HANAMAULU — A groundbreaking is set for Thursday for a project of 40 badly needed, affordable rental apartments at Kalepa Village. Some housing experts predict it will take six months to a year to fully lease the second phase of
HANAMAULU — A groundbreaking is set for Thursday for a project of 40 badly needed, affordable rental apartments at Kalepa Village.
Some housing experts predict it will take six months to a year to fully lease the second phase of the project located on Kuhio Highway. Conventional wisdom says the units will be fully rented three months after they open in March of next year.
A housing study conducted by the Kauai Housing Development Corporation revealed an acute need for rental apartments for low-income Kauaians, said John H. Frazier, KHDC executive director.
The apartments are geared to folks earning 50 percent of $56,100. The higher figure is the Kauai median income according to the U.S. Department of Housing and Urban Development.
That means people making up to $22,600 in one-person households, and up to $32,300 in four-person households, should qualify for the units. They will rent for $495 for one-bedroom units, $595 for two-bedroom units, and $695 for three-bedroom units, plus utilities costs, said Frazier.
That is cheaper than the adjacent, existing, 60-unit Kalepa complex, where a rental waiting list exists.
The lower cost is due to KHDC and the other nonprofit corporation established to develop the second phase of Kalepa being awarded federal tax credits equivalent to 60 percent of the project’s $6,763,000 construction budget.
Large corporations buy up the tax credits, which lessen their federal-tax burdens, Frazier explained.
The existing Kalepa units allow those making up to 80 percent of the HUD median income to qualify, so most of those families there will not qualify for the new units, he said.
Half of the new units will be three-bedroom, 16 will be two-bedroom, and four will be one-bedroom. There will be three units designed specifically for handicapped residents, one in each bedroom size.
There will be four buildings in the second phase, each two stories tall, and they will look essentially identical to the existing Kalepa units.
All units will have solar hot-water heaters, with electric backups, plus washers, gas dryers and ranges, refrigerators and other amenities.
Primatech Construction, Inc. is the general contractor for the project.
The county subdivided the 12-acre Kalepa site, and leased 2.7 acres to KHDC, for $1 a year for 62 years, Frazier said. This is where phase two will be built, adjacent to the occupied first phase.
The county also kicked in $1,675,000 in HUD funds for the project, in the form of a deferred loan. A construction loan from First Hawaiian Bank, of $4,933,000 at an interest rate of 6.25 percent, provides the remainder of the construction budget.
“Without the county, this wouldn’t work,” Frazier said.
The nonprofit KHDC has created a nonprofit partnership, Kalepa Village Partners, to develop the project.
Leasing won’t begin until later this year, and each potential tenant goes through an income-certification process. There are stiff penalties imposed on the developer by the federal Internal Revenue Service for violations of low-income guidelines, he said.
If there is enough interest in the apartments, a lottery may be held, Frazier noted.
The low-income, federal, housing-tax-credit program, administered in the state by the Housing & Community Development Corporation of Hawaii, is currently the only way to finance large-scale, affordable, rental-housing projects in the country, he said.
“Congress will probably expand the program to include single-family developments in the upcoming (federal) fiscal 2004 budget,” he said.
The state gets an annual allocation of these credits, and awards them to nonprofit housing developers each year on a competitive basis. This is the first tax-credit project on Kauai in more than 10 years, Frazier said. Oahu typically gets awarded most of the credits each year.
Current plans call for 180 affordable rental units in all at Kalepa. The site has water lines and other infrastructure in place.
KHDC is a nonprofit corporation in existence to develop low-income housing on the island. It was founded just before Hurricane Iniki in 1992, and has developed some affordable, single-family homes, in Waimea Valley.
KHDC also owns and operates affordable elderly housing projects, notably the Harry & Jeanette Weinberg Senior Apartments in the old Lihue Theater building, and Hale Kupuna in Kalaheo.
County Councilmember JoAnn Yukimura was KHDC’s first board president, and real estate agent Paul Kyno was the first executive director. Current volunteer board members include appraiser Dennis T. Nakahara, board president; real estate agent Yoshiko “Dimples” Kano, board secretary; Michael Murakoshi of First Hawaiian Bank, board treasurer; and members Aletha Kaohi, Roy Katsuda and Marion Penhallow.
Frazier, of Kapaa, had experience with for-profit developers, including Charles Pankow Builders and Blackfield Hawaii, before joining KHDC in mid-1993.
Interestingly, Frazier almost left the island shortly after arriving, because he had trouble finding a place to live.
Business Editor Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
