Home subsidy purchase program expands

GEORGE F. LEE / GLEE @STARADVERTISER.COM The developer of the two-tower condominium project The Park on Ke ‘eaumoku includes 25 units where Hawaii residents with certain jobs and incomes can tap a state program that will contribute 15 % to 20 % of the purchase price with a no-interest loan that requires sharing future equity with the state.

GEORGE F. LEE / GLEE @STARADVERTISER.COM The developer of the two-tower condominium project The Park on Ke ‘eaumoku includes 25 units where Hawaii residents with certain jobs and incomes can tap a state program that will contribute 15 % to 20 % of the purchase price with a no-interest loan that requires sharing future equity with the state.

Many city workers are being given an opportunity to buy new homes subsidized by the state under a 2023 pilot program that the Legislature might make permanent.

A state agency that runs the program announced Tuesday that city emergency medical technicians, water safety officers, construction inspectors and advocates for victims or witnesses can now qualify for interest-free loans that cover part of a home purchase in return for a future share of equity.

The program was designed to help keep middle-­income residents working in professions with critical staffing shortages from leaving Hawaii due to high homeownership costs.

Initially, the program was marketed to prospective first-time homebuyers with moderate-income jobs in health care, education, law enforcement, corrections and agricultural labor.

Now the Dwelling Unit Revolving Fund Equity Pilot Program run by the Hawaii Housing Finance and Development Corp. has been expanded to city workers in the additional job categories.

“Making homeownership more attainable for our dedicated City and County employees is absolutely a critical step in addressing our workforce challenges, ” Honolulu Mayor Rick Blangiardi said in a statement. “This expansion of the DEP program acknowledges the invaluable service of our emergency first responders, inspectors, and victim advocates—individuals who are essential to the well-being and safety of our community. We are deeply grateful for this collaboration with HHFDC, which will help keep our hardworking professionals here in Hawaii, where they belong.”

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Dean Minakami, HHFDC executive director, said in a statement that the price of homeownership is a major issue affecting whether young professionals stay home in Hawaii or start a new chapter of their lives elsewhere.

“We firmly believe that the DEP program will make the decision to remain in the islands, especially for paramedics, inspectors, and others in professions facing shortages in Hawaii, ” he said.

Last year, the median sale price for previously owned homes on Oahu was $1.1 million for single-family houses and $515, 000 for condominiums.

Besides profession, a primary requirement for a buyer to qualify for the subsidy program is having a household income that is 80 % to 120 % of the median by county. For Honolulu, this range at the low end equates to $78, 000 for a single person and $111, 000 for a family of four. At the high end for the same respective family sizes, it equates to $117, 000 to $166, 500.

Under the program, HHFDC pays a portion of the purchase price and holds an equity stake in the properties, which so far have been new condo units sold by developers.

The agency’s contribution represents a no-interest loan, reduced from an original 1 % rate, that the condo buyer must pay back along with a share of appreciation within 30 years or under other conditions that include selling or renting the home.

The Legislature appropriated $10 million for the program, authorizing HHFDC to provide initial subsidies until June 30, 2028. Repayment of subsidies would allow the agency to subsidize more home purchases in the future.

Bills currently pending at the Legislature would make the program permanent, and allow HHFDC to use one of its major funds for financing affordable-housing development to also be used for DEP subsidies.

HHFDC has so far committed to make $7.4 million in subsidies available to qualified buyers of condo units in three tower projects where developers have had a hard time selling moderate-priced units.

In many cases, the units being subsidized were produced by developers to satisfy city or state affordable-­housing requirements in return for project benefits such as fee waivers, height bonuses and extra building density.

For instance, HHFDC has committed $3.6 million under the program to help the developer of Kuilei Place in Moiliili sell 35 affordable condo units that were already reserved for middle-­income buyers at below-­market prices but had not sold since a lottery in July 2023.

The Kuilei Place condos were two-­bedroom units priced around $627, 000 with HHFDC offering to pay $103, 300 per unit, or 16 % of the total price.

At Sky Ala Moana, 26 studios that satisfied an affordable-housing requirement for the hotel and condo tower project but sat unsold for over two years also were approved last year for DEP program participation with subsidies totaling $1.7 million.

Another project, two towers called The Park on Ke ‘eaumoku, nearing completion, was recently accepted for the program where $2.1 million will subsidize 25 units.

According to HHFDC, developers of two planned condo tower projects in Kakaako on Kamehameha Schools land have expressed interest in using the program to sell units.

To date, 29 buyers have contracted to purchase units under the DEP program, all at Kuilei Place, according to HHFDC.

Minakami, in written testimony on Senate Bill 1229 and House Bill 1009 that propose making the DEP program permanent, said the program and other financing from HHFDC could benefit a number of for-sale housing projects that have been stalled due to high interest rates.

“Using the DEP program in conjunction with (other HHFDC financing ) has the potential to move these projects forward, ” he said.

HHFDC helps finance affordable housing projects produced by private developers, and the two bills propose allowing such project developers to repay HHFDC loans by giving the agency ownership stakes in housing units.

HB 1009 was advanced Tuesday by the House Finance Committee for consideration by the full House and potential delivery to the Senate for hearings.

SB 1229 awaits a full Senate vote and potential delivery to the House for hearings after being advanced by the Senate Ways and Means Committee on Feb. 19.

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