OVER A HUNDRED RESIDENTS RETURN TO RENOVATED HOMES AT STATE’S LARGEST PUBLIC HOUSING PROJECT

Governor tours KPT renovations made possible by public-private partnership

News Release from www.Hawaii.gov/gov

HONOLULU – Governor Neil Abercrombie and State Department of Human Services (DHS) Director Patricia McManaman today visited residents returning to their newly-renovated apartments at the Towers at Kuhio Park, formerly known as Kuhio Park Terrace. The two-year renovation project began on May 19, 2011.

The $135 million project to renovate Hawai'i’s largest public housing project, originally built in 1963, is the first public-private partnership between the Hawai'i Public Housing Authority (HPHA) and a private developer to transform public housing. The Michaels Development Company and local development partner, The Vitus Group, expect to complete the renovation of the two high-rise towers by December 2013. Renovations to Tower A is half-way done and residents have or are in the process of moving into 144 out of its 270 units.

“With our private partners, we are moving quickly to renovate public housing units that have been vacant and rehabilitate occupied units in desperate need of repair,” said Governor Abercrombie. “We are investing in the people of Hawai'i by ensuring that families have safe and dignified housing as they move toward self-sufficiency.”

Each of the two high-rise towers at the Kuhio Park property, which together include 555 units, is expected to be renovated in 12 months. During renovations, residents moved into an “on-site hotel” at Tower B. Renovations include econfigured ground floors, the creation of new space for resident activities, social services, management offices and enlarged laundry facilities.

“Safe and dignified housing is essential for all of Hawai'i’s people, regardless of their economic status,” said DHS Director McManaman. “We are partnering with the private sector to expand the state’s stock of workforce housing and provide a comprehensive array of social services to rebuild the state’s safety net.”

In November 2010, HPHA agreed to sell to KPT Towers, 1 LLC—a partnership between Michaels Development, Vitus Development, and tax credit investors AEGON USA Realty Advisors—the two high-rise towers and low-rise apartments that make up the 748-unit Kuhio Park Terrace project in Kalihi. HPHA also leased the underlying land to KPT Towers, 1 LLC, for 65 years. In exchange for the sale of the structures, the private development team will renovate, manage, and maintain the units.

Monika Mordasini, Vice President of Development for The Michaels Development Company, said, “Once restored, The Towers at Kuhio Park will serve as an attractive, affordable housing resource for future generations and will be a source of pride for the community.”

Funding for The Towers at Kuhio Park includes a combination of:

• $66 million in tax-exempt bonds issued by the State of Hawai'i
• $47 million from AEGON USA Realty Advisors through the Low-Income Housing Tax Credit equity program, which generates private capital investment to support the development and the rehabilitation of affordable rental housing
• $50.4 million in loans from HPHA to fund major system renovations and for the acquisition of the improvements
• $32.35 million in construction and permanent financing from Citibank
• $181,134 in a tax credit fee rebate from HHFDC

Towers at Kuhio Park is a state housing project that rents to low-income tenants at or below 60% of the Area Median Income for 30 years—pursuant to a Regulatory Agreement entered into with HHFDC. Of the 555 units, 347 units are designated as public housing units, 150 units are Project Based Section 8, and the remaining 58 units have rents set at 40% of the area median income. The property is also subject to affordability restrictions for a 40-year period pursuant to a Regulatory Agreement with HPHA, as well as the Declaration of Restrictive Covenants and Section 8 Housing Assistance Payment Contract which provide Public Housing and Project Based Section 8 rental subsidy.

The State of Hawai'i has a comprehensive strategy for expanding available workforce housing which includes: repairing and building public housing units such as the Towers and Kuhio Park; below-market rentals such as Hale Wai Vista II that opened in Wai'anae last week; and affordable homeownership opportunities such as the Holomua development in Honolulu that will break ground tomorrow, October 6, 2011. The state and private sector are coordinating to nurture vibrant, affordable communities across the islands.

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