Maui developers seek subsidies to alter projects and help fire evacuees

Dec. 17—Maui County officials are being asked to subsidize at least two planned residential subdivisions to affordably house people displaced by the Aug. 8 wildfire that destroyed roughly 3, 500 homes in Lahaina.

Maui County officials are being asked to subsidize at least two planned residential subdivisions to affordably house people displaced by the Aug. 8 wildfire that destroyed roughly 3, 500 homes in Lahaina.

Two developers are seeking $90 million to modify their projects planned before the fire.

In one case, the developer of a project in Kapalua called Pulelehua has sought $50 million to increase the share of affordable units to 91 % from 56 % while also increasing the total number of homes and delivering them over a shorter period of time.

The other proposal is from leaders of a project in Wailuku called Kuikahi Village who have asked for a $40 million low-interest loan to help build 202 affordable rental apartments after high interest rates upset an original plan to develop 202 affordable homes for sale.

Neither proposal has received public commitments from the administration of Maui County Mayor Richard Bissen, though the Maui County Council supports both efforts.

Bissen's administration faces budget constraints brought on by fire disaster factors that include lower tax revenue and unbudgeted response costs.

Meanwhile, the mayor is also exploring other ways to rehouse people who were displaced by the fire. This includes tax breaks for short-term vacation rental property owners if they rent long term to fire evacuees, and subsidies for homeowners who add accessory dwelling units to their property for the same purpose.

The revamped plan for Pulelehua, crafted in response to the fire, is described as the largest affordable-housing project for Maui in 75 years, with 1, 060 rental units for low-to moderate-income households and 100 affordable homes for sale. Another 100 single-family house lots for sale at market prices are also part of the 1, 260-unit revised project plan.

Pulelehua's previously approved plan is for 900 units comprising 400 market-­priced rentals, 300 affordable rentals, 100 affordable homes for sale and 100 market-priced house lots.

Construction began in March to grade an area for an initial phase of 240 units originally slated to include 120 market-rate rentals, 60 affordable rentals and 60 affordable homes for sale under the original plan. Recently, construction is shifting to put in infrastructure for the first phase where initial homes should be done in mid-2025.

The initial 60 affordable homes for sale are already being subsidized by the county under a prior $18 million grant that will reduce the sale price of each home by $300, 000. These homes are expected to sell for $330, 000 to $350, 000 on average.

Paul Cheng of Maui Oceanview LP, Pulelehua's developer, is pledging to complete the entire revised project in under five years compared with a previous expected 10-year timetable, and to develop a "large number " of homes in as little as 30 months if the county contributes $50 million through expense reimbursements tied to affordable-housing production over three years.

Building 200 modular homes as a temporary use on 10 acres designated for a park on the 304-acre Pulelehua site also is part of the plan and would be funded by private organizations.

"Because of the great need demonstrated right now, our response should be commensurate in that, " Kai Nishiki, a member of the local nonprofit Maui Nui Resiliency Hui consulting for the project's developer, told the Council during an Oct. 6 meeting. "We understand that the ask can seem like a lot of money, but for years we have put infrastructure costs onto our developers, and they have time and time again said that's why it's hard to get housing built."

At the meeting, the Council was considering a resolution urging Bissen to expedite the $50 million grant for Pulelehua, with specific terms to be arranged by the administration before returning to the Council as a budget amendment item.

Council members adopted the measure, Resolution 23-206, on an 8-1 vote.

Alice Lee, Council chair, said during the meeting that the proposal represents an opportunity "not to stay in the box like we always do " and to direct money where it can do the greatest good.

Council member Yuki Lei Sugimura, who cast the opposing vote, said Pulelehua is a great project but that directing so much money in tight fiscal times could come at the expense of funding other worthy projects, including money needed to rebuild Lahaina.

"We have kind of severe, I think, economic times ahead of us, so to be very prudent with how we spend is critical to me, " she said. "We don't have a lot of money. If we give it all to one project, what is it taking from ?"

Several other Council members expressed support for the resolution as a way to help displaced Lahaina residents remain in West Maui by moving to Pulelehua, which is near Lahaina below Kapalua Airport.

"West Maui is hurting, and we need to help them, " said Council member Gabe Johnson.

Nohe U 'u-Hodgins, another member of the Council, said, "$50 million is a lot of money, but we are going to have to invest in ourselves, invest in our people, so that we can keep our people here."

Tamara Paltin, who represents West Maui on the Council, noted that a resolution doesn't have the force and effect of law, but has the force and effect of hope.

Representatives of Bissen's administration did not speak during the Oct. 6 meeting and did not convey a position on the resolution after being asked recently.

Lee, on Monday, said she believes county administrators are discussing some kind of support for Pulelehua's developer, including possibly providing a loan instead of a grant.

Such an arrangement would be similar to what the developer of Kuikahi Village in Wailuku is seeking.

During a Nov. 1 meeting of the Council's Housing and Land Use Committee, representatives gave committee members an update on the project that previously received a $6 million county grant along with county fee waivers last year and faces a deadline next year to begin construction.

Everett Dowling, a Maui developer aiming to take over Kuikahi Village with an experienced mainland apartment development company, told the committee that the surge in interest rates since early last year has made the original plan unfeasible given higher mortgage costs for buyers and construction financing for the developer.

Dowling said the current for-sale Kuikahi Village project wouldn't get built even with a $30 million grant. "It's not feasible. It's not financeable. ... Things have changed that much."

Dowling is seeking a $40 million loan from the county with a 0.25 % interest rate and possibly 60-year term that he said would supplement federal financing and allow the new partners in Kuikahi Village to quickly move forward with the project as 202 rental apartments in six buildings instead of a more costly mix of homes for sale including duplexes, tiny homes and single-family houses.

If such a loan were provided, Kuikahi Village is expected to be able to begin construction before the end of next year and deliver units in early 2026.

Dowling and representatives of the project's original developer, Alaula Builders, presented their plan to the Council as an information item that could be followed at a later meeting by an effort to amend a 2022 resolution approving the original version of Kuikahi Village.

Lori Tsuhako, director of the county Department of Housing and Human Concerns, told the committee that the county Office of Recovery formed after the fire aims to vet all housing projects that desire county financial support largely from an existing affordable-housing fund.

Tsuhako said demand for such support exceeds supply.

On the supply side, Tsuhako told the committee that a prior estimate that the fund balance will reach $43 million is no longer good because of property tax losses due to the fire.

"That will definitely go down, " she said. "I don't exactly know how much that will be."

Demand, meanwhile, is high. "If you just do a simple calculation on paper to figure out how much money has been asked for and how much money is actually available, there's a very big deficit in that, " Tsuhako said.