Slicing the remaining vacant acreage at the county’s Kalepa Village rental apartment project site into smaller pieces should allow for quicker development of badly needed affordable rental housing units. And, because of available state tax credits for the partnership slated
Slicing the remaining vacant acreage at the county’s Kalepa Village rental apartment project site into smaller pieces should allow for quicker development of badly needed affordable rental housing units.
And, because of available state tax credits for the partnership slated to develop the next phase of apartments, rents at the new Kalepa units could be lower than those at the existing units.
So says the county’s executive on housing.
“The rent structure will be different because of the financing; it’ll actually be lower than the existing units,” said Ken Rainforth, executive on housing in the county Offices of Community Assistance.
The next construction phase, around $5.8 million worth, could be completed in around 18 months once construction starts, and will be 40 apartments in four buildings, said Rainforth.
Half of the new units will be three-bedroom layouts, 40 percent two-bedroom units, and 10 percent one-bedroom layouts, he said. Although recent surveys indicate people want units for larger families, history has also shown that at Kalepa there is also sizable occasional demand for one-bedroom models, he said.
The County Council approved over $20,000 for the subdivision of the remaining vacant acreage into smaller parcels.
“There’s room for 12 more buildings, and we’re subdividing it so groups of four buildings each can be (built) on separate parcels of land, thereby enabling us to obtain financing where the lender wants to secure the debt without encumbering the entire property,” said Rainforth.
“That’s the whole purpose” for the subdivision, and a $21,900 appropriation for the subdivision work on the county’s affordable rental apartment project along Kuhio Highway in Hanama’ulu, he added. A contract was awarded to M&E Pacific, Inc., to perform the subdivision work.
“The reason we’re subdividing is (that) we need some mechanism in order to provide a security for anybody who is going to lend us money,” he said.
The plan now is for the county to lease one parcel for the next four buildings to the Kauai Housing Development Corporation (KHDC), which has created a limited partnership which it hopes will enable it to secure tax credits for low-income housing development from the state.
The Housing and Community Development Corporation of Hawaii (HCDCH) board is expected to vote on which entities will get the finite amount of tax credits at its meeting on Maui Thursday and Friday, June 20 and 21.
Nadine K. Nakamura of Kapa’a, who next month begins serving as the Kaua’i member on the Hawaii Tourism Authority, is the Kaua’i member and vice chair of the HCDCH board. She was appointed by Gov. Ben Cayetano to both positions.
She said there is stiff competition for the tax credits, but the KHDC presentation was good, and the Kalepa project looks good because infrastructure (roads, water lines, electric lines, etc.) is in place, there are county funds available to leverage the tax credits, and a Kaua’i entity hadn’t applied for the tax credits before KHDC’s application.
Still, she wouldn’t speculate on HCDCH board action at the Maui meeting. Normally, only around half of the entities applying for the tax credits are awarded them, she added.
Proceeding with the planning of the Kalepa expansion under the assumption that it will receive the tax credits is KHDC, said executive director John Frazier.
Without the tax credits, KHDC won’t be able to undertake the expansion, he said. But that doesn’t mean there will be no Kalepa expansion. County officials have testified before the HCDCH board that between 20 and 60 additional affordable rental units will be built at Kalepa, with the higher number likely if tax credits are won.
The county cannot apply for these state tax credits, but nonprofit and for-profit corporations can, Rainforth continued. Under the plan, KHDC will control its portion of the property for the life of the loan period, said Rainforth.
All of the utilities for the remainder of Kalepa Village’s expansion are already in place, he noted. The apartment complex is named for the Kalepa Ridge and Kalepa peak immediately mauka of the units.
Is there a need on the island for both housing and affordable rental housing? “Yes, we certainly believe that,” he said. Frazier agreed.
The community seems to like the look of existing Kalepa buildings, and tenants like the fact that the buildings are termite and hurricane resistant, Rainforth said.
The existing Kalepa Village has 60 apartments, a recreation building and manager’s office on around 2.5 acres. The existing units are all occupied. The entire project is on around 12 acres, planned eventually for 180 units.
“So, instead of selling the property – we don’t want to give it up – we will lease it to them, with provisions that we want the project units to be built very much or very similar to the existing ones,” Rainforth said.
Under the state tax-credit financing scheme, those who invest in the development partnership get tax credits they can list for 10 years on their individual tax returns. “So those who have large tax obligations are interested in investments like this,” Rainforth said.
Frazier said KHDC won’t get the tax credits until the buildings are up and occupied. The credits are sold to investors, and proceeds are used to pay off construction financing, in a system known as “take-out permanent financing.”
Tax credits if acquired will cover only around 60 percent of the total project cost, Frazier said.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
