Senate Standing Committee on Housing

Good afternoon, and welcome. Thank you everyone for your patience. We are the committee on housing from the state Senate as well as the committee on housing from the State House of Representatives in a joint informational briefing. I'd like to welcome Chair Luke Evslin of the House Committee of Housing, one of our key members.

We have vice Chair Miyake here and possibly other members coming.

And from the Senate, we have vice Chair Troy Hashimoto, and we also have committee members, senators Elefante and Rose. We're holding this informational briefing today to discuss the 2025 funding round for the low income housing tax credit rental housing revolving fund. And we're welcoming HHFDC to do this, briefing. It looks like the tech is now set up to do that. I don't think a lot of people understand just how much money HHFDC disperses year after year.

This is hundreds of millions of dollars. This is over half of all the housing being built in the state. And I think it's imperative that the legislature get a better understanding of how these funds are awarded and how they get spent and how much money per unit, these programs cost. So without further ado, we'll welcome HHFDC. And if you could also introduce yourselves before you begin the presentation.

Good afternoon, sir. Thanks, Chair of the day, all the committee members. I'm David Nacavi, executive director of HHFDC. With me here today are Mike Doyle, our housing finance manager, Mike Winnie, our chief planner, and Randy Chu, our development branch chief. Mike Doyle will be giving the majority of the presentation. He joins us. He was promoted to finance manager.

I think it was April or so. Prior to that, he was with HHFDC as a finance specialist who is very well versed in our multifamily high-tech program. So I'll turn it over to Michael to provide the presentation.

Thank you, Dean. As Dean mentioned, I'm Mike Doyle, housing finance manager for HHFDC. Thank you very much for having us today. Today, I'm gonna focus primarily on how the process works for the HHFDC's 2025 low income housing tax credit and rental housing revolving fund route. How applications are received, screened, scored, ranked, underwritten, and ultimately brought forward for award.

I'll then spend a few minutes at the end summarizing the projects that received awards through the 2025 funding round. Next slide. Thank you. So for today's scope, the hearing asks us to cover three general areas, the application and award process, the applications and evaluation results, and the projects that ultimately received awards.

There were a large number of applications in 2025, so that rather than walk through every project individually, I think the most useful approach is to explain the process that was applied consistently across the funding round and then show the results the resulting award slate.

Detailed application lists and scoring tables are included in the appendix to this presentation, and we can certainly address any specific application process questions at that time. The main goal of my presentation is to explain and demystify the process of of how we get from an application being submitted to an award recommendation being presented to the HHFDC board. Next slide.

Before getting into the process, this slide provides some context on the scale of the 2025 funding round. HHFDC received 35 application entries representing 4,761 proposed housing units. Ultimately, 10 projects totaling 1,749 units were awarded, of which 1,738 are LIHTC units. The other important point is the magnitude of the demand for state resources. Applications requested approximately 1,700,000,000 in Hula Mae multifamily bond financing and approximately 1,200,000 in RHRF financing.

Approximately $579,000,000 of HMMF bonds and approximately $395,000,000 of total RHRF loans were committed to the award awarded projects. That RHRF total includes the 56,000,000 legislative appropriation supporting Mayor Wright Houm's phase 1A in addition to its funding round award.

Sorry. It's a slide. We're on slide three?

You're on slide three. Yeah.

Yeah. Sorry about that. So the reality is that demand for state housing resources substantially exceed what is available. The scoring, ranking, and underwriting process is how we determine where those limited resources can be most effectively deployed. Next slide.

There are three work resources involved here, and it is important to distinguish between them because they do not all operate in the same way. First is the 9% LIHTC. This is a scarce federal resource. Hawaii receives a limited annual allocation, so 9% applications compete directly against one another. Those projects are ranked using scoring criteria contained in HHFDC's Qualified Allocation Plan or QAP.

Second is the 4% LIHTC, always paired with tax exempt bond financing, mainly through the Hula Mae multifamily bond program. The 4% credit itself works differently because it is generated through qualifying tax exempt bond financing rather than allocated from the state's limited 9% credit ceiling. The QAP still governs the LIHTC portion of those projects, including eligibility, minimum thresholds, required documentation, financial feasibility, and ongoing compliance, but the QAP selection point system does not rank 4% projects.

Instead, for 4% projects requesting HHFDC issued bonds and RHRF financing, the competitive selection is driven by the HMMF and RHRF scoring systems. Third is the Rental Housing Revolving Fund or RHRF, which is the state's loan resource.

RHRF has its own 250 evaluation system, and an application must score at least a 125 points to qualify for consideration. So the basic distinction to keep in mind is 9% projects are competitively ranked under the QAP. For 4% projects requesting RHRF and HMMF, Projects are separately scored and ranked under both programs, and those rankings are then blended to establish the overall 4% ranking. Next slide. So at a high level, the application process operates as a funnel.

First, the application must be submitted correctly and on time, then it goes through a minimum threshold review. These are essentially pass fail requirements. Next is a completeness review where staff determines whether the information is internally consistent and sufficiently documented to actually evaluate the proposal. Only after those gates are cleared do we move into the scoring and ranking. For 9% projects, that means scoring and ranking under the QAP.

For 4% projects requesting HMMF and RHRF, That means separate HMMF and RHRF scores and rankings, which are then combined into the overall blended ranking. Once those rankings have been established, we move into the much deeper financial underwriting and project review. That process may involve follow-up questions, clarification of assumptions, negotiation of financing terms, and analysis of project specific risks. Finally, staff develops an award recommendation for consideration by the HHFDC board. One thing I want to em emphasize is that these are different functions.

Eligibility is not scoring. Scoring establishes ranking, and ranking is followed by underwriting before an award recommendation is made by staff. So what applicants submit? The application itself is extensive. At its core, is a standardized Excel based consolidated application.

That's where we receive the project's financial information, including sources and uses, development budget, developer fee, operating budget, long term cash flow, debt service, LIHTC basis calculations, and affordability elections. That provides a standardized dataset that allows us to compare projects consistently. But the financial model is only one part of the application. Applicants must also submit a substantial exhibit package to validate those representations.

That includes things like the market study, evidence of site control, permitting and entitlement information, preliminary preliminary engineering or capital needs assessments, independent construction cost reviews, environmental reports, title information, plans and specs, financing commitments, and various certifications.

So the Excel model tells us what the developer is proposing, and the exhibits are where we determine whether those representations are supported and whether the project is truly actionable. Before a project receives a competitive score, it first needs to clear minimum threshold requirements. Generally, they test several fundamental questions, including, is there a demonstrated market demand? Does the applicant control the site? Is the project sufficiently advanced from a zoning and entitlement standpoint?

Has an independent third party reviewed the proposed construction costs? Have the environmental issues been evaluated? Does the financial structure meet minimum debt service coverage and feasibility requirements? Are developer fees and contractor profit within HHFDC limits? And does the development and management team have the required LIHTC experience?

These are important because scoring is not intended to compensate for a project that is fundamentally incomplete or not ready. The threshold review establishes the minimum level of credibility, feasibility, and readiness required before we compare one project against another. Once applications clear those initial reviews, the formal scoring process begins. A key control is that the scoring criteria are established before applications are received. Staff does not receive the applications and then decide which characteristics should be important.

For quantitative criteria, the scoring is formula driven and calculated directly from application data. For qualitative criteria, staff uses the written standards and evaluates the supporting documentation. Scores are then reconciled across the team evaluation or the team evaluation. If there are differences or inconsistencies, those are discussed and resolved before final scoring and ranking rankings are made. The principle is straightforward.

No new criteria are added, modified, or reweighted after the application deadline. That separation is important because our goal is to apply the published policy criteria consistently across the entire applicant pool before moving into the individual project underwriting. The 9% LIHTC ranking process provides the cleanest example of how that works. For 9% projects, the QAP is essentially the board approved policy framework. It establishes the priority before applications are submitted and staff applies those criteria to the applications received.

In 2025, the Malahia project received the highest QAP score, and Kehlani Apartments ranked second. Those were the two projects that ultimately received the 2025 9% awards. The next ranked project was six one four Wailepo followed by Kimole Lane and Puale Lane. And just a note here, Wailepo, Kimole Lane, and Puale Lane all resubmitted 9% applications in the 2026 round and were awarded earlier this summer.

For the 9% program, the ranking creates a strong presumption for the order in which staff bring projects forward because the credit itself is a scarce resource being allocated.

Staff still performs underwriting and assessment of the execution risk, but we generally do not bypass a higher ranked 9% project unless there is a materials project specific concern. The 4% LIHTC award framework is different, and I wanna be very clear about the sequence because several different programs are involved here. First, the QAP still applies. A pro a 4% project must satisfy IRC Section 42, the QAP, the consolidated application, LIHTC minimum thresholds, feasibility requirements, and ongoing compliance.

What does not apply is the QAP criteria point system used to competitively rank 9% applications.

Second, if the project is requesting HMMF bonds, it is scored and ranked under the HMMF criteria. Third, if the project is requesting RHRF, it is separately scored and ranked under the RHRF criteria. The projects requesting both resources, HHFDC then combines those two rankings on an equal weighted basis. In other words, HMMF represents 50% of the overall ranking, and RHRF represents the other 50%. That produces the final blended ranking for the 4% funding round.

That blended ranking is the primary methodology and the starting point for the staff's award recommendations. After that ranking has been established, staff conducts project specific underwriting and resource allocation review before determining which project should ultimately be recommended to the board. So the sequence is QAP compliance, HMMF and RHRF scoring, blended ranking, underwriting and resource review, staff recommendation, and finally, board consideration. HMMF and RHRF policy goals.

The reason we use two rankings is that HMMF and RHRF are different state resources and the scoring system set forth in the Hawaii administrative rules measure somewhat different things.

For HMMF, the criteria generally mimic the QAP and scoring looks at factors such as affordability, government owned land, income targeting, resource efficiency, project readiness, developer experience, cost reasonableness, and other public benefits. Readiness has particularly become an important factor because one of the lessons learned from prior funding rounds is that awarding a project too early can tie up limited state resources for an extended period without producing the housing within the time frame represented. Our HRF uses a separate 250 system.

Its five major major categories are local housing need, project description and design, benefits and impact, project management, and leverage. One important distinction is that the RHRF scoring framework is more directly grounded in both statute and HAR.

The detailed RHRF criteria are incorporated into HAR chapter 15 dash three eleven and reflect priorities established under HRS chapter two zero one h. That makes material changes to the RHRF scoring framework more difficult than HMMF scoring because those changes would require formal administrative rulemaking. And if statutory priorities are affected, potentially legislative act legislative action. The purpose of blending the rankings is therefore to give equal weight to how a project performs under each of these two separate resource allocation frameworks.

Once the 4% blending once the four percent project's blended ranking is established, the analytical framework is not finished.

The ranking tells us how a project compares to the other applicants under the published HMMF and RHRF policy criteria, but underwriting asks a different question. Given the amount of state resource being requested, can this project actually close, get built, and deliver the housing units represented in the application? Staff looked deep staff looks deeply at sources and uses, the operating pro form a, financing commitments, tax credit pricing, construction timing, permitting and entitlement risk, development costs, and the capacity of the development team.

We also evaluate the amount and the type of state resources being requested and whether allocating those resources to one project may affect our ability to fund other viable projects. We identify inconsistencies or assumptions that need clarification.

In some cases, we negotiate better terms for the state, whether that is increasing deferred developer fee, changing the financing structure, modifying RHRF terms, or imposing conditions necessary to to protect public resources. So for the 4% projects, the blended ranking establishes the primary order of order of consideration. Underwriting determines whether there is a material project specific reason to depart from that order. Next slide.

This slide this slide shows the final blended ranking for the 4% new construction projects. The blend is simple to simply as described before, the equal weighting of each project's HMMF and RHRF ranks. As you can see, awards generally follow that order with the principal exceptions being projects Ho'ola and Naio due to developer capacity and Kapiolani due to cost concerns. I'll explain those exceptions on the next slide. For the 4% award recommendations, in most cases, the ranking is guided by the recommendations.

However or sorry. The ranking guided the recommendations. However, there were several higher ranked projects that were not advanced ahead of lower ranked projects because staff identified material project specific considerations during the subsequent review. Generally, there are three principal reasons for this. The first is development cost.

Kaiaulu O Kapiolani is the clearest example. The project ranked very highly under the published scoring systems, but its development cost presented a significant concern. Before recommending substantial state resources, staff determined that the cost issue warranted additional review rather than automatically advancing the project based solely on its ranking. In 2026, this project resubmitted its application and was able to meaningfully lower its cost structure. The second reason was or second reason is development team capacity.

Naia and Ho'ola were associated with a development team that had already been selected for another award. The issue was not that either project failed the scoring process or scoring or underwriting process. As a general matter, given the size and complexity of the 4% transactions and the capacity required to advance them through financing, closing, and construction, HHFDC generally seeks to limit awards to 14% project per development team in a funding round. This helps reduce execution risk and supports a more balanced allocation of resources.

The third consideration involve acquisition and rehabilitation projects.

Those projects can provide an important preservation benefit. But within the context of the 2025 funding round, staff placed greater emphasis on projects that would produce new affordable housing inventory. With limited HHFDC bond authority and RHRF availability, that was an important resource allocation consideration when deciding which projects to advance. Next slide. This slide shows the 10 projects that ultimately received awards.

As mentioned, two received competitive 9% LIHTC awards, Maluhia on Oahu with 70 units, and Kehalani Apartments on Maui with 35 units. Eight projects were awarded 4% LIHTC via tax exempt bonds, 1142 Kinao, Aikanaha Residences, Ho'onanea Phase 1, Honuaula Living Community, Lai Opua v four Hema, Leiwili Kapolei Buildings, Mayor Wright Homes Phase 1 A, and Melia the Melia Project. They also represent projects on Oahu, Maui, and Hawaii Island and include a range of project sizes, target populations, affordable affordability commitments, and public private financing structures.

In aggregate, the 2025 awards represent a substantial state investment. 29% projects received approximately 3,900,000 of federal 9% LIHTC authority, which is delivered over a ten year federal credit period.

The 4% project represented approximately 50,000,000 of annual federal 4% LIHTC also delivered over 10,000,000. The projects received approximately 579,000,000 in HMMF tax exempt bond authority, and total RHRF support associated with the awarding projects was approximately $395,000,000. Another result that I think is worth highlighting is the long term public benefit. Of the 1,749 units awarded, 964 units, approximately 55, were either committed to perpetual affordability or located in state owned projects.

That reflects the growing emphasis on ensuring that significant state resources housing significant housing investment produces the benefit that remain in place well beyond the initial tax credit compliance period.

This slide is intended to show the effects of the stronger readiness criteria. Kehalani project has already broken ground, and the remaining twenty twenty five awardees are currently projected to move into construction between now and April 2027. Importantly, this prod this progress is not dependent on additional state resource requests.

Compared with prior funding rounds, these projects are advancing from award toward closing and construction much more quickly, which is exactly what the readiness criteria were intended to accomplish, with the goal getting to construction within twelve to eighteen months. So

I'll close with four main points. First, the policy framework is established before applications are submitted. For 9% projects, that policy framework is primarily the QAP. For 4% projects, the QAP continues to govern VITAC eligibility and compliance, while the and RHRF programs establish the competitive rankings for the those state resources. Second, the scoring process is structured and documented.

Staff applies the published criteria, validates the underlying information, and reconciles the results across the application pool. Third, for 4% projects, the HMMF and RHRF rankings are blended on an equal weighted basis to establish the primary order for work consideration. That ranking is then followed by detailed underwriting and resource review. Staff departs from the ranking only when there is material project specific consideration, such as feasibility, cost, readiness, development team capacity, or another significant execution issue.

And finally, the 2025 process resulted in 10 awarded projects totaling 1,749 units through a combination of LIHTC, HMMF bonds, and RHRF resources.

The detailed application scoring and award information is included in the appendix for reference. Thank you for the opportunity to present today, and I'm happy to answer any questions.

Thank you very much. Members, do we have any questions for the present, presenter? Senator Elefante? Yeah.

Thank you, Mister Doyle, for your presentation. Just two questions. The first one has to do with, you mentioned about staff. Yes. So it are the staff members that are reviewing it, are they consistent with every project, or who does that include?

Yeah. No. It's a good question. So, the way that we score is that we we have there's most of the scoring is quantitative, and then there's some qualitative scoring built in. So each staff on the funding round scores every project.

So quantitative, going through it, as well as qualitative. And then what we do is we compare, make sure that, you know, the quantity you know, there's no issues with the formulas or thing that things that show up. You know, why did you get a seven and I got a nine? So that's easy to do. But the qualitative stuff, what we do is we'll meet as a team.

Everyone will prepare their results, meet as a team, and make sure that we're being consistent project by project so that we're not, you know maybe one person may look at a project one way while another person may look at it, you know, some in another way, basically. So that we meet, we say, okay, this is the criteria. This is the documentation provided.

We all agree that this is this should be the score and this is sort of the basis for the score for all the projects within this criteria. So we wanna make sure that there's consistency throughout, not just the round itself, but through the rounds, you know, going forward so that we're sort of always anchoring at the same place for that for that particular criteria.

Okay. And then ultimately, it's the agency that makes the decision on the final call?

Right. So the yeah. The scoring yeah. So staff puts it together of the you know, within the finance branch and then the finance manager, which would be me, runs through all the scoring as well. And then once we sort of have those finalized rankings, that's when we make our recommendations up, you know, all the way up to Dean and the, you know, executive management to decide, you know, what what should we be bringing to the board for them ultimately to award.

So that's sort of the process.

Okay. And the other question that I have is, based on this presentation, which has been very informative, so thank you for that. Will the agency, HHFDC, have any recommendations for proposed changes to existing law or status quo on what you just presented?

Yeah. No. I I think it's a good question. So, generally, the QAP is sort of that's that's the that's the guiding, sort of policy document for LIHTC basically, right?

And so what we do staff and, you know, with members of the public and, you know, you know, the legislature and everyone is we try to open up the QAP every few years and take comment, try to decide, you know, how to adjust the formulas, the criteria, you know, if there's if there's things that are important that are not showing up or maybe there's things that are important that are not weighted correctly.

So currently, we're gonna be opening that process up for the 2028 QAP. The last major revision was done for the this 2025 QAP, so the the time cycle is basically every three years.

And the idea is that you wanna set a q a set up a QAP, but you don't necessarily wanna make major revisions every year because you're not giving the the development, industry time to basically understand what what it is that we're looking for or, you know and projects generally take three to five years to sort of get off the ground anyway. So we wanna basically signal what we're looking for, signal the changes, and then implement them, you know, within a two to three year span.

So Thank you. Thank you, Chase.

Thank you. Questions?

Go ahead. So I'm I'm looking at slide 14. So you had a slide of why a higher rank 4% project may not be awarded. And you have a couple of issues that you present. Right?

So you have extreme cost concerns, developer capacity, funding round priorities. And so, you know, you gave the example of Kyuru Capiolani that was not moved forward because of extreme cost concerns. Can you dive deeper on what how do you come up with that criteria? What what do you what is your criteria of extreme cost concerns? There's a great

slide in the appendix that'll visually represent that. I mean, we mathematically, right, we wanted we've got we're looking for outliers. Is there any way to get the get it back up? Basically, you know, that particular project that, you know, last year, there's two there's a cost per square foot and a cost per unit, and it was an outlier on both of them, like an extreme outlier mathematically. And so that was you know, that raised our flag when we say, hey.

This is a very expensive project. So, you know, staff then elevates that concern to management, and then, you know, the agency itself makes a decision whether or not to to push that project forward. Yeah. Yep. Sorry.

Is it it the very I think it's the very last slide, maybe. Okay. Just right. Very end. Yeah.

So you can kinda see where that project landed in terms of the the cost matrix there, that it's it's the far one in the upper head right. So, you know, that that project just being so far outside of the the cost matrix that we were looking at mathematically, you know, staff made the you know, decided to raise that issue up to management and then management made the call that, the the cost on that project was was too great to, take to the board.

So then the board didn't even see it?

Or did not see it. No.

So so when you make that calculation, what are you using? Are you just using pure RHRF or you just you use No.

It was there's we dug into the budget itself. Like, you know, there's items in the budget that we thought were were, you know, could needed to be pulled back. You know, that, I mean, there's very specific things with that project. We're very familiar with that project because it had been, actually was awarded, I wanna say in '20 What was it? 2019.

And then it moved forward, and then it lost site control, and then it sort of lost its award. So it had been come it had gone and come back. So there was great familiarity with the project and the costs themselves.

So when the project actually came back in this year, they were able to they were able to cut costs, and they were actually cut they came in at a at a lower number per unit and per square foot than they were last year, so which is unusual. Most projects only go one way.

So they were able to find some some cost savings and and

and reapply. So did they get awarded or they just reapplied?

They they re we're still in the middle of our 4% round.

So so this next round, you know?

Yeah. They're they're currently on

So so at at the time though, when I'm looking at this, I I think the calculation is it was probably around 1,280,000 per door. Something like that. Yeah. But then when you look at what you just awarded for Laiaupua, you it was 1,550,500 per door. So so where why does why is there a discrepancy of what you're awarding?

But Laia Pua? Maybe the one in Kailua.

Oh, Waymapo. This year, though. That's not this is the current map.

Yeah. That that yeah. That's that's that's this year. So, yeah, costs have gone up significantly in this round. So, you know, the the again, the that this project itself was an outlier last year.

This year, the costs have increased considerably among the projects. So it's not you know, it's every every year, we're kind of looking at it differently and comparing it against the other projects at the time. And Wailepo was expensive, but it also, you know, there was, it wasn't expensive enough not to warrant it warranted to take it to the board to let the board make the decision.

So it's it's very unusual that we would make, make a, a cost concern, something that we wouldn't take to the board. It it has to be an extreme outlier like this was last year.

So this last one wasn't in an extreme outlier then that you took to the board? No.

Unfortunately, you know, cost that one is substantially this year, so a million dollar project for you, unfortunately, is not an outlier this year.

It's it's high, but it's not an outlier. So so

break maybe you can break down for everyone on what is the actual subsidy that we're giving to these projects, right, to get to the million dollars. Because I think once I understood what the breakdown was, I I'm kinda getting a little bit concerned. Right? So per unit, it almost what what is it now? Almost RHRF is what? 200,000 per unit?

So if you sorry. Sorry. If you go to the slide prior so talk maybe it's hard to see, but it's gonna be sorry. There it is over here. So the awarded projects, our HR per unit was 220,000, and the average cost per unit was 681,000. Average cost per square foot is 688,000 or sorry, $680 per square foot.

So the And then h and then how much in HMMF?

Well, HMMF, it it's not really a subsidy because HMMF is is bond it's conduit bond bond financing that essentially the state has no obligation on. It's it's

Well, everybody wants it though.

Right. It's a limited resource. Yeah. But what happened last year was the the increase in, that there was a there's the reason it's a it's a limited resource is because the project must show 50% of its costs are are, covered by bonds. That would that would that had been the law for a long time.

The rule changed last year to where that's now 25% of costs. So kind of an overnight bond, HMMMF bond increased by by double. You you know, you the way you can use HMMMF, I guess we should say. So it's still a limited resource, absolutely, but it's not as limited as certainly RHRF or the 9% LiTAC.

Right. So how much in typical project, how much are we giving in that?

So it depends on the project. So, I mean, there's there isn't really Let's

pick a project then and let's walk through it.

So, generally, you have to have bond costs at 25% of total development costs. That's the law in order to get the LITEC credits. So we limit it at 30%. So you can have between 2530% of your total development cost be HMO bonds. K.

So let's let's give it a number.

Twenty seven twenty seven and a half percent. K. That's all there.

Yeah. And then you then have the LITEC credit and then the state credit.

Right. The LITEC and the the combined LITEC plus state credit is somewhere between 4070% of cost. 30 actually, 3070% depending if it's a 4% or if it's a 9%. 9% is the higher you'll get closer to that 70%. 4%, you're closer to the 30 to 40%

of total per total development costs. So in in round numbers, that's how much real dollars? You're subsiding from, you know, our HRF by around 250,000 and

what Right. So yeah. So if you think about it, right, you're gonna say, like, most of these projects are gonna be 100% of their costs are gonna be covered by bonds, RHRF, and, the LIHTC equity. So just kinda backing into it. Right?

If we say, let's say, 40% we're talking about a 4% project. Let's say that it's a high side. Let's you know, just because trying to do math up here. So let's say 30% is covered by the bonds, 40% is covered by the LIHTC credit, then that 70%, so about 30% maybe, would be covered by RHRF. The gap financing would be necessary, something along those lines.

And the state tax rate is not free because we're subsidizing that as well. Right. Oh, yeah. So that's how we get to a million dollars a door then.

It it depends. Not everything's a million dollars a door, but, yeah, I mean, some some are. And there's also, you know, depending so other other projects that are more expensive are not necessarily always have the highest IHRF per unit cost. So there you know, DHHL projects sometimes have their funds put in, city and county or, they they also put funds in sometimes. So, it's not always 100% covered by those three, but those are the three main, sources that provide the the funding for the capital stack.

So have you have you noticed that, affordability in perpetuity is costing more than regular sixty year projects?

So our our you know, we all we have is our data really from last year to to kinda go off of, and they were more expensive last year.

Do you know how much?

Sorry. So so we bumped into government and per perpetuity together. So the average cost per unit for awarded projects was 718,000. And then for the non perpetuity, non government, the average cost per unit was 635,000 per unit.

So there's a substantial difference then.

Yeah. And and I'd say, you know, it's it's a small sample size. There's five projects of each. So it's not a 100% representative, but it's you know, just from that, you could say it is more expensive.

So I guess the trade off is, I guess, when we when we prioritize perpetuity, it's not free.

Yeah. Probably not. So you could say that. Okay. That's fine.

That's it for now.

Thanks. Any further questions?

Thanks for

everything here, and thank you for your for the presentation. I'm just confused why a project like Kyle O'Leary or Gonna be open, Yolani, would score well. Yeah. See such an outlier on cost per square foot.

Yeah.

Does the formula scoring criteria take into account those types of cost measures?

Yeah. No. That's a great question. So, during the last time the last update of the QAP, scoring was or sorry. Cost was deemphasized.

There is a component there, but it was deemphasized because what we saw was that when it was a larger component of the scoring, you'd have a lot of project come in and kind of almost you know, they they they present their costs that maybe weren't real, that weren't and so they would end up getting awarded. They weren't as ready as they should be. And then they'd come back and they'd require more resources. Right. And, and they would take longer to close.

And as, as things take longer, things always get more expensive. So we had a backlog of closings for several years. And so it was decided during the last adjustment to the QAP to deemphasize cost to and to focus more on the readiness component so that we could find these projects that we thought, you know, would close faster, deliver the units quicker.

And in a way, readiness is actually a cost controller because when you're you have two you have two projects next to each other and this one has its permits and is ready to be built and this one's still in schematic design and isn't gonna submit permits for a year, this one is absolutely gonna be able to tell us that its costs are more certain versus this project here. So by, you

know, emphasizing readiness, we're actually just getting we're the goal was to get a truer number from the developers and not something that necessarily would be, maybe, you know, a little bit, my best guess would be this or that,

which would, you know, not

saying that's what was happening, but, you know, it's by what we knew what occurred later after those projects were awarded in, you know, 2021, '22, '22, and even 2023 is that there was a lot of projects coming back and requiring more resources, more time. So that that's kind of the the reason that a that a project like the Kapiolani project could come in, score really well because it was ready. It had been awarded prior.

It had, you know, a lot of certainty to it, but it also it just it was so expensive.

I mean, that makes some sense, and I appreciate, you know, you guys trying to solve for the readiness question. I guess in my mind, it would still be better rather than deemphasizing cost in the scoring. That cost should still be, I would think, one of the driving factors here. And readiness is almost like a, you know, pass or fail type of thing rather than sort of a work around of boosting the readiness score and deemphasize the cost.

There must be a way to to accomplish both, I would hope or imagine.

Yeah. The I mean, it's a good point. It's hard to find a balance. And, you know, to I completely hear you that there, you know, there's there needs to be more emphasis on cost. Our board has been very focused on it through this funding round.

And, you know, I think that that's absolutely something that we're looking we're we're we're looking to shift, certainly, in the next QAP and potentially even before. There's a the NASHIA, which is the housing finance agency agency sort of national organization as a this is I've got kids again. This is a nationwide issue, and they they've produced sort of a best practice list that we're looking into and looking into sort of putting cost containment strategies together to keep, you know, issues like this from occurring.

So, we're we're absolutely looking into that. We recognize that the costs, you know, at a certain point, it's, you know, you you can't, you know, it readiness is great, but again, if projects are just gonna be way, way too expensive, then, you know, we gotta find another way to to allocate the resources.

So And what would be a barrier, because I'm sure you've worked through this, to just having sort of readiness be an initial criteria, sort of, you know, go or no go type of readiness level, and then making the scoring entirely formula based, cost based formula, you know, with adjustments obviously for AMI and and and better count in some capacity. What would be the barrier to something like that?

You know, I I think we're thinking I think it we're we're thinking about maybe flipping it because so readiness is not the thing with readiness is it's it's very there there's lots of reasons a project could or you know, it's hard to say yes or no for readiness. Right? And it and it and digging into readiness takes a lot more time than digging into cost because you can just kinda look at the cost and say yes or no.

So I think, potentially, one solution would be to just have a cost cap, you know, and make that a minimum threshold requirement. Projects that are above this number are, you know, not eligible to apply or they're they're, you know, something along those lines.

And then what you get beyond that is, okay. Now we can dig in and focus on we know all these projects have met the metric of cost, and now we can let's find out which projects are ready, which projects provide the most public benefit, you know, that that area. So that's something worth we're considering.

Okay. I mean, I guess just conceptually, as you said to Senator Ashimoto, 100% of the costs for the most part are covered. And even if HMF even if the BlueBay is not, you know, necessarily a state subsidy, it's a limited resource. Right? And so I think, personally, we don't just wanna cost cap.

We want to try and incentivize the projects that are gonna be cheaper and use less state resources.

Right. Yeah. And I think that would be probably a combination. Right? There'd probably be a cost cap or maybe an RHRF cap or, you know, some combination of you need to have a certain amount of limited resources.

But also, again, you know, the scoring component, you'd still keep that scoring component in terms in in the you know, to make sure that we're still getting value for the resources.

So I don't think we would get rid of it, but really more it's overlaying it, you know, to say that what is what is the number that we want everything to be under no matter what and whether that's our HRF per unit or per unit, whatever it may be, cost per unit, sort of put that in place, and then move then we can move forward to what we're at what we've been doing anyway, which is looking into the the various criteria and scoring that that out.

Okay. And does HMF have similar to QAP, like, you know, like a lead, I don't know, energy efficiency scoring criteria and amenities type of criteria?

I I I I had it right here. Let me just double check.

And can you just furnish both of those to the committees so we can share with all of our groups both of the scoring and the mixed range and the mapping arguments? Absolutely. Thank you.

So And the only reason I'm asking that question is just, like, how much of the scoring is based on factors other than the amount of units we're producing when we're responding to the subsidy?

Yeah. It so it's out of 50 points, the criteria. So, you know, the big one of the big pieces of it is is that the the, affordable commitment period and including whether or not it's on state land. So if you choose perpetuity or you choose, or you're able to go on on state or government land, you know, you get the you get the most points. And then, you know, if you go up to seventy years, that's sort of the second tier and on down.

Income targeting is about so that's five points. Income targeting is six points. So again, this is out of 15. Income targeting is gonna be, you know, the lower preference for lower lower units. Readiness is, out of 15 points.

So it's very important. HMMF efficiency is two points. So to your point, you know, it's deemphasized. Project based rental assistance is two points. State and local government financing, meaning if you're able to come in with resources outside, and supported, you know, so the county or or otherwise, that adds points two points.

Project location and market demand is two points. Developer experience is very important. It's out of six points. We find that that's something that, you know, that that's one of the more qualitative areas, but, you know, we have lots of information and lots of lots of data that goes back that we can look at to to provide the criteria for that. The reasonableness of development cost is two points.

So, again, it has been deemphasized. Minimum unit sizes is three points. There's one point for energy efficiency and green building, one point for special housing needs, and then two points for state conveyance. So that's if you, as a project, come in and say I will sell my project at fair market value to the state within a required time frame, then you you can get up to two points.

So really, the the major drivers are gonna be sort of the income targeting, the readiness, and the, the state government land or,

you know, the length of affordable commitment period. Those are pretty those are, like, the big pieces. And, you know, all these other pieces, again, it's important. The project has, you know, outside, you know, state, provide or sorry, local funds provided that also provides a big boost. But the yes.

So to answer your question, there is energy efficiency in green building one point out of 50.

I guess a comment for that question is as as the data working group moves forward and revised the criteria for 2028, you

know, some stand up things from the list you just said is like the unit size is getting three points whereas Etop cost is getting two points. That seems to me like, you know, that that shouldn't be. So there's there's I think, I I would hope as costs are getting more and more expensive and with the assumption that the state is covering essentially all of that, that we should be doing whatever we can to incentivize our cost through the through the book, my my goal. Yeah.

As as that gets revised.

One more question. Do we have any estimate? Our ability to sort of estimate our our model, like, total subsidy per unit including county subsidies, contributing towards money, even property tax exemption, etcetera. Do do we have a way to estimate?

Yeah, I mean we could. At a project level because

they're all gonna be.

Yeah, I mean, yeah, yeah, certainly for any given project we could dig in and determine, you know, what would be the total subsidy including, property tax exemption is, you know, not it's not easy because that's more of a a revenue, you know, growth that's more of a revenue item that's not necessarily embedded, but, it helps obviously with your able to get a bigger bank loan because your net operating income is higher since you're not paying. But

Or or, you know, just like I imagine including property taxes, I'm saying it's the GE exemption, all the subsidies that we're giving. You know, it appears that we're gonna be well north of of a million dollars a unit in subsidy in some capacity. But it and if we're not, it would be good to have those numbers.

Yeah. No. No. Yeah. Like I said, I think it it's the challenge is if you're, you know, subsidizing ongoing it's what would be expenses to convert that into how how does that end up in the capital stack and what does that what does that drive up or not?

And I'm sure we could back into some numbers and and provide that. But And

and also probably not, you know, you guys will allow on your plate. Maybe it's something we can consider trying to get you here or somebody involved in is is trying to, you know, ways to model

Yeah. This. I I think that, I mean, it's a good point. This the the the the I think the thing that has to be, you know, that that we we have to remember is that the cost of the construction, whether whatever it is, is it the the rents are so low that these projects are never you know, there's no way to ever provide this housing without significant subsidy.

And, you know, even looking at we're we're working on our our mixed income rental program, which is, you know, higher than 80 to one forty.

And even those units, you know, there's pretty significant subsidy required, just because of the the construction costs and development costs are so high. LIHTC does have higher costs associated that are soft costs outside of the normal construction costs. If we that number is estimated somewhere to be about nine to 15% of additional costs added on it.

If, you know, if you're taking building the same building, this building is gonna be YTECH and this or it's the same building, but through the YTECH scheme versus not, it's about nine to 13%. So there's costs that are embedded.

But, you know, then hopefully the federal tax credit usually makes up for more than that and adds the value back. So ultimately, you know, the to to get to the number that we're looking at, I think we really wanna just emphasize some level of cost that the state wants and, you know, sort of push that direction.

So if we wanna stay at, you know, $200,000 per unit Max for a for our HRF or, you know, whatever it may be, $800,000 per unit, you know, maybe make it island based, you know, whatever it may be. That there's there's gotta be some sort of scheme that basically drives the cost from the top.

And then when developers know that, they can make adjustments before they've committed resources for years and years and years, and then they have to come back and kinda start peeling back what they've done.

So

Yeah. I hear that. I think that would be a good good start.

But the reason why I don't think a cap is necessarily enough, why I feel like we should also be deriving that question with a rubric based, you know, high score account for low cost per unit is, at least on the Mainland, I know that there's things like adaptive reuse projects, that are converting to SROs that can be done relatively cheaply, And they're doing them through LITEC in a way that I think would never work in Hawaii because of the, you know, the they're gonna be small units, so they're not gonna score well.

And I don't think it after b u's projects would score well either.

But so, you know, you could get these creative projects that could could potentially produce units really cheap But they're never gonna score well, I don't think, under our criteria unless we're, you know, pumping up that metric.

And and yeah. You know, one one thought and and something that we're gonna look at is that, you know, you can within LIHTC, you can have different set asides. So you can basically have different categories of type of project and sort of put them, you know, maybe you put the state projects in a in a set aside and you put small, you know, adaptive reuse, you know, or something. And and then you kind of allow for many different types, you know, whatever we want.

And the idea would be what what are we looking to incentivize?

Are we looking to push this or that? And you can guarantee a certain amount of resources going to that category, that set aside. So that's something that's done in other QAPs. It's not done here. It's definitely something we can look at.

And and that's interesting. You know, I I that's not necessarily my hope either. I wouldn't wanna just have it set aside and then we're funding inefficient projects. The hope is just like if somebody can do an adaptive use project, that's gonna be really efficient on a per unit account and that one's horrible and and get funding. Whereas, I think, currently, it's it's not going to you know, I don't wanna beat that up too much.

But, yeah, at the end oh, I guess one final question on special affordability. So as it looked like they might be coming in a little bit more expensive, where is that extra expense for a non government project? I I guess to back up, is the assumption for the pet perpetual affordable projects that they're gonna come back in in sixty years for LIHTC again Right. And then refurbish these units?

Yeah. So that that's a that's a good question. So, generally, most of these projects, they come back in after so after fifteen years, the original investors are they're they're they're done with their investment. So they, you know, in other places where there's not as much of a concern, they just basically come back for a new bond allocation.

They get the tax credits and it's re either re it's resold or or sorry, the project is sold or it's basically sold to yourself more or less, and then you use that additional use those additional funds for substantial rehab and fixing up the project.

The problem here is that, you know, a lot of these projects that we have don't need substantial rehab. So that we've seen them come in, we've looked at what they need and there, it's not enough to warrant, certainly not enough that we would commit resources to it above building new units. So, when we have projects that come in that do need substantial rehab, much more likely to, to pursue that.

And there, there is a criteria for, you know, what, you know, when we're looking at the substantial or the rehab units, like what the level of need is. And so, you know, we're definitely more likely also to award projects that don't need our HRF.

They can just basically do it with tax credits and bonds, you know, because then that doesn't take away from the sort of limiting factor which is generally our our HRF balances. But, yeah, usually any project, whether it's per perpetually affordable or not, is gonna come back, I'd say, within thirty years and and ask for, and try to do a, a rehab. And, you know, it just depends on the resources available.

I guess question is are the provincial ones, private ones banking on getting that at some point that we have money or are they what what is the model there for keeping it?

Well, I mean, it's I think it's it it it it'd be the same as the other guy, you know, anyone coming in for seventy years or not. I don't I don't know that anybody's banking on anything, you know, sixty to seventy years or or beyond. Generally, about twenty to thirty years people, you know, you know, perpetual or not. And again, the perpetual affordability is relatively new.

So we haven't seen what will happen yet, but I think, you know, realistically, it's every project is gonna come back at some point and ask for, the ability to to be rehabbed.

So that's something that we are, you know, trying to calculate and figure out what what the need will be for that eventually. But, you know, generally, it's it whether it's perpetual or not, that that's the model that most of these WiTech developers and WiTech projects have. So yeah. Okay. Thank you.

Further questions? Okay. Thank you. I have a few questions. So, what's the typical repayment schedule for rental housing involvement?

Well, first, after you award the project, when does the RHRF money actually leave the door?

So once the loan closes, that's that's sort of when the funds are pulled out. And then what happens is there's usually a disbursement schedule during construction. And because RHRF is the lowest cost funding, it almost always makes sense to utilize those funds first. So if I'm a developer and I have, you know, a bank loan at 6%, and and the equity that's coming in is usually already scheduled on certain around certain milestones. So generally, the RHRF starts, you know, within a month of closing, basically.

That's sort of when it gets starts to get drawn on and then dispersed out until more or less it reaches, you know, they they exhaust that and then they'll start drawing on their bank loans and

such. So about by what year does all of the RHR money get to work disbursed?

So if a pro okay. So let's say a project let's okay. Project is awarded. Let's say it's awarded in July, and we expect it to close by, you know, within, let's say, fifteen months. So let's say we expect it to close by September, the following year.

The RHRF will start being dispersed probably by October. And then depending on the construction schedule, usually that ends up getting dispersed out by maybe seven month seven or eight, depending on the the size of the project. So probably like a twenty four month project, a smaller project would be faster, but it might might take till month twelve or so after that, on a larger three year project.

And then what's the interest rate and the repayment schedule like?

So the interest rate is somewhere between 25 basis points and, a 100 basis points or 1%. So point 25%

to one percent?

Point 25%. Yeah. And and the way it works is it's it's called a soft loan. So it's not hard debt service like you would have with a, you know, like, the example being like the mortgage on your house. It's the same payment every month that a little bit is a little bit more is, principal and interest, you know, that principal and interest amortizes over time.

This is soft debt service, so it's repaid through cash flow. It's available after the project has already paid its primary debt service. So the schedule it's not a set schedule, but if it doesn't pay, then it, you know, it next year, the amount that it owes grows by the interest rate and there you know, it basically, the interest goes up.

The interest pool goes up a little bit more every every year assuming that it's, you know, making that the project is making minimum payments but not enough to cover its overall interest rate.

Can you give us, like, a real world example with ballpark figures?

Yeah. So let's say there's let's say there's a project has growth after let's call it its net operating income. Right? So that would be gross rents less the operating expenses of the project. And then let's say it has a $100 left over. And then, let's say that the senior debt on it is $50.

So after that, you have $50 left over after you paid senior debt. Right? So before that money can go into anyone else, in anyone else's pockets, there's a percentage applied based on the RHRF. It's in the application. That's a number that we negotiate, with you know, they'll put it in their application, and that's the number we're always saying.

So usually, it's somewhere between 75 and 95% of the residual cash flow from the project is required to come back to pay our HRF. So let's say it was 75%, you know, then, you know, it's like $37.5 then would come back to pay our HRF and then $12.5 would go on to the, you know, the partners and such project.

And then how many years does the loan have to be repaid in its entirety?

Yeah. So what we do is we set a loan term. So when you do the underwriting, there's a schedule. It basically shows how many years it will take based on the residual cash flows and expectation of growth in rents, expectation in growth in expenses. And it, you know, it goes out sometimes 50 or 75 years.

75 years is is pretty much our Max. But what we try to do is we try to establish, okay, how long is this actually based on our underwriting is this gonna take? And then we'll set the loan term there. So let's say we set it generally, let's call it 50 to 60 years depending, but the loan term can never be longer than the affordable commitment period.

So if the affordable commitment period is 7, is 65 years, we're not gonna make a loan for longer than 60 years.

So that the loan, the loan should be repaid before the, you know, well before the project becomes off comes off of its affordable commitment period.

What's the average developer fee for a LIHTC project?

Per unit, it's somewhere between $55,000 and $95,000 per unit.

It's about 10%.

It's usually less than 10%. So it's somewhere like a really low developer fee would be 3 to 4% and it kinda depends, you know, because it's actually the developer fee maximum is established in the QAP. And then for, like, 9% units, there's just a flat rate per unit, which I think is that's where the $55,000 comes in. And for 4%, there's a small adjustment that can be made to push it up.

So, you know, 7-8%, I think, is probably about what we average.

If we saw higher than 8%, that we'd, you know, that would be above average in my mind. 9 to 10% would be above average.

So maybe you need to tinker with that because they actually have an incentive to charge more per unit because they get paid the more each more of the more each costs. Right?

No. So we actually remove that. It's actually per unit. So that the the amount is per unit, and it's not necessarily based on there's that was something that was in the QAP prior, and that was something that was removed in that it's now it's not it's no longer based on cost itself. So,

What percentage of Hawaii's total housing production is from LIHTC?

That I don't know off the top of my head, to be honest with you.

I think it's over half based on the governor's dashboard. Does that sound right to you?

It could be. I mean, I think, you know, like I said, last year was, you know, you awarded almost, you know, 700, 1,750 units. I think it's somewhere around 3 to 4,000 units a year is what I just something I remember. I'm not sure if that's right or not, but so it could, it could in any given year be about half.

And almost all of these units, 90% plus of these units are for the 60% AMI range. Right?

So again, the, it's you're incentivized to go lower, to push that number lower. So you score better if you're, if you have more 30-40% units. So 90%, you know, maybe not 90%, but probably closer to 75.

How much demand is there for 60% AMI rentals?

My my understanding is that there's a fair amount of demand. I mean, we haven't so, you know, we look at these market studies pretty carefully, and, you know, they're they're produced by third parties and and, there's not very many projects that I'm aware of that have had trouble leasing up. It wasn't something more had anything to do with the, you know, something to do with the the property itself, specifically to the property versus, you know, just, you know, a general LIHTC project somewhere.

So it's hard to say how much demand there is, but, you know, we do analyze the market study and make sure that it shows that there's a significant need.

So you gave some examples of projects that you declined to award because of high costs, for example, do you have what's your statutory authority to do so? Do you have complete discretion to award or non award projects?

No. I mean, we take it to a board and, you know, they

What's a statutory authority?

I'm not sure. Statutorily

That criteria that you gave, were they in statute?

Not in statute, but they're in HAR. So, I mean, I'm assuming they came from statute and, you know, put into the administrative rules that we follow.

So for example, when you were saying one project per developer, is that in the HAR?

No. That's an internal policy based on our best understanding of, you know, what has happened in the past when you award more than one project to a developer at any given time. Now, again, if there was a developer that was able to manage several projects and they had lots of teams, but generally, these developers are, you know, a single team more or less.

So, you know, we just look at the team and we say, well, the team, team of three or four people, you know, it'd be a real challenge for them to move forward doing two projects at the same time, you know, and and we we discussed that with the developer when we're making an award. So

Okay. So my understanding is that you have a you have complete statutory authority to reject projects for any reason or no reason at all. Is there anything stopping you from rejecting a project for no reason at all?

I mean, you know, we what we'd like to have a reason. I mean, you know, we, you know, we're not rejecting

Are you aware of any statutory limits?

I'm not aware of it, no.

Why aren't a 100% of projects either perpetually affordable or government owned?

So it's a newer concept for the state. And, you know, I think the reason is that you wanna, if that's something that is the priority of the state, you can't, you don't wanna jump right to that because that will cause a lot of dislocation in the market. And and what I mean by that is that you have it's not just the state of Hawaii and developers who are doing this. You have banks, you have investors, you have syndicators. So there's a lot of other parties that are necessary to get these deals done.

And so you wanna sort of signal what you're trying to do and not necessarily make, you know, giant moves that may push, you know, dislocate the market at any given time. So the goal has been to move more, you know, towards that model. And, you know, it looks like we're seeing results from that indicated, you know, by our increase, the increased point, points in the criteria for that.

So, you know, in terms of why we can't go to it, you know, again, this is just my opinion, but I think that it would be, unhealthy for the, you know, the LIHTC market, the ability to build units.

I still haven't heard a reason why, though.

Yeah. I think the reason is that it would be again, again, this is just my opinion on why is that it would be tough to, build units if we required everything to be perpetual or government owned. You'd a lot of developers and a lot of projects that are already in existence would probably fall out, and you'd have a period and, you know, LIHTC investors would be scared off.

Banks would perhaps stack away and you'd have a very fallow period where nothing gets built. So that that again, this is just my opinion.

I mean, 55% of the projects are perpetual government though. So clearly, there are developers and banks that are willing to

Right.

To do this.

Right.

So and what's more, you're oversubscribed three to one.

Right.

So it wouldn't be the worst thing for some of those applicants to, you know, drop out.

Yeah. I mean, I don't disagree with you. I'm just, you know, I'm trying to predict what would happen if we just said everything needs to be perpetual or state owned.

Does the city and county of Honolulu receive a guaranteed fraction of the awards?

No. They have their own bond allocation that they can either choose to use or give back. But the bond allocation, again, will you know, if they award a project with bonds, then the LIHTC comes as, as by right, which we would we would award. But the RHRF component is still within our purview. So unless they're able to build a project with no RHRF, then we'd still have to work with them on it.

So what if, those projects that the city awards do not get RHRF funding? What happens? They don't get built. And so that bond allocation also just goes away?

Well, what happens is then the bond allocation, if they don't use it, it goes back to BNF and then BNF reassigns it. So, they do have bond allocation that they've kept that they need to, you know, move on and, you know, so generally we're we try to work with the city. No one wants to lose bonds.

But as for, you know, what happens if they don't award or don't get RHRF then, I guess in theory, they could, get to a point where the bond allocation is not used. As far as I know, that hasn't happened yet.

Does HHFDC have the power to transfer funds into the mixed income subaccount right now? And if not, why not?

Do not. I'm not sure why. Be very useful for us.

Are you working on administrative rules for that? But do you need administrative rules for the mixed income subaccount?

We do. Yeah. Are those being worked on? Yes. We're running a pilot program right now called the it's the Mixed Income Rental Program based on the program is structured around the, statutory guidelines put through in, 201H-202 subsection F.

And we opened that pilot program in July, and we're running it through the end of the year. The funds are gonna come from the whole tier two because they're not actually in the mixed income sub account. But we're, you know, we're using the criteria to basically follow what was, you know, what what was in statute. And and once we are able to get funds into the mixed income sub account and have administrative rules, then it will be set up as a permanent lending vehicle for us.

Doesn't the emergency powers of the governor give you the power to transfer funds into and out of the mixed income subaccount?

You know, we discussed this and I don't think so. We discussed this with the attorney generals and my understanding is it does not. And again, this is just what I heard from the attorney generals when we had a discussion with them.

Okay. So we are out of time. Just in summary, I'd like to say, you know, one of my takeaways from this hearing is that the development cost for each of these units is now at a million dollar per unit level, which is a lot of money.

And just the state subsidy involved, cash subsidy there, $220,000 per unit, I mean, I wonder whether if you just offered $220,000 cash to each LIHTC eligible tenant, I think most of them would probably take that $220,000 rather than the unit, which might expire in its affordability after a certain number of time. And if you add in the state and federal tax credits, you're talking about, like, a 5 or $600,000 of taxpayer money going into each one of these units.

And if you were just to give that cash to each tenant, you know, the median condo price in Hawaii is $500,000. They could just pay that they could just buy a condo, right, you know, front, outright. Right?

So I think I, at least speaking from my perspective, I think the staggering cost and the staggering inefficiency of the way that state resources are deployed in this matter, putting all of our eggs into this one basket is not, healthy, especially considering that this is over half of all the housing production in the state nowadays.

So I think it's imperative on all of us, including you, to, develop more efficient models for housing production that don't put, you know, $500,000 of, burden on the taxpayers and state per unit.

Yeah. No. I agree.

Alright. Anything further? I think we'll close the box.

I appreciate you guys coming in here. I think we all have the same goals, ... So I appreciate the collaboration as we work towards those goals. Thank you.

Thank you, there'll be no further business briefing as a treatment.