The problematic Waikiki building is an example of the challenges facing the city in its effort to provide homes for low-income families and homeless people.
A $7.5 million apartment building purchased by the City and County of Honolulu in 2018 to provide housing for low-income and homeless people is now sitting vacant due to problems with the building.
Even though the city spent more than $335,000 on repairs, tenants lived there for less than five years, and the future of the Waikiki building remains uncertain.
Honolulu purchased the eight-story property at 436 Ena Road in April 2018 using federal Community Development Block Grant funds and it was the first city-developed project in Waikiki to accept Housing First vouchers for its 33 studio apartments.
An assessment completed at the time by G70, a civil engineering company, deemed the building in “fair condition” and said it was ready to be occupied.
But assessors also noted “code compliance deficiencies and maintenance issues.”
For example, the roof was in poor condition and leaking, and assessors recommended it be completely removed and reconstructed. A new fire sprinkler system was needed; the elevator had to be redone; “extensive accessibility modifications” were required, including the installation of access ramps; and water infiltration points needed to be sealed, among other repairs, according to the assessment report.
‘Urgency For Affordable Housing’
The Waikiki building is an example of the challenges facing the city as it tries to use existing developments to help ease a housing crisis that has seen many residents priced out of the market and low-income families threatened with homelessness.
Michael Formby, the city’s managing director, said he couldn’t explain why tenants were moved into the building despite its issues because the purchase took place under the previous administration.
“There’s such a push for the city and the state to acquire affordable housing,” he said. “It’s considered one of our top priorities and a crisis.”
“I’m sure the prior administration did the analysis of this building and looked at it and made a determination that in the interest of getting 33 people housed, it was in the best interest of the community to invest in that building and provide shelter,” he added.
Neither former Honolulu Mayor Kirk Caldwell, who oversaw the purchase of the building, nor the building’s former property management company Housing Solutions Inc. responded to calls and emails requesting comment.
Guy Fong, the registered agent of Hale Waikiki LLC, the building’s previous owner, also could not be reached for comment.
Tenants Had To Move Out Less Than 5 Years After Moving In
Since its purchase, the city has spent $335,886 working on the building, including $100,000 for “miscellaneous repairs” in 2018, $200,476 on fire alarm upgrades in 2020, $13,947 on emergency roof repairs in 2021 and $21,463 fixing a fire suppression system in 2022, according to the city’s Department of Community Services.
At first, tenants were moved around within the building while repairs were conducted, Formby said. But by early this year, the city decided the repairs needed were too extensive, and the 12 tenants who remained had to move out.
Housing Solutions Inc. relocated residents to other properties it manages around the city, according to Aedward Los Banos, director of the city’s Department of Community Services.
Politicians say they don’t want to see the city and county’s precious stock of affordable housing go to waste, especially given that there are 4,028 homeless people living on Oahu, according to the latest point-in-time count. The island has by far the highest homeless population in the state, and nearly half is unsheltered.
“We already have a houselessness problem in Hawaii, and people are already running themselves into debt because they can’t make rent payments,” said Rep. Adrian Tam, who represents Waikiki. “It doesn’t help to leave buildings empty.”
Honolulu City Council Chairman Tommy Waters, whose district includes the Ena Road property, declined to be interviewed for this story.
“It disappoints them when they do see underutilized properties, not just in Waikiki but across the state.”
Rep. Adrian Tam
Millions in general obligation bonds set aside for projects to serve the city’s homeless population have not been spent in recent years because capital improvement projects were never identified.
Honolulu has commissioned a study with a planning and design contractor to determine what it would cost to do a complete rehabilitation of the Ena Road building, Los Banos wrote in an email.
Formby said once the results are received, officials will do a cost-benefit analysis and decide what to do with the building.
“At some point you say it may not be in the city’s or the taxpayers’ best interest to put money into that building,” he said. “That’s the analysis we’re going through right now.”
What Next?
If the rehab is deemed too expensive, and the city decides to sell the property, the Community Block Grant funding it used for the purchase will need to be repaid to the federal government, according to the Department of Housing and Urban Development. Formby said he’s talking to HUD about repayment requirements and whether interest would be charged.
Also, if the building is sold for less than its original purchase price, the city would need to make up the difference, Formby said. The most recent property assessment put the property’s value at $5.1 million, over $2 million less than what the city bought it for.
But Formby said many discussions still need to be had before the building’s fate is decided. One possibility is to gut it and put in more units to increase its density, but he said he still doesn’t know how much that would cost.
Tam said whatever the city decides to do with the property, he hopes it will remain affordable housing.
“In my district, I think (my constituents) are very concerned, and they understand the urgency for affordable housing,” he said, “and it disappoints them when they do see underutilized properties, not just in Waikiki but across the state.”
The city is pursuing other affordable housing developments, such as a dorm building known as Waikiki Vista on Kapiolani Boulevard purchased in November. The $37.75-million property will eventually provide 100 affordable units.
As the city pursues new projects, the longevity of buildings and the cost of their maintenance need to always be considered, Formby said.
“Lessons learned,” he said. “We’re very careful when we acquire buildings to do that forward-looking assessment about property condition and what are the potential costs in the long run.”
“Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.
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