Program Purpose:

Originally, the sole purpose of this program was to provide qualified owners with monthly rental assistance subsidies to assist eligible tenants who live in rental housing developments to make their rental payments. The 1992 Legislature amended the program to also provide for interim construction financing for rental projects. The interim construction financing is to be used solely for rental housing and preference must be given first to private non-profit and for-profit entities and secondly to the Corporation.

Legislative Authority:

Chapter 201G, Subpart III.C., Hawaii Revised Statues.

Qualified Owners:

Non-profit, for-profit or governmental agencies determined by the Corporation to be qualified to develop, own, manage, and maintain a rental housing project.

Eligible Projects:

  1. A project which is financed by the Corporation pursuant to Chapter 201G, HRS, or the Corporation determines that the project will require rental assistance to make it financially feasible;
  2. Maintains at least 20 percent of its units for eligible tenants; and
  3. Is subject to a regulatory agreement and contract with the Corporation.

Eligible Tenants:

A family or an individual whose income does not exceed 80 percent of the area median income as determined by the United States Department of Housing and Urban Development.

Rental Assistance Subsidy:

It ranges generally between $175 per month to $250 per month depending on the type of tenants to be housed in the development (i.e., family or elderly) as well as the subsidy necessary to make the project viable. The maximum term of the subsidy is 15 years for a for-profit entity and 25 years for a non-profit entity.

Rent Structure:

The program does not have a set maximum rental rate for eligible projects. The Corporation must approve of the rental rates and any proposed rent increases. Tenants pay a minimum of 30 percent of their income towards the rent.

Sharing of Appreciation:

Upon termination of the Rental Assistance Contract, sale of the project, or refinancing or prepayment of the mortgage loan, the Corporation shall be entitled to share in the appreciation of the project. The Corporation's share of the appreciation would be calculated by obtaining the present value of all rental assistance payments made to the project and comparing that against the amount of equity contributed to the project by the owner.

Interim Construction Financing:

The program accepted its first application in October 1993. The rules are similar to the current interim construction financing program. In 1996, the Legislature transferred $13.5 million from the program to the State's General Fund. To supplement the $11.5 million currently remaining in the interim construction financing program, a taxable bond is planned. At an approximated rate of 8% for the taxable bond funds and 0% for the interim construction financing program funds, it is projected that the interest rate on the rental interim construction fund will be approximately 4 - 5 percent. Applications are accepted on a continual basis.

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