On August 8, 2023, wildfire tore through Lahaina, claiming over 100 lives, displacing thousands of families, and reducing much of the town to ash. Among the structures lost was Front Street Apartments—the 142-unit affordable housing complex at the center of this story.

For years, residents fought to keep their homes affordable, only to see the owner attempt to break that promise decades early. Then the fire took what was left.

This is a story of loss on top of loss. Of families who survived the flames only to face the uncertainty of whether they will ever have a place to call home again. We hold space for the victims, the survivors, and the entire Lahaina community as we continue this fight for housing justice.

Front Street Apartments was a 142-unit affordable housing complex in Lahaina, Maui, that was built using more than $20 million in public money and benefits.

In exchange for the public investment, the owner of the property—Front Street Affordable Housing Partners (FSA)—agreed to keep the complex affordable for a period of 51 years. But FSA attempted to get out from under their affordability commitments decades earlier than agreed upon. If permitted to go forward, the conversion to market rate would have almost certainly resulted in the loss of housing for most of Front Street’s residents, while increasing the value of the complex for the owner by up to $44 million.

More than 300 low-income tenants lived at the complex. Many of the tenants were senior citizens, or people with disabilities living on fixed incomes.

To be eligible to live in an affordable unit at Front Street Apartments, a one-member household needed to make less than $39,660 a year. Many households at Front Street made less than $15,000 annually. Monthly rents for a one-bedroom unit at the complex were capped at between $885 and $1,062 depending on the income of the tenant.

If a conversion were to occur, rents would likely more than double. Given the crisis in the availability of affordable housing in the state, and on Maui in particular, it would have been impossible for most Front Street tenants to find alternative housing. Many would be faced with the prospect of becoming homeless.

To build the complex, FSA was provided with $15.6 million in Low Income Housing Tax Credits and over $5 million in benefits from Maui county, which included property tax exemptions and waivers of building requirements, in 2001. In return, FSA promised to maintain the affordable rents at the apartments for 51 years—a promise which was memorialized in a restrictive covenant on the property:

Although the covenant clearly states that FSA may only get out from the restrictions early in the case of a looming foreclosure, FSA planned to increase rents to market rates on all Front Street tenants starting in 2019, more than 30 years early.

FSA stood to make tens of millions of dollars had the early conversion to market rents been permitted. FSA claimed it was entitled to be released from the affordability commitment using a special process that provides an exception to the rules that typically govern Low Income Housing Tax Credit projects like Front Street Apartments.

Under the process, FSA asserted that the property was worth only $8.4 million in 2015. FSA then provided an opportunity for the State of Hawaiʻi to purchase (or find a purchaser for) the property at a price of $15.4 million—nearly twice the purported value of the property. FSA later contended that the opportunity to purchase the property for $15.4 million had expired, and that the property was therefore worth up to $52 million based on the claim that the complex no longer was bound by the affordability requirements, allowing rents to be raised to market rates.

The issue also involved the Hawaiʻi Housing Finance and Development Corporation (HHDFC)—the state agency which oversees the Low-Income Housing Tax Credit program that governs Front Street Apartments. LEJ also challenged HHFDC’s failure to comply with applicable legal requirements relating to the conversion process, including improperly entering into a release of the restrictive covenant without legal authority and without public notice or consent from the tenants, who are entitled to enforce the covenant.

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Flexible, expert advice when you need it. Book hourly support across a range of topics—from planning to problem-solving. This focused consultation will help clarify your goals, map out next steps, and identify opportunities for growth.