Hawai'i Community Development Authority

Pacific Business News

Amendment to bill could resume HCDA’s 99-year leasehold project in Kaka’ako

By Nichole Villegas / Feb 11, 2026

At the beginning of last year, the Hawaii Community Development Authority acquired two plots of land in Kakaako at the corner of Ward Avenue and Kapiolani Boulevard for the development of a mixed use and mixed-income residential building with units for sale under a 99-year ground lease. But the project was put on pause a few months ago due to economic concerns within the housing market including the amount of buyer interest.

However, Senate Bill 2061, introduced this legislative session by Sen. Stanley Chang, would remove or modify the restrictions attached to the leasehold in hopes of making the units more feasible and marketable to buyers, HCDA Executive Director Craig Nakamoto told PBN.

The two properties owned by HCDA are currently home to a Jack in the Box, located at 875 Kapiolani Blvd., and the Galiher Office Building at 610 Ward Ave., which has a mural of former President Barack Obama painted on side of the building.

The land, totaling 26,626 square feet, was acquired in January 2025 as a pilot for the HCDA’s first 99-year leasehold program under which affordable and market condominium units on state-owned and county-owned land in urban redevelopment sites would be sold to qualified residents under the leasehold.

“It’s kind of another tool in the toolbox to try to address the shortage of housing, especially workforce housing,” Nakamoto said. “If this works in Kakaako, it could be a tool that we could use in other parts of the island.”

The leasehold program was introduced and passed through SB865, introduced by Chang in 2023, which also appropriated $1.5 million to HCDA for the pre-development work.

HCDA acquired the land from Howard Hughes Holdings (NYSE: HHH) through a non-cash consideration or purchase price of 163,000 square feet of floor area, which translated in dollars to $12.22 million, based on an agreed-upon value of $75 per square foot.

“The property was appraised at $15 million so we purchased the property for less than appraised value,” Nakamoto said.

Developer Ko Laila LLC was selected to develop the pilot project, which would provide 370 units, with 60% set aside as reserved housing for residents earning at or below 140% area Median Income, which for a family of four in Honolulu is $212,800. The other 40% of the units would be sold as market rate, and there would also be commercial space in the development.

As the developer completed its due diligence three to four months ago, which included looking at the current market, the developer and HCDA agreed to put the project on pause before moving to presales, which would have been the next step.

The reason for the pause was due to concern for buyer interest in the units, mainly because of increased buyer uncertainty in the economy, high interest rates and competition from two other projects in Kakaako – Stanford Carr Development’s Kahuina and Castle and Cooke’s Waiakoa, which both offer fee-simple, instead of leasehold, affordable units for sale.

Due to the rising cost of construction, the cost of the leasehold units compared to the fee simple units in the other projects, would have been too close to justify the restrictions that come with a leasehold.

The 2023 bill introduced by Chang imposed stricter restrictions than HCDA’s usual two to 10 year living requirement and shared equity. It states that all units under the 99-year leasehold must be owner-occupied as residential use in perpetuity for the entire lease.

The new bill introduced by Chang would adjust the owner-occupant restrictions to only be applicable to the reserved units and would reduce the owner-occupant timeline requirement to 10 years instead of in perpetuity.

“That made a lot of sense,” Nakamoto said, “because to have the market units subject to that “in perpetuity,” was going to make the market units unsellable, too.”

However, the bill stipulates that at the time of the initial sales, 100% of the units in the project, market and reserved, must be offered for sale for owner-occupied residential use only. But, after 60 days, if there are any unsold units, up to 40% of the market units may be sold to Hawaii state residents without the owner-occupant requirement.

With a total development cost of $279 million, the average cost to build one unit is $740,000, Nakamoto told PBN. The reserved units would be priced at $368,100 to $644,700 for a one-bedroom and $650,000 to $725,300 for a two-bedroom. The market-rate units would be priced at $879,200 to $974,200 for a two-bedroom, $957,300 to $1.21 million for a three-bedroom and $1.33 million to $1.4 million for a four-bedroom.

In comparison, the affordable units in Kahuina, which are open for presales, range in price from one-bedrooms starting at $598,888, two-bedrooms starting at $692,800 and three-bedrooms starting at $839,900.

The bill has passed first reading and was referred to a committee on Jan. 22, and if the amendment passes into law, Nakamoto said HCDA will begin presales if the market conditions are right. If the pilot program is a success, then the plan is to replicate it for other HCDA-owned sites.