The Haggai International Mid-Pacific Center in Kihei is seen Nov. 16. The state plans to purchase the property and turn it into teacher and affordable workforce housing in the future, but in the meantime, it’s considering using the building to house residents displaced by the Aug. 8 wildfires. — The Maui News / MATTHEW THAYER photo
An old Kihei hotel that the state eventually wants to turn into teacher and affordable workforce housing could temporarily serve as housing for wildfire survivors in the near term.
Earlier this month, the Hawaii Housing Finance and Development Corporation board voted unanimously to approve the $34.5 million purchase of the old Maui Sun Hotel along East Lipoa Street in Kihei, which is now known as the Haggai International Mid-Pacific Center.
Currently, the approximately 6.3-acre site with two wings of six floors each is housing members of the Hawaii National Guard, the American Red Cross and Southern Baptist Disaster Relief, the HHFDC said.
The long-term plan is to turn the property into housing as well as classrooms. In May, the Legislature approved the state budget that appropriated $45 million in general obligation bond funds to HHFDC for “plans, land acquisition, design and construction for repurposing existing facility for public prekindergarten classrooms, dedicated teacher housing and affordable workforce housing; ground and site improvements; equipment and appurtenances,” with Maui County taking the lead on the conversion.
The project was pushed for by Maui state Sen. Angus McKelvey, who said it was an ideal site because it includes the former hotel kitchen and other amenities that can support prekindergarten classrooms and other programs, along with getting teachers housing.
But until that longer-term project is realized, in the interim, “it should be fire victims first, because of imminent emergency need,” McKelvey said Wednesday.
The setup may still be hard for residents displaced by the fire, as the rooms need to be retrofitted with kitchens, he added. But even if it is not ideal for fire victims, the spaces could also be used for off-island workers coming to support wildfire recovery efforts.
When the Aug. 8 wildfires hit, destroying or making uninhabitable more than 3,700 homes, Maui County representatives, Lt. Gov. Sylvia Luke and certain members of the state Legislature held discussions on how to proceed with the acquisition and operation of the property, HHFDC said. Currently the property has 175 furnished guest rooms along with a few large suites on the sixth floors of both the East and North wings of the building, according to an HHFDC staff report.
HHFDC staff in September determined that it should proceed with trying to acquire the property itself rather than the county as originally planned, “due to the all-hands nature of the County’s response to the wildfires disaster and recovery efforts and the dire need for housing on Maui that was exacerbated by the wildfires.”
Staff also said in a report to the board that HHFDC should “own and operate” the property as temporary housing for wildfire survivors in the interim.
But a lot more needs to be done.
HHFDC housing information officer Gordon Pang said in an email last month that the board’s approved purchase price of $34.5 million is less than the $37.7 million purchase price under a purchase and sale agreement for the property.
“It is uncertain if the seller will accept the reduced purchase price,” he said.
In 2022, seller Haggai and buyer Pacific Rim Land Inc. entered into a purchase and sale agreement for the property. Pacific Rim Land and its business partner Paramount Hotels started due diligence for the acquisition, an HHFDC report said.
On July 10, Paramount agreed to withdraw from the project as a co-venturer with Pacific Rim due to “differing visions for the property,” thus allowing Pacific Rim to assign its purchase rights under the agreement to a government buyer.
Neither Pacific Rim nor Paramount responded to a request for comment.
The HHFDC staff report said it does not recommend HHFDC acquire the property at the $37.7 million purchase price, but rather a lower one which leaves approximately $1 million in excess capital improvement project funds as a contingency.
The staff report notes that the total acquisition cost would be approximately $44 million, which includes the purchase price of $34.5 million, just over $6.5 million in near-term repairs and improvements as well as nearly $3 million in fees and due diligence costs.
Earlier this year, the Legislature approved and the governor subsequently released $45 million. The property purchase is scheduled for December.
Before the former hotel can be acquired, “due diligence” activities on the property have to take place, along with determining that the revenues projected to be generated by the property under HHFDC’s interim ownership will exceed budgeted operating expenses, Pang said, noting HHFDC does not have funds to subsidize property operations.
The staff report indicated that the Hawai’i Community Foundation has “expressed interest” in helping and possibly providing a grant though its Maui Strong Fund. A member of the foundation leadership toured the property in October, the report said.
HHFDC said it has commenced discussion with Paramount, a boutique hotel company that the Maui Coast Hotel is part of, regarding a contract to provide property management and maintenance services for the Haggai property. A no-bid contract is permitted through state’s disaster emergency proclamation.
HHFDC is anticipated to own and operate the property through May 2025, when it projects to close on the leasehold sale of the property to a private developer who will convert the facility for public prekindergarten classrooms, dedicated teacher housing and affordable workforce housing.
HHFDC estimated that conversion of the project for the long-term housing could begin in late 2025.
* Staff Writer Melissa Tanji can be reached at mtanji@mauinews.com.
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