The county could be posting the paperwork as early as this week to sell $14.4 million in bonds to provide sewer service to a 100-unit affordable housing project at Kaloko Heights.
The county is issuing the revenue bonds to pay for the sewer project. But Finance Director Deanna Sako said neither the county’s borrowing power nor its bond rating are affected by the bond, will which be repaid through the county’s first ever, and the state’s second, community facilities district that was created by developers of the Kaloko Heights project.
The bond resolution approved by the County Council on Nov. 16 is explicit that county taxpayers are not liable for payment of the bond.
In addition to the affordable housing component, the development will be created as a 1,300-unit master-planned development by RCFC Kaloko Heights LLC, Kaloko Heights BIA Holdings LLC and Kaloko Heights Investors LLC.
The affordable housing project will be built by the Hawaii Island Community Development Corporation. Each unit at the Kaloko project would be about 750 square feet and come furnished with a range, oven, refrigerator and solar water heating.
“One of the projects that is actually dependent on this sewer pipe going in is the affordable housing project there in the Kaloko Heights area and their funding is actually dependent on the sale of these bonds, so we do want to get this project moving,” Sako said.
The improvements consist of a sewer line extension and related improvements to connect the developer’s project as well as the affordable housing project, extending west within the existing rights of Hina Lani Street and Ane Keohokalole Highway to the existing sewer line within the Ane Keohokalole Highway fronting the West Hawaii Civic Center.
The sewer line extension will be an all-gravity system located within the existing rights of way of Hina Lani Street and Ane Keohokalole Highway.
Council members praised the innovative financing mechanism being used to move the project along more quickly than a typical improvement district,such as was used elsewhere in the county.
In 2017, the Lono Kona neighborhood became the county’s first sewer improvement district, when property owners voted to tax themselves to pay for the improvements. Lot owners there were assessed an estimated $9,090 per single-family equivalent unit. The county allowed property owners to make annual payments around $498 per single-family equivalent.
The Kaloko Heights project can be treated differently because it’s essentially one landowner versus multiple lots.
“This is the right way to do it,” Puna Councilman Matt Kanealii-Kleinfelder said.
Still, said Hilo Councilman Aaron Chung, the financing mechanism was a “very involved process and involved a great number of specialty individuals.”