Committee adds $25 million grant condition for Kihei affordable apartments; vote advances funding amid questions over conditions

The Budget, Finance & Economic Development Committee on April 25 amended the proposed fiscal-year budget to include a condition directing up to $25 million in county funds as a grant for a Kihei affordable rental project identified in committee as “Lipoa Apartments.” The committee voted to add the condition after extended public testimony by developers, agency staff and public commenters.

Council Member Keani Paulton moved the amendment to allocate “up to $25,000,000 must be for a grant to Lipoa Apartments LLC for an affordable rental housing development in Kihei.” The motion drew sustained discussion from committee members, city staff and the project’s representatives. After debate on process and whether the council should name a specific project in the budget ordinance, the motion passed on a roll call vote (7 ayes, 2 no).

Developers and administration representatives had urged the committee to find a way to keep the project moving. Developer Doug Bigley and others told the committee that the project is shovel-ready at a pace that could add units earlier than some other applicants. “We would seriously have to take a look at it not being affordable or not as many affordable units,” said Leilani Palmano, a project representative, when asked how a denial would affect the project timetable.

Managing Director Josiah Nishita told the committee he and the administration had worked to identify funding sources and proposed combining carryover savings and affordable-housing funds so the area of need could be addressed without delaying other projects. Nishita said staff could transfer carryover savings from the general fund into the affordable housing fund to help cover the appropriation, and he offered to work with council on the final funding stack.

Because committee members raised legal and enforceability questions about naming a private developer and tying funds to specific project terms, corporation counsel asked for more precise grant-language and for time to confirm the correct legal name of the grantee entity. Staff said they would confirm the legal entity to be used in the ordinance and draft enforceable grant terms clarifying the unit counts, affordability periods and reporting requirements so the county’s grant contract could reflect the representations made to the council.

The administration had also offered a separate proposal to reduce an existing $12.4 million loan for a different project (Kaʻulu Napili) to a $2 million grant and to transfer approximately $13.94 million in general-fund carryover savings into the affordable housing fund — a package of moves intended to free cash for the Kihei award while holding the overall affordable fund accountable. That package was voted on separately during the meeting and was approved after additional motions; the committee then moved the Lipoa condition forward.

The committee’s motion makes the grant conditional (the ordinance language as amended directs the appropriation to the affordable-housing program, naming the recipient and amount) but staff and corporation counsel said the final contract terms will be essential to ensure the county’s expectations are enforceable — for example, unit counts, AMI targets, whether units will be rental or ownership, and long-term affordability obligations.

Ending — next steps: Staff said they will confirm the legal name of the grantee and draft a grant agreement consistent with the condition approved by the committee. The committee directed corporation counsel to draft clarifying language on enforceable conditions and the administration to prepare any related budget adjustments for first-reading work on the fiscal bill later in the cycle.