State buys land under Front Street Apartments
Tenant’s lawyer, Ige say it will help keep units affordable
The state has purchased the land under the affordable Front Street Apartments in Lahaina for $15 million, which the tenants’ attorney said could give the state leverage as it works to keep rents from rising to market rates.
Gov. David Ige announced the purchase from 3900 LLC, a Weinberg Foundation affiliate, Thursday and said that the move brings the state a step closer to keeping the Front Street Apartments affordable for 250 tenants.
Front Street Affordable Housing Partners, who holds the lease for Front Street Apartments, has said it plans to convert the complex to market-rate units before the end of its 50-year affordability commitment to low-income tenants. The developers contend that they are entitled to break the affordability promise due to a 2012 change in federal tax law, which allows them to be released from their low-income commitments after 15 years if no buyer can be found within a certain timeframe.
The conversion to market rates originally was pegged for this past August, but parties to a lawsuit filed by the tenants agreed in the spring to hold off on the rent increases until the Hawaii Housing Finance and Development Corp. becomes the owner of the apartments or until four months after the court issues a final judgment.
The lawsuit filed last year challenges the developer’s attempt to convert the complex to market-rate units before the end of its 50-year affordability commitment to low-income tenants. They only are seeking to keep affordable rents in place and no other damages. Tenants include elderly and people with disabilities living on fixed incomes and families with incomes of less than $15,000 annually, plaintiffs’ attorney Lance Collins said.
A new law approved by the Legislature and signed by Ige in June authorized the Hawaii Housing Finance and Development Corp. to acquire the land from 3900 LLC and initiate negotiations with the owners of Front Street Apartments to keep the property affordable for the tenants, the governor’s news release said.
The measure also gave the HHFDC the authority to initiate condemnation proceedings, with the state and county each putting in $250,000.
The HHFDC board approved $15 million from the Dwelling Unit Revolving Fund for the acquisition of the land at its May 9 meeting. The $15 million figure was based on a $14,930,000 appraisal of the fair-market value of the land under Front Street Apartments.
“This acquisition brings us closer to protecting tenants from significant rent increases that could displace them,” Ige said.
Collins said that the purchase “could put pressure” on Front Street Affordable Housing Partners to come to a settlement. He noted that a settlement conference, set for Nov. 13, will have one less party with the sale.
“The number of parties has shrunk by one” and “maybe now is that time to . . . sit down and figure out a way” to keep the apartments affordable, Collins said.
He said the state owning the land will give it more leverage over lessee Front Street Affordable Housing Partners, though he and Ige did not outline specific options.
“I appreciate that progress is being made toward maintaining Front Street Apartment residents in their affordable rental units,” said Mayor Michael Victorino. “I thank Gov. David Ige and the Hawaii Housing Finance and Development Corp. for their dedicated collaborative effort with Maui County to keep affordable rentals affordable for our people.”
* Lee Imada can be reached at email@example.com.