Hawai'i Community Development Authority

A 99-year leasehold residential project in Kakaako resumed after Gov. Josh Green signed Senate Bill 2061 into law, easing leasehold restrictions that had dampened buyer interest.

The mixed-use and mixed-income development will sit at the corner of Ward Avenue and Kapiolani Boulevard in Kakaako that were acquired by the Hawaii Community Development Authority last year.

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.

The project was put on pause at the end of last year due to economic concerns within the housing market, including the amount of buyer interest, but it will now continue moving forward with development, HCDA Executive Director Craig Nakamoto told PBN.

The next step is to make changes within HCDA administrative rules with the new regulations, a process that will begin in September. Nakamoto hopes to begin presales in the first quarter of 2027.

“It’s officially back on. I think SB2061 gave us some flexibility. It addressed some of the things that were problematic and we thought might make for a less than successful presale, so with SB2061, I think we were in a better position to start the pre-sales, and hopefully, successful pre-sales,” Nakamoto said.

The project, being developed by Ko Laila LLC, is set to 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 at market rate, and there would also be commercial space in the development.

SB2061, introduced by Sen. Stanley Chang, was an amendment to SB865, introduced by Chang in 2023, that introduced the leasehold program and appropriated $1.5 million to HCDA for the pre-development work. Under the original bill, all units under the 99-year leasehold were required to be owner-occupied as residential use in perpetuity for the entire lease.

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 owning a leasehold, which is why the project was paused.

However, the new law adjusted 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.

Still, 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. After 60 days, up to 40% of any unsold market units may be sold to Hawaii state residents without the owner-occupant requirement.

The 99-year leasehold project is a pilot program, and if successful, could be replicated for other HCDA-owned sites, but lawmakers would need to amend the law before it could apply to other sites.