Housing Department submits report on unspent Affordable Housing Fund appropriations | Maui Now (2025)

The Maui County Council’s Budget, Finance and Economic Development Committee has gotten a written response from the Department of Housing about nearly $12 million in unspent and unencumbered funds in the County’s Affordable Housing Fund.

The questions came up during a March 18 Budget Committee meeting, chaired by Council Member Yuki Lei Sugimura, who asked at that time for answers about each project, in writing, from the department. Now, in a letter dated April 9, Housing Department Director Richard Mitchell has provided those answers.

First was the HaggaiInstitute, of which$3,935,000 was unspent, although $1,565,000 was encumbered, according to a letter from Budget Director Lesley Milner. The former institute located on Lipoa Street, across from Kīhei Elementary School, was purchased by the state in late March 2024. The property was originally developed as the 178-unit Maui Sun hotel.

In early August 2024, the facility began being used as housing for wildfire survivors when eight families moved into the former hotel, renamed as Hale ʻO Lāʻie.

Mitchell said the Council appropriated $5.5 million for building renovations, and the formerDepartment ofHousingand HumanConcernsexecuteda$1.565milliongrantagreement at the requestthe Hawaiʻi Housing FinanceandDevelopmentCorp., which bought the property on behalf of the state.

TheCounty executed a memorandum of agreementwith the state housing corporation last yeartoconverttheuseoftheproperty from hotel toaffordable housing, teacher housing and apublicpre-kindergarten, Mitchell said.

“Thescope ofthegrantagreement allows for lifesaving, and necessarygroundand site improvements to the property,” he said.“Theworkcompletedas ofApril 7,2025, includes pool deckandbridgereplacement, elevator modernization, and askylightreplacement.”

He reported “one draw” from the grant in the amount of $486,046.98.“TheCountywillseekfuture fundingfor the project to complywiththe terms of the memorandum ofagreement between HHFDC and the County,” he said.

For the Kuʻikahi Village project, reported earlier as “not going forward,” Mitchell said that Council appropriated $6 million in fiscal 2024 for that 202-unit workforce home project. Units planned for the project included for-sale, multi-family, duplex, townhome, live-work, studio and single-family for below-moderate to above-moderate income households.

In 2022, the Council approved the project, but in January 2023, the project developers “indicated (an) approximately $20 million in gap funding was needed from the County to develop Kuikahi.”

The balance of the County’s Affordable Housing Fund was insufficient to cover the request, so the project went unfunded in the administration’s fiscal 2024 budget, Mitchell said.

However, inApril 2023,theCouncilappropriated$6million for Kuikahiasalineiteminthefiscal2024 budget, he said.

In November 2023, the Council and administration discussed “substantial revisions” to the project, including shifting it away from a residential workforce housing project to a 100% multifamily rental project.

The revised project plans would require “sufficient development funding” and “new entitlements from the Council,” Mitchell said.

InDecember2O23,Kuikahidevelopersappliedforadditional projectfundingforthereviseddevelopment through the County’s Affordable Housing Fund, and “theDHHCconvenedanindependentcommitteeto rank andprioritizetheprojectapplicationsreceivedduring the request for applicationsprocess.”

“The committeeprioritizedtheprojectsbasedonprojectreadiness,abilitytoleverageother sources offunding,expertise, andneed,” he said.

The Kuikahi project did not rank high enough among other projects to be included in the administration’s budget amendments for submission to the County Council, Mitchell said.

“Itwas unclear whethertheoriginalKuikahi projectcouldsecureadditionalsourcesof fundinginFY2024,” Mitchell said. “Thebudgetamendmentwas draftedtoalsoremovethe$6millionappropriationintheFY2024adoptedbudgettoprovide adequatefundingtothe top twoprojects.Theadministrationproposedadding the original fundingforKuikahiinhisFY 2025 budget proposal.”

In March last year, the administration proposed $6 million for the revised Kuikahi project, but the Council did not approve it, he said.

Mitchell said that during the Council’s regular meeting earlier this month (April 4), “theCouncil consideredatimeextensionfor two more years go to completetheoriginal Kuikahi andentertained discussionswiththedeveloper torevisitthe revisedKuikahiproject.”

Ultimately, after extensive discussion, the Council deferred action on the time extension request until its April 17 meeting. A video of that meeting is available here.

According a proposed resolution for the time extension: Since the beginning of the project’s initial conceptual design in November of 2019 and today, “there have been supply chaindisruptions, materialcost increases, labor shortages, wage increases, runawayinflation andcontractor price jumps. These outside events increased the project’s costs by over 20% from its original projections.”

“The departmentwelcomesadditional fundingproposalsfromtheKuikahidevelopmentteaminfuture Affordable Housing Fund applicationfundingrounds,” Mitchell said.

Regarding a $1 million feasibility study for affordable housing on a County-owned parcel in Waikapū, the County was not able to secure a consultant for that project. However, “the department is open to completing feasibility studies on the parcel.”

As for $637,593 in unspent funding for the Hawai’i Community Development BoardforHale oPi’ikeaII, Mitchell said the Council appropriated$2,150,000infiscal 2024 for development of that rental project in Kīhei. The County executed a grant agreement with the board in the amount of $1,512,407.

The former Department of Housing and Human Concerns was able to save $637,593 in County funds by using allocations from the National Housing Trust Fund. That fund supports increasing the housing stock for extremely low-income families earning up to 30% of the area median income.

And, for a master plan andfeasibilitystudyfor5th Street in Uinaʻi project, the Council appropriated $250,000 for a master plan for the affordable housing project on County-owned land in Lānaʻi City.

“TheDHHCdidnotexecute acontract forthefundsbecause apartnershipwas formedwiththe Ikaika ‘Ohana,a nonprofitdeveloper,todevelop housingunderthe updated masterplanfrom2O18,” Mitchell said.

InFebruary 2024,thedepartmentsubmitted arequesttoCongress tofundthe Lānaʻi project’s offsite water and wastewater infrastructure, he said.

In November 2024, the Council adopted a resolution approving of the County’s intent to enter into a memorandum of agreement with Ikaika ‘Ohana to the develop the Lānaʻi project and a Nāpili parcel, Mitchell said.