News, Analysis and Commentary On Affordable Housing, Community Development and Renewable Energy Tax Credits
January 2017 • Volume VIII • Issue I
Published by Novogradac & Company LLP
STATE TAX CREDITS
Hawaii Senior Housing Gets
First Makeover in 35 Years
TERESA GARCIA, ASSIGNMENT EDITOR, NOVOGRADAC & COMPANY LLP
T
he high cost of developing affordable housing
Big Island Housing Foundation, a local nonprofit
in Hawaii means that preserving every
housing provider, built Kamana Elderly Housing
existing unit is crucial. A mix of federal
in 1982 as nine one-story buildings with 62 rental
and state low-income housing tax credits (LIHTCs)
apartments and an on-site resident manager
recently helped an independent senior housing
apartment. All apartments have one bedroom and
property on Hawaii’s Big Island do just that. Kamana
one bathroom, totaling about 500 square feet of living
Elderly Housing in Hilo, Hawaii, reopened its doors
space. As one of the few affordable senior housing
in November 2016 to new and returning residents
properties in the city, Kamana Elderly Housing has
after a complete renovation.
historically experienced high occupancy rates and
continued on page 2
Image: Courtesy of Randall Duryea Photography
Kamana Elderly Housing in Hilo, Hawaii, was renovated leveraging federal and state low-income housing tax credits (LIHTCs).
Cost of Living
Hilo, Hawaii vs. United States*
maintains a waiting list of about one-to-two years. The
development is also in an attractive location next door
to the Kamana Senior Center, which offers various
209
200
programs and activities.
To extend the useful life of Kamana Elderly Housing,
Big Island Housing Foundation partnered with Urban
Housing
Communities
163
158
LLC,
a
146
Index Points
STATE TAX CREDITS
continued from page 1
131
116
121
California-based
development company that previously helped Big Island
The recent renovation of Kamana Elderly Housing is the
l th
Ho
us
in
g
Ut
ilit
Tr
ies
an
sp
or
t
M
isc atio
n
ell
an
eo
us
Ov
er
al
l
ry
100
U.S. Average
Cost of Living
He
a
housing properties in Hilo.
Gr
oc
e
Housing Foundation rehabilitate two of its multifamily
property’s first major update in its 35-year history, so
Sources: Sperling’s Best Places; Novogradac & Company LLP
all of the apartments’ outdated fixtures were replaced.
* Based on the cost of living index where the U.S. average is 100 points.
Amounts below 100 indicate a cheaper cost of living than the
national average; amounts above 100 indicate a more expensive cost
of living.
“The property needed a facelift–a new hat, new dress
and new shoes,” said Delene Osorio, executive director
of Big Island Housing Foundation. “It’s a 100 percent
Osorio said residents were overwhelmed by Kamana’s
renovation: new kitchen cabinets, appliances, flooring,
transformation. “There were a lot of tears of joy,” she
wall coverings, added ceiling fans to the bedroom,
said. “Some of them had been waiting over a year for
windows and water heaters.” Developers reconfigured
their own housing and to be independent. Even the
the layout of each apartment and added a dining
contractors told us, ‘Now we know why you do this.’”
counter for more open and functional living space.
All rented apartments will continue to operate with a
Other upgrades include energy efficiency renovations
Section 8 subsidy.
and accessibility improvements for disabled residents.
Financing
www.novoco.com  January 2017
The property also features an on-site laundry facility,
Rock said LIHTC funding was critical to the
gazebos and picnic tables. David Tamura, who designed
development, especially because of the added cost of
Kamana’s landscaping 35 years ago, returned to update
shipping building material from the mainland. “Having
the property’s landscaping and to install new, front-
resources available to improve the property makes sure
porch private gardens for the residents.
it extends the life of the asset for 60-plus years,” said
Rock. “Without the program, the funds available would
The development team wanted to complete the overhaul
be much more restricted and the scope of the rehab
as quickly as possible, considering that residents needed
wouldn’t be as great.”
to temporarily relocate during construction. “We did
plan on an aggressive rehab schedule,” said James
The Hawaii Housing Finance and Development
Rock, senior development manager for Urban Housing
Corporation (HHFDC) awarded Kamana Elderly
Communities. Financing closed in August 2016 and
Housing with a reservation of $5.6 million in federal
crews began work immediately, finishing the renovation
LIHTCs and $2.8 million in state LIHTCs. HHFDC
within three months.
also approved nearly $8.2 million of tax-exempt
continued on page 3
2
issuance from the state’s Hula Mae Multi-Family
Jeff Weiss, Alden Capital Partners’ president, agreed
(HMMF) bond program.
that in Hawaii there is both a great interest and need
for additional investments in affordable housing
“The state is able to continue providing high-level quality
preservation. “This is our ninth property that we’ve been
affordable housing for residents by allowing these
involved with in Hawaii,” said Weiss. “For properties in
rehabs to take place and keeping units in service and
Hawaii–because of the elements–you generally need to
livable for tenants rather than letting them fall out of
spend a little bit more on maintenance to extend their
service or letting them become condemned,” said Rock.
useful life.”
Alden Capital Partners acted as the tax credit
Investment in Kamana’s renovation not only extended
syndicator for Kamana Elderly Housing and for the
its useful life, but also allowed Big Island Housing
two previous LIHTC redevelopments by Big Island
Foundation
Housing Foundation and Urban Housing Communities.
possibilities. “Going through this sale and renovation
For Kamana Elderly Housing, Alden Capital Partners
allowed us to look at funds in reserve toward building
provided $5.4 million in federal LIHTC equity and
another senior [development],” said Osorio. Big Island
$650,000 in state LIHTC equity through its multi-
Housing Foundation is planning to build an affordable
investor fund, Alden Capital Partners Tax Credit Fund
housing property in Hilo next year.;
to
explore
new
affordable
STATE TAX CREDITS
continued from page 2
housing
10. Alden Capital Partners also bought $5.3 million of
tax-exempt bonds to fund construction.
Kamana Elderly Housing
FINANCING
Dana Mayo, Alden Capital Partners’ executive vice
president, said that Hawaii is an attractive place to
demand for affordable housing in Hawaii is huge, partly
because it’s an expensive place to develop,” said Mayo.
“From an investor standpoint, even though [Kamana
Elderly Housing] is far away geographically, investors
like the demand and metrics of the investment.”
This article first appeared in the January 2017 issue of the Novogradac Journal of Tax Credits.
© Novogradac & Company LLP 2017 - All Rights Reserved
Notice pursuant to IRS regulations: Any U.S. federal tax advice contained in this article is not intended to be used, and cannot
be used, by any taxpayer for the purpose of avoiding penalties under the Internal Revenue Code; nor is any such advice intended
tax issues addressed in it. Additional issues October exist outside the limited scope of any advice provided – any such advice does
not consider or provide a conclusion with respect to any additional issues. Taxpayers contemplating undertaking a transaction
should seek advice based on their particular circumstances.
January 2017
to be used to support the promotion or marketing of a transaction. Any advice expressed in this article is limited to the federal
Novogradac Journal of Tax Credits 
invest because of the strong housing market. “The
ŠŠ $8.2 million tax-exempt bond issuance from the Hula
Mae Multi-Family bond program
ŠŠ $5.4 million in federal low-income housing tax credit
(LIHTC) equity from Alden Capital Partners Tax Credit
Fund 10
ŠŠ $5.3 million construction loan from Alden Capital
ŠŠ $650,000 in state LIHTC equity from Alden Capital
Partners Tax Credit Fund 10
This editorial material is for informational purposes only and should not be construed otherwise. Advice and interpretation regarding
property compliance or any other material covered in this article can only be obtained from your tax advisor. For further information
visit www.novoco.com.
3
CREDITS
EDITORIAL BOARD
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PUBLISHER
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COPY
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PROPERTY COMPLIANCE
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Jesse Barredo
www.novoco.com  January 2017
4
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EDITORIAL MATERIAL IN THIS PUBLICATION IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT
BE CONSTRUED OTHERWISE.
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MATERIAL COVERED IN THIS PUBLICATION CAN ONLY BE OBTAINED FROM YOUR TAX ADVISOR.
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2017 All rights reserved.
ISSN 2152-646X
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