“I always wanted to be a homeowner, but I didn’t know when or even if that would be possible,” says Samantha St. John, a Kaimukī resident who is a labor and delivery nurse at Kapi‘olani Medical Center for Women & Children. “I never thought I’d be able to own a home on my own.” A new program initiated by a state agency called the Hawai‘i Housing Finance and Development Corp. seeks to help people like St. John – those working in professions with critical shortages in the state, including health care, education, law enforcement and agriculture – to buy their own homes.
The DURF Equity Pilot, or DEP, Program is a five-year effort that rolled out this year. DEP is under the umbrella of the Dwelling Unit Revolving Fund (DURF), established in 1970 to support housing development and associated infrastructure.
“We were looking at ways of making housing more affordable for middle income people,” says Dean Minakami, HHFDC’s executive director. “We have programs primarily for households who earn up to 60% area median income, but there are fewer programs for those above that threshold.”
DURF had an appropriation of $50 million from the Legislature for each of the past two years, says Minakami, and this pilot program’s budget, $10 million, is 10% of that.
With DEP, the HHFDC buys partial equity in condos that are offered to people in the select professions – that HHFDC investment lowers the price of those condos. The HHFDC gets its share of the equity back when the condo’s owner eventually sells.
“It might take a while but the state will get a return on its investment,” Minakami explains. True, the longer someone stays in their first home, the longer it will take the state to get repaid, he says, but it also means that the needed professional who bought the condo is still in Hawai‘i.
And when the HHFDC gets its investment back, the money can then be reused to help other people acquire homes.
In addition to working in the targeted professions, buyers must already be living in Hawai‘i at time of application and become owner-occupants of the newly purchased homes, among other requirements.
Says Minakami: “We know that one of the reasons people leave the state is because of the high housing costs, and in particular, they don’t see a path to homeownership. This program helps keep people in Hawai‘i in a manner that is fiscally responsible. Also, this gives those buyers a chance to build up equity and move up the housing ladder. They are buying their first unit, so they are buying a studio, one-bedroom or two-bedroom unit, and over time they might start a family or need a bigger place, so after 10 years or so, they have equity built up and can buy something larger.”
Through DEP, St. John was able to buy a two-bedroom, one-bath unit at Kuilei Place, a residential condo project being built on Kapi‘olani Boulevard in the Mō‘ili‘ili neighborhood, near Prince Jonah Kūhiō Elementary School.
Kuilei Place, which is being developed by BlackSand Capital and the Kobayashi Group, was the first project tapped for the Hawai‘i DEP Program.
Originally, 23 two-bedroom residences were available at Kuilei Place through the DEP program. Kobayashi Group later got HHFDC approval to add five more. The feedback from buyers has been overwhelmingly positive, says Alana Kobayashi Pakkala, Kobayashi Group executive VP and managing partner.
She provides an example of how the program works: a two-bedroom, one-bath condo priced at $627,000 could instead be sold at $524,000 to select professionals because the revolving fund buys $103,000 in equity in that unit. That reduced price puts the condo within financial reach of many more people, she says. The equity is paid back to the revolving fund when the professional sells the unit.
Part of the developers’ responsibility with DEP is to market those condos to the professionals they’re intended for. Kobayashi Pakkala says her team connected with about 25 organizations, including law enforcement and teacher groups, held industry nights, used social media, and bought traditional advertising to spread the word to eligible buyers.
“We are huge supporters of this program,” she says. “We feel the best way to stabilize our whole community is around trying to get as many people as possible, particularly our workforce, those in that 80% AMI to 140% AMI range, from renting into homeownership.” Currently, she notes, Hawai‘i has one of the lowest rates of homeownership in the country, especially among Millennials.
Other development projects have gotten on board with the revolving fund. At Modea on Queen Street in Downtown Honolulu, 25 units are designated, according to HHFDC, including 12 studio/one-bath units and 13 one-bedroom/one-bath units. The Flats at Sky Ala Moana East has also gone before the HHFDC board for approval, says Minakami. “There are other projects very interested in participating. It’s just a matter of timing for them.”
For the developers, the program doesn’t help with construction financing or their gross margin, says Minakami. “What it does do, is it opens more units to a greater depth of buyers. For Kuilei Place, granted it’s a drop in the bucket of a 1,000- unit project. It helps their sales a bit, their absorption. But what we’re hearing is that some of the buyers are coming in looking for a DEP unit and wind up buying a market price unit or another affordable [designated] unit. So, it does help with sales prospects and getting exposure.”
He says the program’s success or lack thereof will be determined in several ways. One is interest among developers. “How many are participating? Are they finding eligible buyers?” Longer term, he says, “We will measure success by tracking the units that are participating. How long do the buyers stay in the units? How long does it take the state to get repaid, and are these buyers staying in Hawai‘i in the long term?”
St. John and her dog, Cookies and Cream, plan to move into her new home in early 2027 once Kuilei Place is completed. She has been sharing her homebuying experience with friends and colleagues, hoping they can find similar opportunities with the pilot program.
“Owning a home in Hawai‘i is a big accomplishment – if you ever get to do it,” she says. As a state, “we’re struggling because it’s hard for people to hold their roots here. I hope they continue to use this program for other buildings and projects, to help keep Hawai‘i people in Hawai‘i.”
Minakami says that HHFDC plans to go back to the Legislature in 2025 to request the pilot program become permanent, and to seek permission to use more DURF funds.
HHFDC also is exploring other home-ownership programs. “We’re standing up a new down payment assistance program, a mortgage program, and other financing methods which can help incentivize developers to provide more opportunities for workforce families,” he says.
“Supporting the rental market is great; I fully support the efforts to incentivize ADUs, and other affordable rental housing projects,” he says, referring to Hawai‘i’s accessory dwelling units. “But we have to realize that many households are not going to stay in Hawai‘i unless they can own something.”