A $5.5 million county grant to purchase a historic West Hawaii hotel and use it for affordable housing has fallen through.
Last year, Hawaii County allocated $17 million to various partner organizations via the Affordable Housing Production Program to develop seven projects that would have created 1,176 new affordable housing units in East and West Hawaii.
The most costly of those projects — although not the largest — was a plan by nonprofit Mental Health Kokua to purchase the Manago Hotel in Captain Cook and convert it into 72 units of workforce housing.
As detailed in a January joint statement by Mayor Mitch Roth and Mental Health Kokua, the project would offer 67 studio units, two one-bedroom and three two-bedroom units, available to households earning no more than 140% of the area median income.
However, in May, Mental Health Kokua informed the county that its plan would no longer be going forward, as negotiations between the nonprofit and the hotel’s owners were unable to reach a finalized agreement.
“It was unfortunate to learn that plans by Mental Health Kokua to build much-needed workforce housing at Manago Hotel will no longer be possible,” said Roth spokesman Cyrus Johnasen in a statement Tuesday. “Although the plan was selected as one of seven projects across the island to share in our $17 million Affordable Housing Production Program, the county has no say in negotiations between the buyer and seller of the proposed property.
“We believe that both parties believed in the opportunity for our community and, in the end, were unable to find a way forward.”
Hawaii County Housing Administrator Susan Kunz said via email Wednesday that because Mental Health Kokua failed to complete a finalized purchase agreement, the $5.5 million grant will not be awarded to the nonprofit. Therefore, she added, the funds remain available for other applicants in the AHP program, and a request for proposals is still open until July 1.
The other six projects awarded funds through the AHP program remain active and include a $5.4 million grant to the Office of Housing and Community Development to add 643 units to the Waikoloa Village Kamakoa Nui Subdivision, $3 million awarded to the Ho‘omalu at Waikoloa project for the construction of 229 units, $2 million to build the 140-unit Na Hale Makoa subdivision in Waikoloa, and more.
Meanwhile, the Manago Hotel has been listed for sale online, with an asking price of $7.5 million.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
