State offers
$14 mil to build
low-income units

Developers are being sought
to construct affordable rentals

By Jerry Tune
Star-Bulletin

The state has $14 million to help developers build affordable rentals.

The projects must meet a new requirement passed by the state Legislature. Ten percent of a project's units must be for tenants earning less than 30 percent of the county's median income.

On Oahu, for example, this would help a family of four earning $19,380.

Letters went out Nov. 27 to potential developers who must respond with proposals by Jan. 29 to the Housing and Community Development Corp. of Hawaii.

The state hopes to help eight to 10 projects with the $14 million from a rental housing trust fund, said Donald K.W. Lau, the agency's executive director.

Lau said the state also has $23 million in "additional resources for affordable rentals." This includes federal and state tax credits.

The trust fund allows the state to be flexible in financing terms for the rental development and make loans that private lenders would not make. Normally, the state provides about 20 percent of a project's permanent financing, with private lenders financing 80 percent.

The loans can be based on various terms, including paybacks of more than 30 years. In return, developers set rents low so at least 50 percent of their units are for tenants earning below 60 percent of the median income.

Applications from developers whose projects have lower rents get more favorable consideration from the state.

Another factor in deciding who gets state money is whether the developer agrees to take tenants from a waiting list for public housing, which now has about 5,000 to 6,000 people.

Scott Kami, the agency's finance manager, said the trust fund program has a long-term benefit.

"Rents are locked in, so it works in our favor when the (market) rents go back up," Kami said.

Since the trust fund program started in 1992, the state has committed $34.8 million to help 21 projects with 1,455 units.

Another $1.2 million has been granted to nonprofit organizations working to develop affordable rentals. The state works with nonprofits that have difficulty getting financial help from the private sector.