Maximizing affordable housing requires creativity


This past Friday, the Maui County Council adopted a resolution urging the state Legislature and governor to keep Front Street Apartments in Lahaina affordable.

Front Street Apartments is home to almost 300 low-income tenants who could be priced out of their homes if no action is taken to keep the apartments affordable.

The apartment complex was completed in 2001, utilizing federal and state tax credits, and was to remain affordable until 2051. However, the Internal Revenue Service tax code allows for the owners to request to sell their interest, which requires approval from the state’s Hawaii Housing Finance and Development Corp.

After the owners’ request to sell is made, a qualified contract price is calculated in accordance with the Internal Revenue Code, which may exceed the fair market value of the project. For Front Street Apartments, the contract price was calculated at over $15.3 million, despite the appraised value of $8.7 million, both of which were for the buildings only.

As a result, no buyer was identified within the required one-year period and, therefore, the affordability requirement of the complex was terminated and is now operating under a three-year affordability commitment.

Within the three years, the owners are prohibited from increasing the gross rent of low-income units except under special circumstances and may not evict or terminate the tenancy of low-income tenants without good cause. The period ends in 2019 and at that time, the owners may sell or rent the property’s units at market value.

Many of the tenants have fixed incomes. If the rent is raised, this could leave renters in a precarious position of being homeless.

The matter is now in the hands of the state Legislature and the governor to find a solution to help save Front Street Apartments’ tenants from financial hardship. The council will continue urging and supporting state legislators to exhaust all options, including creative solutions, to help keep Front Street Apartments affordable.

Also, this past week, in continual efforts to monitor affordable housing, the Housing, Human Services and Transportation Committee received an update from the Department of Housing and Human Concerns on the various sources of affordable housing funding.

Sources of funding available to the county include: Maui County’s Affordable Housing Fund, County National Housing Trust Fund, State of Hawaii Housing Finance & Development Corp.’s Rental Housing Revolving Fund and Dwelling Unit Revolving fund, and the federal HOME Investment Partnerships fund.

The key is monitoring where these funds are directed and how they are used. Some funds are available yearly, others are on a periodic basis. Based on department’s presentation, members now have a better grasp on the timing of funds and how they can be combined to best perpetuate affordable housing.

One example is the HOME Investment Partnerships Program. The funding provides formula grants to states and counties in partnership with local nonprofit groups to fund a wide range of activities, including building, buying and rehabilitating affordable housing for rent or homeownership to low-income individuals.

In an effort to generate a larger impact, federal HOME funds rotate among the three Neighbor Island counties each fiscal year. In fiscal year 2018, it is Maui County’s turn to receive approximately $3 million for local affordable projects. In the last allocation in fiscal year 2015, HOME funds were used in conjunction with the county’s Affordable Housing Fund to complete the 56-unit Kulamalu Hale in Pukalani.

Creativity in combining funds to create projects with long-term value is critically important. The county must continually review funding sources, aggressively pursue new sources of funds, and ensure they are deployed in the most efficient manner. In the end, it is all about creating affordable housing.

* Stacy Crivello is chairwoman of the council’s Housing, Human Services and Transportation Committee. She holds the council seat for the Molokai residency area. “Chair’s 3 Minutes” is a weekly column to explain the latest news on county legislative matters. Go to for more information.