HCDA: Honua Kaha shows lower-than-expected income, $201,000 tenant receivable; board to seek follow-up from manager

The Hawaii Community Development Authority’s Kakaʻako Authority on Aug. 6 heard that the Honua Kaha senior rental housing project at 545 Queen Street is reporting lower-than-expected income and a tenant receivable balance of $201,000, HCDA staff said.

Garrett Sasaki, HCDA chief financial officer, told the board the project’s recent financial package shows “income is low” and that “it seems like it’s more of an accounting error rather than a drop in collections,” though staff are verifying the discrepancy with the property manager, MDI.

The update matters because the board said the shortfall is large enough to affect the project’s expected revenue. Board members asked for additional detail from MDI and requested the follow-up be shared with the board prior to the next meeting.

Sasaki reported the following operational and financial details provided in the staff packet: 126 units are occupied; 24 units are not occupied, of which about nine are rent-ready and about 15 require rehabilitation. Sasaki said the authority has contracted a contractor to rehabilitate those 15 units, with an estimated timeline of about one year and a pace of roughly three to four units every few months.

On tenant accounts, Sasaki said the tenant receivable balance is “a pretty high balance, 201,000.” He described the receivables as the result of several situations: about eight tenants are in legal proceedings for nonpayment and potential eviction; five or six tenants have irregular payments and staff are working on consistent payment schedules; and about 10 accounts relate to subsidy payments not yet received.

Board members pressed for specifics. Member Evans asked whether the subsidies were Section 8 vouchers; Sasaki said the authority is “focusing on Section 8,” and that some tenants have vouchers or small subsidies administered by nonprofits such as Catholic Charities. Evans asked whether some nonprofit subsidies might be COVID-era programs that could end; Sasaki said he was not aware that any were COVID-time limited and that many tenants had those subsidies prior to COVID.

When asked whether the property provides social-services support in eviction cases, Sasaki said Honua Kaha is a regular rental project, “it’s not a supportive housing” or assisted-living project, and that the standard process is used (standard eviction steps). He added that property management contacts next of kin and community organizations when tenants have difficulty living independently but that there is not an established pipeline of written partnerships for placement or assisted living referrals.

Member Heehy asked about an existing partnership with First Hawaiian Bank; Sasaki said that partnership is set to expire “the end of next year,” and the board indicated it will discuss options well ahead of that date, including whether other state departments or private-market options should be considered.

Sasaki said the authority receives monthly financial packages from MDI (not only quarterly reports). A board member calculated that even with full lease-up and bringing the rent-ready and rehabbed units online, there remains an estimated roughly $200,000 quarterly shortfall based on current projections; the board asked staff to follow up with MDI and share the findings with the board as soon as they are available.

Public testimony: one person, Michela Bliss, living in the area told the board she was surprised Honua Kaha had occupancy issues and urged a review of marketing and management, saying it “doesn’t make sense to have any occupancy issues.”

Votes at a glance: The board approved the minutes of July 2, 2025, as presented (no mover/second or roll-call tally recorded in the minutes).

Next steps: staff will follow up with MDI to reconcile the income variance and provide that information to the board before the next meeting. The board will schedule further discussion of the First Hawaiian Bank partnership ahead of its year-end expiration and will monitor the 2024 audit wrap-up and tax-filing steps that staff said are expected to be completed this month.