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HCDA reports cash shortfall, delinquencies and rehab plan for Honua Kaha senior rentals
Summary
Hawaiʻi Community Development Authority staff told the Kakaʻako Authority on May 7 that the Honua Kaha senior rental project is operating at a short-term net deficit amid vacancies and tenant delinquencies; staff described a plan of unit rehabilitations, collections and a longer-term move toward divestment.
The Hawaiʻi Community Development Authority on May 7 told the Kakaʻako Authority that the Honua Kaha senior rental housing project at 545 Queen Street is operating at a short-term deficit and that staff expect continued renovation and leasing activity to drive recovery.
HCDA Chief Financial Officer Garrett Sasaki told the board that income was down because of vacancies and that expenses were higher in part because the operator had begun renovations. “Net deficit of $230,000, but the property started the year with a little over $500,000 in cash,” Sasaki said.
The board heard that tenant receivables total about $150,000 and that several tenants are severely delinquent. Sasaki and other staff said they are working with the management company (referred to as MDI in the presentation) to identify delinquent tenants and to begin collection steps. Board members and staff said some delinquencies may trace to a change in on-site management and to complications when residents had to reestablish autopay with the new property manager.
Why this matters: HCDA is a general partner in the limited partnership that owns the senior rental portion of the project; continued vacancies and arrears reduce available cash and complicate operations while the agency oversees repairs and seeks a longer-term solution.
Board members asked for more consistent monthly follow-up on delinquencies, and HCDA staff described short-term management actions including reminders and a consistent person to watch accounts. Director Craig Nakamoto said staff expect a “J-curve” in which deficits continue while about 18 units undergo rehabilitation, then improve as those units are leased.
Staff reported current occupancy and rehabilitation status: 23 units occupied, nine units rent-ready with nine additional applications in the pipeline, and about 18 units that need rehabilitation ranging from moderate to extensive. An audit of the property has begun with a report expected in June and tax returns estimated for completion in August.
Nakamoto and staff said HCDA is using agency special funds to pay for some renovations and will seek reimbursement under a memorandum of agreement with the Department of Human Services (DHS) for up to $1 million. Nakamoto said staff inventoryed unit conditions and prioritized work; some occupied residents may be temporarily relocated for repairs, although staff said not all residents want to move temporarily.
On longer-term disposition, staff again referenced the limited partnership’s scheduled dissolution in December 2026. Nakamoto said the dissolution is a milestone that will allow HCDA to consider disposition options, including working with lenders and potential affordable housing or social-service providers. “We are not a social service agency, and this property would be better handled by a social service agency or an affordable housing developer or management company,” Nakamoto said.
Board members pressed on cash flow and the ability to weather the rehabilitation period. Staff said the property began the year with cash reserves that will help cover operating needs as renovations proceed, but emphasized continued oversight of the operator and more active collections work.
No formal board action or vote took place on the item; the presentation was an informational update and generated board questions and staff commitments to follow up on collections and lease-up timelines.
