Resurrecting the Private Activity Bond Program after a 23-year hiatus.
As of November 2023, $258,000,00 has been awarded to preserve over 950 affordable units throughout O’ahu.
PABs are an essential component of the nation’s primary program for financing the development of affordable rental housing – the LIHTC program – which is administered by HHFDC. The bonds are used in conjunction with 4% LIHTCs which reduces the senior debt required to finance affordable housing projects. This decreases the overall borrowing costs and allows developers to charge lower rents. Federal government rules require the bonds to cover at least half the project costs.
The federal government limits the amount of tax-exempt PABs that each state can issue (on a per capita basis). Because Hawaiʻi is a small state, it receives a limited amount of PAB volume capacity (bond cap). In Hawaiʻi, state law allocates a portion of the state’s bond cap to each county. In 2020, the prior administration opted to retain the city’s PAB allocation but was not able to stand up a program to deploy the bonds to finance housing projects. The current Administration hired individuals with knowledge and expertise to stand up a program (the Multi-Family Rental Housing Program) within DPP and launched its first public offering during the fourth quarter of 2022. Only the City and County of Honolulu and Kauaʻi County have elected to retain their bond cap in recent years.
In 2022, a total of $135,000,000 in bonds were awarded to preserve and rehabilitate approximately 500 affordable housing units. The projects awarded were Maunakea Tower in Chinatown (378 units) and Jack Hall in Waipahū (144 units). With the reestablishment of the housing bond program, the city has yet another tool to support the development, rehabilitation, and preservation of affordable housing.
Maunakea Tower
Located at 1245 Maunakea Street, the city awarded $105,000,000 in PABs for the rehabilitation and preservation of 378 housing units in Chinatown for households at or below 60% AMI. This is a single 32-story high-rise tower with 378 one- and two-bedroom units.
Jack Hall
The city awarded $30,000,000 in PABs for the rehabilitation and preservation of 144 housing units in Waipahu for households at or below 60% AMI. The project includes 23 two-story residential buildings with a total of 144 one- and two-bedroom units, plus community space.
In October 2023, a tri-party agreement between the city, HHFDC, and the state’s Department of Budget & Finance was approved for the city’s 2022 and 2023 PAB allocation. State Act 262 (2023) or HB923, CD1 authorizes HHFDC to enter into a cooperative agreement with the city to jointly administer PABs. With this agreement, the city will coordinate its PAB bond financing to make it more efficient for developers and prioritize new construction on Oʻahu. In calendar year 2023: the city awarded $123,000,000 to develop 431 affordable units at Kūhiō Park Terrace Redevelopment (302 units) and Kaleimaʻo Village (129 units).
Kūhiō Park Low Rise & Homes Redevelopment
The city awarded $93,000,000 to this project. Located on Hawaiʻi Public Housing Authority (HPHA) land in Kalihi. KPT will consist of 304 units – 3 buildings of 6 to 8 stories in height.. Construction is projected to commence by the end of 2024 and is estimated to be complete in 2027. The project entails the complete demolition and redevelopment of the existing 174 units.
Kaleimaʻo Village
The City awarded $30,000,000 to this project on city land in West Loch, ʻEwa Beach. Kaleimaʻo Village is estimated to be complete by the end of 2025 and will serve households at or below 60% AMI. This is a new construction on city land through a long-term ground lease to a private developer. The project will consist of 7 separate 3-story buildings with a total of 127 units.