HCDA authorizes director to use reserved-housing funds to prepare for Luana buybacks

Honolulu — At its June 4, 2025 Kakaʻako Authority meeting, the Hawaiʻi Community Development Authority voted to authorize the executive director to expend funds from the agency's reserved housing subaccount to prepare for potential buybacks of reserved housing units at the Luana development and to explore alternate financing and pre- and post-buyback options.

The board approved a motion giving the executive director authority 1) to use the reserved housing subaccount funds to buy back reserved housing units at Luana when the agency's buyback right arises during the regulated term; 2) to explore other means of financing for such buybacks; and 3) to study pre- and post-buyback options including equity-sharing, buyback-and-sell, buyback-and-rent, and rent-to-own programs. The motion was moved by Member Evans and seconded by Vice Chair Hsieh and passed on a roll-call vote with all members present voting yes (Evans; Vice Chair Hsieh; Chair Sterling Higa; Secretary Lidstow; Miranda Johnson; Member Strides; Member Chenow; Member Sakoda).

The action responds to the approaching end of many units' regulated terms at Luana, which the executive director said are closing in December 2025. Executive Director Craig Nakamoto told the board the agency’s reserved housing subaccount holds about $11,500,000 and that the authority needs a practical plan to address buybacks as they arise. "The authority is only, to give me the right to, authority to spend money out of that $11,500,000 reserve housing subaccount," Nakamoto said during the presentation. He added that shared-equity returned to the agency from Luana could replenish the subaccount over time.

Board members pressed for details on which units will return under varying regulated terms. Nakamoto said regulated terms are generally two, five and 10 years depending on unit price and affordability, with lower-priced units typically carrying longer regulated terms. He noted the agency will be selective about which units it actually buys back: "Even if we have the money to buy back all units, we may not buy back all units," he said.

Members raised program and implementation concerns. Member Evans asked for a clearer breakdown of which units carry two-, five- or 10-year terms. Member Schreck asked why the authorization was tailored to Luana rather than given as a broad authority for other projects; Nakamoto said the request was purposely limited to Luana for now and that the agency could return to the board with separate approvals for other projects. Nakamoto also said staff will consult with the deputy attorney general about how vesting rules apply when the authority buys back and resells or rents units; his preliminary read was that the units would remain subject to the agency’s 2005 vesting rules.

The board directed staff to return at the next meeting with additional details on alternative financing options and a more developed implementation plan. Nakamoto said staff will review incoming buyback opportunities and present proposed approaches for which units to reacquire and how to handle them post-purchase.

The meeting packet listed the staff report under Tab 2 and noted potential use of additional financing such as DIRF/DERF (as referenced in the packet) to supplement the reserved housing subaccount. Nakamoto told the board there are approximately 697 reserved housing units in Luana and that shared equity in Luana is "approximately $100,000,000," which staff expects to replenish the subaccount over time as equity returns to the agency.

The meeting concluded with the board moving to the executive director’s monthly report and then adjourning at 10:03 a.m.