- Special Projects
Ratna Heilscher and her husband make a combined $2,700 per month working as educational assistants with special needs kids at King Kamehameha III Elementary School in Lahaina on Maui.
When she gets home from work, Heilscher has time to cook and help her son Edwin with his homework. He’s doing well in school, Heilscher said, and she wants to start saving up for his college tuition.
That might not be possible if the affordable housing complex Heilscher lives in starts charging the market rate for its units, which it’s set to do in two years.
Heilscher is one of about 300 tenants at the Front Street Apartments, a 142-unit complex in West Maui, who potentially face steep rent increases in August 2019 unless the county and state step in.
“We’re feeling terrible,” she said. “I’m so worried. Can you imagine? In two years I cannot live here, I do not know where I can go.”
Affordable housing is hard to find on Maui.
The complex was built in 2001 using $15.6 million in state and federal low-income housing tax credits.
Taxpayers dished out about $109,859 per unit to build the complex, and it was expected to remain affordable for 50 years. But in 2015, the developer, Front Street Affordable Housing Partners, opted for a qualified contract, an option that allows it to raise rents after just 18 years.
Front Street Affordable Housing Partners declined to comment for this article.
Half of the units in the complex are rented to people making 50 percent or less of area median income. That’s $30,150 per year for an individual and $43,050 for a family of four in Maui County, according to the U.S. Department of Housing and Urban Development.
The rest of the units are reserved for individuals making 60 percent or less of area median income.
Anna Barbeau said her neighbors in the apartments work as maids, cooks and waitresses.
“We’re the backbone of the economy,” she said. “The vast majority are working families with kids in schools.”
Residents include single mothers, people with disabilities and veterans, she said.
“These guys are barely surviving as it is,” said Victor Geminiani, a lawyer representing the tenants. He is co-director of the Hawaii Appleseed Center for Law & Economic Justice.
State Sen. Rosalyn Baker, who represents Lahaina, introduced Senate Bill 1266 last session in an effort to keep the apartments affordable by either entering negotiations with the developer or using eminent domain to acquire the property.
The final version of her bill called for the units to remain affordable until 2027, rather than the full 50 years.
It was deferred, but, “We’re confident that we’re going to get a resolution,” Baker said, “before any of the tenants are inconvenienced.”
Not all lawmakers agree.
Rep. Tom Brower, the chair of the House Housing Committee, referred to the bill as a “Hail Mary pass” and a plan riddled with legal roadblocks.
Unlike most affordable housing built with low income housing tax credits in Hawaii, the Front Street Apartments sit on privately owned land.
The landowner, 3900 Corporation, is an affiliate of The Harry & Jeanette Weinberg Foundation, a private charitable foundation with large land holdings in Hawaii.
When the Weinberg Foundation increased the cost of the lease agreement a few years ago, Front Street Affordable Housing Partners could no longer afford to operate the housing complex, according to Hawaii Housing Finance and Development Corporation, the state agency in charge of awarding low income housing tax credits.
“Weinberg is the one who’s allowing this to happen,” Baker said. “It’s their land. They can put restrictions on the lease … Considering that it’s a charitable trust that owns the land, I think it’s tacky of them, and it’s not within their mission.”
The Weinberg Foundation did not respond to requests for comment.
In 2009, the HHFDC closed the loophole that allows developers to opt for a qualified contract. But the agency had no way of reversing the process for the Front Street Apartments.
“This is the last thing that we wanted to happen,” said Kent Miyasaki, a spokesman for HHFDC. “We pretty much did whatever we could on our part.”
The loophole required the developer to put the complex up for sale for a year to potential buyers who would have to keep the units affordable for the remainder of the 50-year period.
The state was barred by its own statute from purchasing the property because the sale price of $15.4 million was higher than its appraised value, $8.7 million, Miyasaki said. An IRS formula determined the sale price.
At a Maui County Council Housing Committee meeting in December, Councilman Don Guzman said the county could have afforded to pay the additional $6.7 million.
“I know it’s spilt milk already,” Guzman said. “If the county put in $7 million, we would’ve been able to afford the $15.4 million.”
The Housing Committee was not aware of the issue when creating the fiscal year 2017 budget, its chair, Stacy Crivello, said at the meeting.
“If there were a magic bullet we would have done that already. It’s a little complicated,” Baker said. “I’m optimistic that there are solutions.”
With a 1-year old great-granddaughter to raise, Front Street Apartments tenant Sharon Serafica isn’t going to wait for lawmakers to possibly broker a deal.
After 13 years living in the complex, she and her husband got on the waiting list for an apartment in Wailuku.
“We’re not going to wait until the two years are up to see what’s going to happen.” she said. “I’m going to move before the time is up. I have to because I have a baby.”
While Serafica is ready to move, other tenants are committed to staying.
“We’re not letting it go away,” said Barbara Henny. “We’re going to keep fighting”
Tenants created a Facebook page to organize their efforts. Communication isn’t easy because many tenants don’t have internet access, Henny said, and they’re not allowed to post notices in community areas of the complex.
Some tenants said they were never formally notified of the plan to convert their units to market rate, which led to rumors and confusion.
“This has been so traumatic on everybody that lives here,” Anna Barbeau said.
Rep. Brower said it’s up to county officials to take the lead on saving the complex, whether that means putting money into negotiations or finding a way to relocate residents.
Legislators could revive SB 1266 next year, but Brower said the Maui mayor and council members must support the measure.
“If the county comes forward,” Brower said, “it’s less of an uphill battle at the Legislature.”
The bill states that no state funds will be appropriated unless the county matches that money with funds of its own.
Councilwoman Crivello, council Budget Committee chair Riki Hokama and Maui Mayor Alan Arakawa were not available for comment this week.
Geminiani, the tenants’ attorney, has grown uneasy about Maui County’s commitment to finding a solution.
“The mayor has indicated no clear path forward,” Geminiani said.