Low-Income Housing Project Gets A New Life On Billionaire-Owned Lānaʻi

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Maui County may have finally hooked a developer for a stagnant project to build affordable homes on Lānaʻi, a place where residents who’ve lived there for generations worry they can’t afford to stay. 

On this tiny isle owned by billionaire tech tycoon Larry Ellison, families sometimes bunk together with as many as 10 people sharing two-bedroom plantation homes to cope with an affordable living crunch. That shortage has left the island’s luxe resorts, only school and medical offices desperate to attract and hold onto workers.

County lawyers are drafting an agreement to solidify a partnership with Ikaika Ohana, a nonprofit developer with a track record of completing affordable housing projects statewide. The development could create hundreds of houses for low-income residents earning less than 80% of the area’s median income. 

The precise number and size of homes is still being worked out but early plans for the project envisioned 372 affordable units, including 199 lots for purchase. Lānaʻi currently has 163 affordable units, primarily rentals.

“This is the closest we’ve ever been to having an affordable, for-sale housing project on Lānaʻi in 30 years,” said Maui County Councilman Gabe Johnson, who lives on Lānaʻi. “We have a developer who’s visited the parcel of land and said, ‘I’m ready to do this. I can make this work.’”

New momentum for the development came after substantial property tax hikes on rental properties. Some of that revenue increased the county’s affordable housing fund. 

The mayor is responsible for translating that funding into action. Whereas his predecessors abandoned the Lānaʻi project, Mayor Richard Bissen has identified the languishing housing plan on Hawaiʻi’s most rural isle as a priority, according to Housing Director Richard Mitchell. 

“Now there’s a lot more hope,” Mitchell said. “It’s gone from being theoretical to being realizable.”

‘Everyone’s Got To Pitch Something In’

Even with a developer on board, the long-ago-abandoned county project faces broad challenges. 

It’s expensive to ship building materials to this 140-square-mile island with no traffic lights and only 30 miles of paved road. And there are few feasible lodging options for fly-in construction workers, a symptom of the housing crisis the project seeks to resolve. 

Then there’s the cost of bringing in infrastructure, a sum that developers have historically projected to be so high they make the development nonviable.

Ikaika Ohana President Douglas Bigly declined to say what it might cost to build the project or hook it up to infrastructure and it’s unclear what share the county might pitch in. Bigly said the project is feasible now because government agencies, including the Department of Hawaiian Homelands, which owns land next to the county-owned project site, and Pūlama Lānaʻi, the management company that oversees Ellison’s monopoly stake in the island, have agreed to partner to cover the exorbitant cost of connecting the project site to water and sewer lines — one of the project’s biggest hurdles. Federal and state dollars could also give the project a boost.

“I think what’s different is people have gotten really serious about it and we have that cooperation we need,” Bigly said. “Everybody’s got to pitch something in on this one because it’s such a difficult deal. All the way up and down the chain people want to see this happen.”

Pūlama Lānaʻi spokeswoman Lyssa Fujie said the company wants to see the project succeed and will work with the government and its partners to leverage the nearby Ellison-owned infrastructure. 

The community is eager to see hundreds of new homes developed on an island where affordable housing is so inadequate that the island’s twin Four Seasons resorts and state-run social services struggle to make new hires and multiple families sometimes crowd into tiny tin-roofed plantation homes, sleeping on cots in living rooms and hallways.

Ben Ostrander, 42, said the county project is crucial for residents like him who dream of homeownership.

The Pūlama Lānaʻi employee, who rents an apartment owned by Ellison, said he can’t compete with off-island investment buyers who sometimes pay cash for an aging plantation cottage originally built to house pineapple field workers.

“They renovate them and flip them,” said Ostrander, a member of Our Lānaʻi, an affordable housing advocacy group. “We’re priced out. Building equity through homeownership, that’s one way that people can build wealth for themselves and it’s something I would like for myself.”

Workforce housing was in short supply long before Ellison bought 98% of the island, including a third of its housing, in 2012 for $300 million. But the problem has been intensified by an influx of hotel and construction workers employed by Pūlama Lānaʻi, which is carrying out Ellison’s renovation of an island that was once a giant Dole pineapple plantation.

Second-home owners add to market pressures — and resident frustrations. On a rural isle with a resident population of 3,300, Lānaʻi Planning Commission Chairman Reynold “Butch” Gima said even a few homes removed from the local inventory has wide repercussions.

“If you come here and buy a house,” he said, “please live here and be part of the community.”

The Affordable Rentals Nextdoor

In 2022, Pūlama Lānaʻi broke ground on the island’s first affordable housing project in nearly three decades. Privately funded for an undisclosed price by Ellison, the creation of 76 units of affordable housing at the Hokuao Housing Project marked an historic investment in the production of homes for residents. 

At an affordable housing lottery for the project, a family of four that won the opportunity to rent a two-bedroom home said they were eager to vacate a two-bedroom, one-bathroom rental home that they shared with five other relatives. 

But Gima said the Hokuao project hasn’t necessarily alleviated this kind of overcrowding, which he described as typical on the island.

“Where there were seven, eight, nine people crammed in a house, maybe two or three moved out to Hokuao,” Gima said. “But that small house still has six people or so living there.”

Hokuao is an investment in Ellison’s redevelopment plans for Lānaʻi. The island largely depends on air travel from a single commercial carrier to commute in medical staff, construction workers, religious clergymen and the island’s only visiting veterinarian. The shortage of workforce housing is also a problem for staffing at the island’s high-end resorts.

Lānaʻi commuters frequently gripe over lengthy travel delays, flight cancelations and high ticket prices. Construction workers from other islands avoid some of the headache by routinely catching a ride to a job site on Lānaʻi on a private plane owned by Ellison.

All of Hokuao’s newly constructed affordable units will be occupied when the final residents move in later this month. The development caters to residents earning between 80% and 140% of the area median income and consists only of rental units. 

The county project differs in that it would serve lower income residents, those earning less than 80% of the area median income. It also would include affordable homes for purchase — a feature that Johnson described as “essential” on an island dominated by monopoly ownership.

“We buy groceries at the market that he (Ellison) owns, we buy gas from the gas station he owns, many of us work for him,” Johnson said. “There’s just something to be said for not having to rent from the guy and instead to be able to own your own home.”

Developer, County ‘Serious’ About Reaching Finish Line

The sidetracked county development plan was first abandoned after the economic crash of 2008 during Mayor Alan Arakawa’s administration. A first attempt to attract a developer in 2016 drew no interest. The project’s price tag was $30 million, plus what developers viewed as the prohibitive cost of bringing in water and sewer lines and other infrastructure. 

Mitchell, the county housing director, said infrastructure costs at that time were estimated in excess of $15 million.

“No one could make it pencil out,” he said.

The county then tried to strike a cost-sharing agreement for hefty infrastructure expenses with neighboring landowners, including the Department of Hawaiian Homelands and the Department of Education. Those negotiations failed and in 2019 then-Mayor Mike Victorino announced that the county would no longer pursue the project.

“What’s changed is the current administration’s appetite to devote a certain amount of resources, most likely from our county affordable housing fund, to underwrite a significant portion of those infrastructure costs that have plagued the development,” Mitchell said.

The county’s investment is expected to be hashed out during budget discussions for fiscal year 2026. 

A five-year affordable housing roadmap commissioned by the council but never formally adopted by the county set a $1.2 billion goal of building 5,000 affordable units across the county’s three islands by 2025. All told, 766 units have been completed since 2021, according to county spokeswoman Kehau Cerizo. Another 900 units are under construction and more than 1,100 units are in the design and planning process.

The county is working “furiously,” Mitchell said, to house residents on Lānaʻi, where average salaries do not come close to affording the $1.3 million median sale price of a single-family home.

Bigly said he declined to bid on the Lānaʻi project in years past because it lacked the kind of support for cost sharing that’s materializing today through the county.

“I can only get as serious as they are,” Bigly said. “But the people in place now are serious. We’re still working on it, but I rarely pick up a project that doesn’t at some point get done.”

Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.