Housing Finance and Development Corp(HHFDC) board members on Thursday voted unanimously to sell leasehold interest in the property and five others for $170 million to Honolulu-based Stanford Carr Development and Standard Communities Co., based in Los AngelesThe joint venture, Nou ka Hale, has also committed to spending millions to renovate and improve the properties.
La’ilani, located within walking distance of Kealakehe Elementary and Intermediate and Hawaii Montessori schools, is the lone Big Island property included in the leasehold saleThe other five properties include four on Oahu (Kamakee Vista, Kauhale Kakaako, Pohulani Elderly and Kekuilani Courts Oahu), and one on Maui (Honokowai Kauhale).
In total, the portfolio consists of 1,221 residential units and approximately 86,000 square feet of commercial spaceThe average age of the properties is 26 years.
If all goes smoothly and the sale closes, Nou ka Hale will assume management of the properties in March or April, said state housing information specialist Kent MiyasakiNeither Stanford Carr nor Standard Communities could be reached for comment Friday.
Current tenants will also be allowed to stay in their homes throughout the 75-year lease.
“One of the goals when we started was to have a nondisplacement policy so no one was displaced,” Miyasaki said.
The process began earlier this year with visits to the sites and a request for proposal to solicit bids went out this summer.
About 10 people contacted at the apartment complex Friday said they had not heard about the planned sale, including one woman who was willing to talk with the newspaper upon anonymityThat woman, who said she was born and raised at La’ilani, has resided there for the past 26 years and is now raising her two children there.
“This is the first time I’m hearing about the sale,” said the woman“The rent should be (stay) good for low-income people.”
The HHFDC said rents at the properties will remain affordable throughout the terms of the 75-year lease, with maximum rents being no greater than either 80 or 100 percent of the U.SDepartment of Housing and Urban Development (HUD) Area Median Income (AMI) rent guidelines.
“It’s hard to say right now,” Miyasaki said when asked about how rental rates could change at the Kailua-Kona property“There’s a 2 percent (annual rent increase) cap, that’s the maximum” that it can increase until after year five.”
At year six, annual increases of 5 percent can be assessed for the following 30 years.
“I think La’ilani is probably the one property that things will change the least, just because most of the tenants, right now, are very close to about 100 percent (of AMI rent guidelines),” said MiyasakiCurrently, 62 residents receive rental assistance, with most of those earning closer to 80 percent of area median income.
Current market rent rates at La’ilani Apartments, according to the July 2017 application provided online by management company Hawaii Affordable Properties, are $1,040 for a one-bedroom unit and $1,470 for a three-bedroom unit, near 2016 HUD guidelinesA $175 subsidy is available to those earning 80 percent of AMI or less.
Based on fiscal year 2017 HUD guidelines, a household on Hawaii Island earning 100 percent of the $63,300 area median income would pay $1,390 for a one-bedroom unit and $1,927 for a three-bedroom unitA household earning 80 percent of the AMI would pay $1,112 monthly for a one-bedroom unit or $1,542 for a three-bedroom unit
The board also awarded project-based Rental Assistance Program contracts to Nou ka Hale that provide rent subsidies for households that currently participate in the program and earn less than 80 percent of the AMI
At La’ilani and three other family properties where those subsidies are currently offered, HHFDC will provide 10-year contract that increases the maximum monthly subsidy from $175 to $225In the sixth year of the contract, when rental increases rise to 5 percent, the maximum monthly subsidy will increase to $500, according to the press release.
Two Oahu properties will see different subsidies.
Nou ka Hale has also committed to a $53.9 million capital improvement program that includes renovations to apartment units and common areasImprovements will include upgrades of finishes and fixtures in the living unitsCommon areas will be refreshed, and community rooms will be renovated to support additional community programming and activitiesIn addition, building systems that are antiquated will be repaired.
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