Hogan Lovells obtains federal court decision preserving low-income housing for Maui tenants

The firm represented tenants of the Lahaina Front Street Apartments low-income housing project with co-counsel from the Honolulu nonprofit Lawyers for Equal Justice, and Maui attorney Lance Collins.

In a 40-page decision, Hawai’i federal District Court Judge Jill Otake rejected an attempt by the project developer, Front Street Affordable Housing Partners, to unilaterally end 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 Hawaii Housing Finance & Development Corporation, for permission to end the restrictions. HHFDC rubber-stamped the developer's request without complying with applicable law, according to attorneys representing the tenants.

Without the court challenge, the end 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 31years, 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 off 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."

"We are very pleased with the decision," said Hogan Lovells attorney Joseph Lambert, who served as lead counsel in the case. "The court’s ruling ensures that the Front Street Apartments will remain rent-restricted 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 Hawaii 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.

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.”

In addition to Lambert, the Hogan Lovells team representing the tenants included Andrew Lillie and Cory Wroblewski, with support from Bobby Thalman, Clara Troyer, and Stephanie Rummery, and former associates Andrew Nussbaum, Alison Toivola, Ann Stanton, and Andrew McCormick.

The team from Lawyers for Equal Justice included Victor Geminiani.