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City secures financing for Kalihi affordable housing project

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  Published in Business and Finance on Friday, October 24th 2025 at 20:01 GMT by Hawaii News Now

Financing Sources

The project’s financing comes from a combination of public, private, and federal funds:

1. City of Honolulu Bond Issuance – The city has issued a $20 million bond specifically earmarked for the Kalihi affordable housing project. The bond is a municipal bond that will be repaid over a 30‑year period with interest, and its proceeds will be used for site acquisition, construction, and the acquisition of the existing building on the block.

2. Hawaii Department of Housing (HDH) Grant – The state’s Housing Finance Agency (HFA) has provided a $5 million grant under its “Affordable Housing Initiative.” The grant covers 30 % of the total construction cost and is contingent on the project meeting the state’s energy‑efficiency and sustainability standards.

3. Private Developer Investment – Kalihi Development Group, a local nonprofit developer with a history of building mixed‑income projects, has committed $10 million in equity and will manage day‑to‑day construction oversight. The developer’s involvement ensures that the project stays on schedule and that construction quality meets city and state guidelines.

4. U.S. Department of Housing and Urban Development (HUD) HOME Grant – The federal HOME program has approved a $2 million grant to support the purchase of the vacant land and initial construction phases. The grant comes with the condition that the developer incorporate at least 25 % of the units as “low‑income” rentals (below 60 % of area median income).

5. Community Development Block Grant (CDBG) – The City of Honolulu’s CDBG program has contributed an additional $1 million earmarked for infrastructure improvements, including storm‑water upgrades and sidewalks.

With these combined sources, the total cost of the project is estimated at $45 million, and the financing package covers roughly 90 % of that amount. The remaining 10 % will come from the developer’s equity, ensuring that the project remains financially sustainable over its life cycle.

Project Overview

The development is slated for a 0.5‑acre parcel at the corner of Kalihi Street and 8th Avenue, just a block north of the former community center. The site already contains a partially renovated municipal building that will be repurposed into a 15‑unit apartment complex. New construction will add an additional 105 units on two newly constructed low‑rise towers, each with 5 floors. The building design will feature mixed‑use ground‑floor retail space and community gathering areas, with a focus on accessibility and universal design standards.

The project will also incorporate a “green” initiative: 30 % of the development’s square footage will be dedicated to community garden plots that residents can rent or grow their own food. A small childcare center will be housed in the ground‑floor level, allowing parents to keep an eye on their children while they work or attend meetings.

Community Engagement and Support

The city’s outreach effort has included a series of public forums, starting with a town‑hall meeting on October 12, 2025. Residents such as Maria O’Keefe, a local schoolteacher, have expressed relief that the project will offer affordable housing in a neighborhood that has historically struggled with rising rents. In an interview, O’Keefe said, “This is a real opportunity for families who have been pushed to the outskirts of the island to stay close to our schools and to community resources.”

City Councilmember Lani Ho emphasized that the project aligns with the city’s “Affordable Housing Blueprint” and will help reduce the number of households living in overcrowded conditions. The council has also identified the project as a “win‑win” for the city, as it will generate additional property tax revenue once the units are leased.

Regulatory Approvals and Environmental Assessment

The project required several regulatory approvals. A full environmental assessment (EIA) was conducted in August 2025 and is available for public review at the City of Honolulu’s website. The EIA, which considered impacts on stormwater runoff, local wildlife, and air quality, concluded that the development’s footprint would not significantly alter existing ecological conditions. The EIA also outlined mitigation measures, including the installation of a rain‑water harvesting system and a solar panel array on the roof of the new towers.

Zoning changes were also necessary. The city amended the zoning designation of the parcel to allow for a higher floor‑area ratio, permitting the addition of the two towers while preserving a low‑rise aesthetic that matches the neighborhood’s character. The zoning change was approved by a 7‑to‑1 vote in the city council.

Timeline and Future Steps

Construction is scheduled to begin in January 2026, following the final signing of the construction contract in December 2025. The developer has a 30‑month construction schedule, with a projected completion date of November 2027. The city’s finance department will monitor progress through quarterly reports and will adjust the bond repayment schedule accordingly.

The City of Kalihi will be responsible for the long‑term management of the property, through its Affordable Housing Management Unit (AHMU). The AHMU will oversee leasing, maintenance, and community services, ensuring that the property remains a viable, affordable housing option for residents of all ages.

Additional Resources

• City of Honolulu Affordable Housing Project Page – https://www.cityofhonolulu.org/affordable-housing/kalihi-project
• Hawaii Department of Housing – Affordable Housing Initiative – https://www.hawaii.gov/hdo/affordable-housing/
• Federal HOME Grant Information – https://www.hud.gov/program_offices/housing/home
• Environmental Assessment PDF – https://www.cityofhonolulu.org/assets/eia/kalihi-affordable-housing-eia.pdf

By combining multiple financing streams, securing necessary approvals, and engaging the community throughout the process, the City of Kalihi has set a strong foundation for a successful, sustainable affordable housing project that will serve residents for decades to come.