Ige signs bill to help tenants at Lahaina complex

(The Maui News story by Brian Perry, July 8, 2018)

Front Street Apartments residents had reason to celebrate Saturday.

In a ceremony at the Lahaina United Methodist Church social hall, Gov. David Ige signed into law Senate Bill 2293. It requires the Hawaii Housing Finance and Development Corp. to begin condemnation proceedings for the ground lease of the 142-unit Front Street apartment complex. The measure also appropriates $30 million from the state’s rental housing revolving fund to build rental apartments on property in Lahaina.

West and South Maui state Sen. Roz Baker, who sponsored the Senate version of the bill that ultimately became law, said the measure “provides a pathway to keep the tenants, many of whom are kupuna or disabled, in the apartments.”

“They cannot afford market rents, which the owners contemplated charging without this bill,” she said. “The apartments were built with tax credits and were supposed to be kept affordable for 50 years.”

Shortly before signing the bill, Ige said it “really is an investment in our community and an investment in affordable housing in the long term.”

With Mayor Alan Arakawa in the audience, Ige said that keeping the apartments affordable isn’t something the state can do alone. He said the state and county would work together to maintain the residents’ affordable monthly rents.

The bill appropriates $250,000 from the state’s general fund for an appraisal and other costs of the condemnation proceedings, and it requires Maui County to provide dollar-for-dollar matching funds.

Tenant Sharon Serafica, a retired teacher and a 13-year resident of the Front Street Apartments, said she thought the governor’s signing of the bill was “fantastic,” but she remained concerned about how quickly condemnation could be done or new rental housing could be built with tenants facing market-priced rents in August 2019.

Serafica said she’s on a fixed income and supports her 2-year-old great-granddaughter, and she can’t afford to pay market prices for rent.

Now, she pays $1,161 a month for a two-bedroom, two-bathroom unit, Serafica said. She expects rent to increase to around $2,400 for a two-bedroom unit if rents increase as planned.

“We’ve got to move quickly,” said Craig Hirai, HHFDC executive director, who attended the bill-signing ceremony.

He said his agency aims to build about 200 affordable rental units for families at what’s now called the Keawe Street apartments. (The bill refers to it as the Leialii affordable housing project.) Now, the property is vacant land, he said, and the state would be working with Maui County to expedite the approval and construction processes.

He noted that the bill signed by Ige requires the state to expedite and complete the Lahaina housing project by 2021.

The HHFDC board of directors has already taken steps to move quickly on the Keawe Street apartments by approving $5 million in predevelopment funds.

West Maui Rep. Angus McKelvey said the bill’s signing was a “first step,” and there’s “a lot of hard work to do.”

Nevertheless, he congratulated residents and pledged that “we will see this through.”

Later, he told The Maui News that the governor and HHFDC officials were “very motivated” to see the Lahaina apartments remain affordable.

Ige said he visited the apartment complex and could see how important it was to keep units affordable for residents who enjoy a “perfect location.”

“This new law is a great example of how the state and the counties are working together to preserve and increase housing opportunities for the people of Maui and our residents across the state,” Ige said.

Barbara Henny, co-chairwoman of the Front Street Apartments Tenants Group, said the bill signing was “very much a victory for us.”

She credited Arakawa and Ige for “stepping up” for residents to maintain affordable rents.

Henny, who is retired and living on fixed income, said she has lived at the complex for eight years and pays $805 a month for a one-bedroom, one-bathroom unit. If rents rise to market rates in August next year, she expects her rent would double.

“There’s no way (to afford higher rent) on my Social Security,” she said.

The Lahaina development was built as an affordable housing project in 2001. The owners, Front Street Affordable Housing Partners, has said it plans to use a federal tax code loophole that allows the owners to raise rents to market rates by August 2019 if they are unable to find a buyer for the development.

Lawmakers contemplated extending rents through 2027, as well as providing subsidies for tenants. Ultimately, legislators decided to appraise the property’s land and acquire the ground lease from Front Street Affordable Housing Partners, which leases the land from 3900 Corp.

The Maui County Council has passed a resolution urging the state to save the apartments. In April, the council also passed a resolution allowing Council Chairman Mike White to contract for an appraisal of the apartment buildings.

The owners have denied the county entry to the project to do an appraisal, and, through a representative, they’ve expressed no interest in selling the property.