Victory in affordable housing dispute on Maui

From today’s press release:

MAUI TENANTS WELCOME FEDERAL COURT DECISION PRESERVING
LOW-INCOME HOUSING

LAHAINA, Hawaii — Tenants of the Lahaina Front Street Apartments low-income housing project
welcomed a federal court decision this week that ensures that the project will stay affordable until
2051. The 40-page decision by Hawai‘i federal District Court Judge Jill Otake rejected an attempt by
the project developer, Front Street Affordable Housing Partners, to unilaterally end the restrictions
that prevent the developer from sharply raising rents or selling the project unencumbered by the rent
restrictions.

The Front Street project was built in 2001 to provide affordable rental housing to low income residents of
Maui. Front Street is one of the few affordable housing complexes left on Maui. Currently, the maximum
income for four is about $55,000 to rent an apartment at Front Street. In return for $15 million in state
funded tax credits, the developer promised by covenant to keep the apartments affordable for 51 years.

However, after just 15 years, the developer asked the state's financing agency, the Hawai‘i Housing
Finance & Development Corporation (HHFDC), for permission to end the restrictions. HHFDC rubberstamped the developer’s request without complying with applicable law, according to attorneys
representing the tenants. Without the court challenge, the ending of rent restrictions could have led to
the doubling or tripling of rents and the eviction of low-income tenants who were unable to pay.

The court ruled that the developer was obligated to honor its commitment to keep rents affordable for
the next 31 years, and that an attempted “release” of the low-income restrictions between the developer
and HHFDC was unenforceable. The court explained, “under Hawai‘i law, the Release is invalid because
it was not done pursuant to a term in the Declaration and instead executed by agreement between” the
developer and HHFDC “without any consent of beneficiaries like Plaintiffs.”

Tenant Mike Tuttle, the lead plaintiff in the case, expressed relief at the decision. Tuttle (57), has lived
at Front Street with his teenage daughters since 2015. Until March, when he was furloughed as a result
of the COVID-19 pandemic, Tuttle worked as a Retail Sales Manager. “It's almost impossible to find
affordable housing on Maui,” said Tuttle. “It’s great to know that I will able to keep a roof over my head
and for my kids.”

The tenants were represented pro bono by Andrew Lillie, Joseph Lambert, and Cory Wroblewski of
the international law firm of Hogan Lovells US LLP, Victor Geminiani and Tom Helper of the Honolulu
nonprofit Lawyers for Equal Justice, and Maui attorney Lance Collins.

“We are very pleased with the decision,” said attorney Joseph Lambert of Hogan Lovells US LLP, lead
counsel in the case. “The court’s ruling ensures that the Front Street Apartments will remain rentrestricted
and affordable through 2051, which is what the developer originally promised it would do.”

Lawyers for Equal Justice attorney Tom Helper noted that the decision criticized the Hawai‘i Housing
Finance and Development Corporation—which is supposed to protect low-income housing—for
approving the developer’s attempt to end affordability restrictions. “HHFDC should have been on the side
of the tenants in this dispute, not the developer,” Helper said.

Lance Collins explained that “when a developer gets substantial tax credits and zoning concessions on
the promise that they will build a project for affordable housing, we must be keep them to the word.”

“Like many others at Front Street, I am retired and living on a fixed income,” said plaintiff Chi Guyer. “If
the court hadn't protected us from rent increases, I would not be able to afford to live on Maui.”

Front Street Lawyers for Equal Justice