HCDA previews Kakaʻako housing plans, 99‑year leasehold pilot and financing options

The Hawaiʻi Community Development Authority on Jan. 8 presented staff plans to pursue additional rental housing in the Kakaʻako Community Development District, including a pilot 99‑year leasehold condominium option and a proposed mid‑300‑unit rental project on an HCDA parcel in Kakaʻako.

Deepak Nupani, a program specialist with HCDA, told the authority the agency has drafted a request for qualifications to select a developer and expects to seek board authorization next month to issue that RFQ. Staff described the concept as a rental project aimed at the “gap” market — households earning roughly 80% to 140% of area median income (AMI) — rather than only deeply subsidized units at 60% AMI or below.

The proposal under study includes a parcel in Kakaʻako that staff said is about 1,000 square feet and a building program the developer estimates could total about 350–360 units. Staff reported average development costs in analysis are running roughly $620,000 to $650,000 per unit. Price points under discussion would generally target 90% to 140% AMI, with one‑bedroom prices described as “mid $400,000” and larger family units in the “mid $800,000” range, depending on configuration and market factors.

Why it matters: HCDA staff said building on authority‑owned land can sustain affordability for longer terms than private land because the public land lease model allows extended affordability controls. Staff framed the 99‑year leasehold pilot as a potential tool to produce housing that remains owner‑occupied or regulated longer than typical market‑rate condominium resales.

Staff cautioned the project faces several financing and market hurdles. HCDA is exploring a financing package that could include state CIP (capital improvement project) appropriations to buy parking and ground‑floor commercial space (staff noted a $30 million CIP request in fiscal 2025–26 for parking and related site work), low‑interest loans from the Hawaiʻi Housing Finance & Development Corporation’s building unit revolving fund (which staff said may be available at roughly 3%–4%), and a portion of project financing structured as debt and the CIP/equivalent as the equity piece. Staff also said they have discussed the possibility of reimbursable general obligation bonds to lower long‑term interest costs.

Deepak said the authority previously authorized rulemaking for a 99‑year leasehold product and that the law authorizing the pilot included roughly $1,000,000–$1,500,000 in funding for predevelopment studies, which HCDA has used to retain a developer for feasibility work. Staff said the developer has engaged an appraiser and an operator to test market interest and cost assumptions and that HCDA expects a presale or market‑interest gauging exercise this summer. The predevelopment contract, Deepak said, includes a clause that if funding or market interest does not materialize there is no obligation on either side to proceed.

Board members pressed staff on program design, administrative burden and legacy policy issues. Member Sakoda raised concerns about the administrative workload on HCDA staff and asked whether HCDA can structure projects to limit long‑term operating responsibilities. In response, staff and the executive director said HCDA intends to follow a land‑lease/developer/operator model similar to earlier projects such as Artspace, where HCDA provides land and the developer/operator handles operations and services.

Members also discussed equity sharing tied to earlier reserved housing projects. Staff said existing equity‑sharing obligations outstanding to HCDA total about $74 million and explained that rule amendments now allow owners to pay equity‑sharing amounts up front rather than waiting until sale. Members questioned whether that design created perverse incentives for owners to retain an interest‑free obligation; staff replied that a revised formula proposed in a rule amendment shifts equity sharing to a percentage of the market value (rather than a fixed historic dollar amount) to keep the obligation proportional on resale.

Supportive‑housing and services planning was presented as part of the Kakaʻako strategy. Staff said HCDA has met with potential service partners including Waikiki Health — a federally qualified health center — and other nonprofit providers to explore co‑located clinic space and on‑site wraparound services. Staff also said they had an introduction to the Weinberg Foundation to learn from a Baltimore supportive‑housing model called Sojourner Place.

Other site and land‑banking work described included authorization to pursue purchase of parcels on South Street and ongoing review of small walk‑up renovation opportunities within the district. Deepak said infrastructure constraints make sites farther west of downtown less viable without additional sewer or electrical capacity.

Next steps: staff said feasibility analysis and market testing are expected by summer 2025 and that HCDA will return to the board under Act 97 to request formal site approval if the project is feasible and funding is available. The agency emphasized several unknowns — finalized cost estimates, market presale interest and legislative support for any bond or CIP request — before a final development agreement would be signed.

Board action: the authority did not take a formal vote on a development agreement at the Jan. 8 meeting. The board approved routine minutes earlier in the session, but no project approvals were on the record for this item.

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