Could a New Housing Cooperative Help Bring Affordable Homes to Hawai‘i?

This story was co-published with Overstory, an online newsroom covering the systems and solutions behind Hawai‘i’s most pressing issues.

For the last year and a half, Chase Hasegawa and a few of his neighbors at the Courtyards at Waipouli have been trying to preserve their Kaua‘i apartment complex as a much-needed source of workforce housing. The tenants have been working with a Honolulu nonprofit with the hope of buying the property and turning it into an affordable housing cooperative.

If their Waipouli Housing Cooperative is successfully established, it would be the first affordable housing cooperative to be created on Kaua‘i and the first in decades for the state.

But the Department of Hawaiian Home Lands (DHHL) is planning to acquire the property for Native Hawaiian beneficiaries soon. If the state agency closes on the property in May as planned, the acquisition would displace Hasegawa and most other residents. Some residents have already voluntarily moved out, and their units remain empty.

“We’re trying to help out the community by not displacing people that’s already there, including myself, because if my household gets kicked out tomorrow, we have no place to go,” says Hasegawa, who is a member of the Waipouli Housing Co-op’s provisional board and has lived at the apartment complex for four years.

Cities and states across the continent are looking at housing co-ops to help combat gentrification and prevent residents from being displaced. According to Housing Cooperative International, the housing co-op movement believes this model can meet the homeownership needs of Americans at 80% to 120% of the area median income without ongoing subsidy. In 2020, the University of Hawai‘i at Mānoa’s Department of Urban and Regional Planning published a research report that said housing cooperatives “could and should be promoted more by state and civil society organizations in Hawai‘i,” given that the right support exists.

Hawai‘i is essentially tied with California for having the highest median rent in the country, and about 56% of local renters spend more than 30% of their incomes on rent, says Justin Tyndall, associate professor at the University of Hawai‘i Economic Research Organization. And nearly 41% of Hawai‘i homeowners with mortgages spend more than 30% of their incomes on monthly owner costs, according to the U.S. Census Bureau. These high costs stem from Hawai‘i’s multi-decade shortage of affordable homes and are one of the main reasons why Hawai‘i’s population has declined for the last eight consecutive years and why more Native Hawaiians live on the continent than in Hawai‘i.

“People are grabbing onto this idea of resident and collective ownership,” says Kenna StormoGipson, executive director of the Hawaii Housing Policy Foundation (formerly Kū Pono Ka Leo O Ka ‘Āina), the O‘ahu nonprofit that helped organize the Waipouli renters. That’s because co-ops can provide a permanent source of affordable housing, are self-governed by residents, and are something in between renting and trying to buy a single-family home or condo, she says.

“The conversation is no longer, ‘well, after five or 10 years, you will have saved up enough to buy in the private market,’” she says. “No, that is not what we’re talking about in high-cost areas.”

How housing co-ops work

In a co-op, a corporation—sometimes in the form of a nonprofit—owns the building or complex. Residents buy shares in the corporation, and these shares grant them the right to occupy a unit. This means that the property’s mortgage is the responsibility of the co-op, which makes it easier for those who can’t qualify for individual mortgages to become homeowners.

Co-op shares can be sold at market rates or at prices determined by a formula that maintains affordability for the long term. Co-ops operate on an at-cost basis, meaning monthly charges paid by each unit only rise with increases in operating costs.

Drastic rent spikes are less likely to occur under the co-op model because it removes profit from the equation, says Fred Gibbs, president of the National Association of Housing Cooperatives, which has 1,125 co-op members representing 144,453 units.

“It makes a mockery of capitalism,” says Gibbs. He is also a member of the Waipouli Housing Cooperative’s advisory board and owns a Missouri property management company that focuses on co-ops and rentals.

Housing co-ops are typically multifamily buildings, but they can also be duplexes, townhomes, single-family homes and manufactured homes. They can be open to anyone or target certain populations, such as union members, seniors, college students, families, certain income groups, or minority groups.

Like condos, co-op members collectively make decisions about their community. They elect a governing board that decides on house rules, budgeting and maintenance projects. However, co-ops differ from condos in that their boards oversee the entire property, rather than just the common areas. Co-ops also tend to prioritize the collective wellbeing of their residents over property values, Gibbs says.

Housing co-ops have existed in the U.S. since the late 1800s and in Hawai‘i since the 1950s. Developer Kepokai Aluli and his partners built the first co-op apartments in Makiki. By 1960, co-op apartments had spread throughout more areas of O‘ahu, and some were planned for Kaua‘i and Maui. They often appealed to people who didn’t need a lot of space or who were interested in renting them out long-term or as hotel rooms.

Affordable housing co-ops targeting lower-income residents began being constructed on O‘ahu in the 1970s using federal subsidies. Hawai‘i’s legislature enabled limited-equity housing cooperatives—the most common type of affordable co-op—in 1982. Limited-equity co-ops limit the amount at which a membership share can be sold.

In 1984, Hawai‘i had some 53 co-ops with about 2,832 total units, according to an article in the Sunday Star-Bulletin and Advertiser. Housing developer Peter Savio converted several Waipahu apartment buildings into co-ops in the 1980s. He says co-ops were the only way of splitting a building into multiple owners before condos and were popular because they gave residents more control over who their neighbors were. But the downside was that having a master loan meant that if one owner didn’t pay, the others had to make up their share.

Today, at least 15 housing co-ops exist on O‘ahu, mostly in Waikīkī and along the ocean fronting Lē‘ahi. Four properties operate as affordable co-ops for lower income residents in Liliha, ‘Aiea and Mililani.

A co-op on Kaua‘i

At 75, former Kaua‘i Mayor and Councilmember JoAnn Yukimura hopes to see a housing cooperative on Kaua‘i during her lifetime. She helped create the Kaua‘i Island Utility Cooperative in the early 2000s and later brought a national co-op housing expert to the island to do community workshops on the housing co-op model. The idea didn’t gain much traction then because it was too foreign.

She’s now part of the Waipouli Housing Cooperative’s advisory board and says the effort has helped encourage more conversations about housing co-ops.

“Housing cooperatives are premier solutions to our affordable housing problem, and the way to get it here on the island is to start with the first one, so that people can see how it works,” Yukimura says.

If tenants have their way, the Courtyards at Waipouli could be the first. Built in 2009, the property was legally required to keep rents affordable for 41 of its 82 units for its first 10 years. The property was already on the market by the time StormoGipson began working with renters there in early 2023. They urged the state and county to acquire the property, fearing it would be converted to vacation rentals if bought by a private buyer.

The idea for turning the complex into a co-op originally came from a resident, StormoGipson says. That year, a group of Courtyards renters and volunteers began researching the co-op model, organizing tenants meetings, passing out flyers, tabling at community events, testifying at government meetings and talking with officials. They’ve also created an advisory board, provisional board of directors, financial plan and bylaws.

StormoGipson estimates that acquiring the Courtyards for the co-op would cost about $46 million, inclusive of closing costs and other fees. The key to keeping the Courtyard’s acquisition price low for co-op members is an initial government subsidy. Federal, and sometimes state, government subsidies spurred the creation of most of the country’s affordable co-ops between 1945 and the 1980s, according to a 2000 article in The American Journal of Economics and Sociology by Gerald Sazama, a professor emeritus at the University of Connecticut.

StormoGipson says the Waipouli co-op has been pre-approved for a $20 million, 40-year loan from the U.S. Department of Housing and Urban Development and hopes to get a subsidy from Kaua‘i County. The subsidy would ideally come from the county buying the land beneath the complex and perhaps a low-interest loan. The co-op would also seek private donations and foundation grants, in addition to having members collectively contribute $2 million in equity.

In September 2023, the Kaua‘i County Council passed a resolution encouraging the county to acquire the Courtyards. Adam Roversi, Kaua‘i housing director, wrote in an emailed statement to Overstory that the county has had generalized discussions with StormoGipson’s nonprofit about the Waipouli co-op but have no current detailed proposals before it for consideration. The county, he wrote, is supportive of efforts that will assist and provide affordable housing to Kaua‘i residents.

StormoGipson says the plan is for average monthly charges, called carrying charges, for Waipouli co-op members to be about $2,500. Those carrying cost payments would go towards the co-op’s loan, taxes, insurance, maintenance and administrative staff, repair reserves, and training and education for members

The Waipouli Housing Cooperative would limit membership to Kaua‘i’s workforce, which it defines as residents who spend at least 30 hours a week working for a local business, or self-employed individuals who receive at least 75% of their income from local contracts or customers. Cooperative members would not be able to own any other property on Kaua‘i. The co-op would be a limited-equity co-op, and membership shares would only be allowed to appreciate by 3% each year.

Hasegawa says his involvement with the co-op has made him think differently about housing options. Hasegawa — who is part Native Hawaiian, but not enough to qualify as a DHHL beneficiary — grew up in Kekahā and Hanapēpē on Kaua‘i’s west side and spent part of his childhood living on the beach.

He now shares a two-bedroom unit at the Courtyards with his fiancée, two roommates and two dogs. He and his roommates, who all grew up on the island and are in their early 20s, pay about $4,000 a month for rent, two parking stalls and water.

Before learning about the co-op model, Hasegawa thought his only options for dealing with high rents were to find a new place or be homeless. But fellow provisional board members say he’s now one of the group’s strongest advocates, passionate about preserving a way for working families priced out by the rental market to stay and continue making a living on the island.

The lack of affordable homes on Kaua‘i has made it hard for businesses to recruit and retain workers. The Garden Island has the state’s second-highest median asking rent in the state, according to Tyndall.

In 2024, median asking rent on Craigslist was $1,950 for a one-bedroom unit, $2,900 for a two-bedroom, $3,700 for a three-bedroom and $4,500 for a four-bedroom.

Tyndall says that nearly half of Kaua‘i renters spend more than 30% of their income on rent, according to the 2019-2023 American Community Survey, and about 21% of renters spend more than half their income on rent.

Lourdes Torres and her teenage daughter moved into the Courtyards after losing their home due to Covid-19. Torres, a provisional co-op board member, runs a small business selling nutritional flours and powders made of dehydrated Kaua‘i-grown ‘ulu, banana, spinach and other produce, which she sells at local farmers’ markets.

Torres says she will support DHHL if the state agency completes its acquisition of the Courtyards but, if that doesn’t happen, the Waipouli co-op would be integral to preserving Kaua‘i’s workforce and helping small businesses, like hers, stay afloat.

Much of the Waipouli Housing Co-op’s efforts are on hold as everyone waits to see if DHHL will complete its acquisition of the property. Diamond Badajos, information and community relations manager at DHHL, wrote in an email that the department recently provided written notice to the Courtyards’ seller that it is electing to exercise its option to purchase the property. DHHL anticipates closing on the property in May and has allocated $1.9 million to help tenants relocate. This amount includes payments for the added cost of securing replacement housing for 42 months, as well as relocation advisory services and reimbursements for tenants’ moving costs.

At the Courtyards, renters have turned their focus to getting more information about DHHL’s relocation plan and their rights. Most recently, seven renters testified at a Jan. 8 Kaua‘i County Council committee meeting to voice concerns about DHHL’s draft relocation plan.

Regardless of what happens with DHHL, Hasegawa says the Waipouli Co-op’s efforts are worth it because it’s helping to educate his community about the co-op model.

Torres says she’s been inspired by fellow renters’ and volunteers’ courage to stand up for their community and be willing to learn about the co-op model and their rights as renters.

“The shared humanity and perseverance of this group in spite of the enormous challenges we face is especially admirable as the sale of the building and evictions become a more real possibility,” she says. “Still they continue to show up with hope and determination.”

Gibbs, the National Association of Housing Cooperatives president, says the group’s efforts demonstrate that citizens don’t have to be part of someone else’s economic picture.

“There’s power in the will of people to govern their own destiny. Housing is a basic human right, and if I can control that right, then I have agency,” he says.

Following in the footsteps of O‘ahu residents

As tenants in Kaua‘i work to turn their apartment into a workforce housing cooperative, they can find an example in the efforts of O‘ahu tenant organizers three decades ago. Renters’ perseverance to preserve affordable prices led to two low-rent apartment complexes in Waipahu and Mililani being converted into affordable co-ops in the 1990s.

Back then, federal rules required owners of the 64-unit Waipahu Towers and 126-unit Makana Hale apartments to first offer the properties to tenants or a community nonprofit before offering them to others who might convert them to market prices. Nearly 2,000 apartment units in Hawai‘i and 500,000 nationwide were impacted by these rules.

Waipahu Towers and Makana Hale renters spent several years working with paid consultants and applying for government and private funding. Charlelynn Kim, who was then in her early 30s and a mom of three at Waipahu Towers, and Kwyn Fernandes, who was in her mid-30s and a mom of four at Makana Hale, were integral to those efforts. A nonprofit called People’s Workshop Inc. introduced both complexes to the idea of a limited-equity housing cooperative, they said.

In 1993, Waipahu Towers renters formed a residents council and held hulihuli chicken and car wash fundraisers to raise initial funds for their acquisition. Kim says she and other renters also rallied neighbors and lawmakers from the greater Waipahu area.

She and Fernandez say it was challenging at times to get fellow renters on board with the idea of a co-op. It was a new concept, and many of those apartments’ residents were used to being renters with no say in their communities’ rules, management and maintenance projects.

“To try and educate 64 (units) to be on the same page was not an easy task, but we were willing, and we were tenacious,” says Kim, who served as Waipahu Towers’ inaugural board president.

Fernandez says a handful of Makana Hale renters led the effort to acquire and convert their Mililani community into a co-op, but at one point it dropped to just her and one other person. Fernandez served as Makana Hale’s inaugural board treasurer and managed funding paperwork. She says what kept her going was that a co-op could offer her family and neighbors long-term security.

“When you were looking at them selling the place, you knew the rent would probably double at least because when you looked at rents, outside regular rents, it was crazy,” she says.

At Waipahu Towers, renters held regular meetings to keep everyone updated on their progress. Kim says not all meetings were successful. Sometimes, they would turn into torrents of complaints about other issues, instead of being about updates regarding the acquisition and co-op.

But Kim says there were always neighbors willing to help her pass out flyers or sit in on a meeting. She never turned anyone away, even if they showed up at her door at 9 p.m. with questions.

Waipahu Towers renters acquired their property in May 1995 for $8 million, and Makana Hale renters acquired theirs in March 1996 for $17.3 million. Both properties received subsidies from the U.S. Department of Housing and Urban Development in exchange for serving very low-, low- and moderate-income residents. And both properties spent several million dollars on renovations.

Makana Hale is still an affordable housing co-op, but Waipahu Towers was converted into an affordable rental in 2018 after nearly going into foreclosure, according to a Honolulu Star-Advertiser article. Waipahu Tower’s new owner paid off the property’s debt and completed an extensive renovation.

Kim and Fernandez have long lived elsewhere but said being co-op owners gave them the stability their families needed.

“It was really kind of the best of both worlds for somebody who was low income, and you had a little bit more security than being a renter,” Fernandez says. That’s because changes in monthly charges paid by each member had to be approved by Makana Hale’s governing board.

She adds that most Makana Hale residents embraced being homeowners and she enjoyed having caring neighbors, who would sometimes help keep an eye on her kids when she was at work.

Kim says that being on the co-op’s board and creation encouraged her to get more involved with the wider Waipahu community. She worked with others to build a park down the road and organize volunteer clean-up days.

“It empowered us to do better for the community in itself, in Waipahu,” Kim says. “It made me a proud mom. It took the financial burden off a lot of us.”

Interest in affordable co-ops growing

An estimated 300,000 affordable housing co-op units have been created across the country, according to the Urban Homesteading Assistance Board’s latest count in 2016. An estimated 167,000 total units were believed to still be affordable in 2016.

The New York-based organization, which works with low- and moderate-income residents to convert apartment buildings into co-ops, has received recent inquiries from Hawai‘i and other regions around the country. Summer Yadao, who helped organize the Courtyards renters with StormoGipson’s nonprofit and has since co-founded a business on O‘ahu focused on co-op development, agrees interest is growing locally; she says a Kaua‘i landowner expressed interest in a housing co-op for his property and she has been talking with local businesses and organizations about the model.

Luciano Minerbi, professor emeritus in UH Mānoa’s Department of Urban and Regional Planning, says affordable housing co-ops, specifically limited equity, would be a good fit for aging walk-up apartments in Honolulu, but they haven’t gained traction here due to a lack of government and technical support.

He says public policy around land use and housing has instead focused on meeting the needs of large landowners through rezoning concessions and infrastructure subsidies. And few organizations have existed to support local renters in organizing and then acquiring their buildings. Some places, like New York City and Oakland, have government programs to help create and maintain co-ops.

State Sen. Stanley Chang has spent years studying how other areas have successfully met their affordable housing needs. In Vienna, Austria, limited-profit housing associations are integral to providing long-term housing at below-market rates. These associations are organized as co-ops or limited liability companies, are supported by low-cost government loans, and are required to reinvest their profits in building more homes.

According to the City of Vienna’s website, 58 limited-profit housing associations administer about 200,000 rental and co-operative flats. And about 5,000 units are built by non- or limited-profit housing co-ops each year—this makes up about 30% of all housing production in the city.

Chang in 2023 introduced a bill to create a limited-profit housing association working group to study the feasibility of adopting such a system locally. Although the bill did not make it to law, he still maintains that co-ops could be a good fit, though for working to upper-middle class Hawai‘i residents, rather than very low-income households. The biggest issue, he says, is that co-ops would have to be financially stable on their own.

Recent increases in insurance premiums and utility rates have caused unusually large annual increases in monthly carrying charges at some existing affordable housing co-ops on O‘ahu: Kauluwela I and Kauluwela II in Liliha and Makalapa Manor in ‘Aiea. These properties target low- and moderate-income households. Some of their residents says it’s been difficult to balance the increases in operating costs with maintaining affordable prices.

A 50-year resident at the 84-unit Kauluwela II says he’s worried about the property’s future. He says 2025 was the first year the co-op saw a double-digit increase in its carrying charges, and the increased insurance and utility costs has caused the co-op to significantly dip into its reserves. Aside from 2024, prior years’ increases were normally about 5%, he says.

His household pays about $1,700 a month for their four-bedroom unit with the latest increase. It’s still much more affordable than neighboring rentals, but he worries the co-op will see more delinquencies. The resident spoke with us on the condition of anonymity for fear of retribution for speaking out about the increases.

Makalapa Manor, which was built in 1971 and consists of 122 one-, two-, three- and four-bedroom units, had to pause renovations on its bathrooms and kitchens because of higher operating costs, its board of directors wrote in a December email to Overstory. In addition, monthly charges for the year will increase by 10% in March; the new rate for a four-bedroom will be $1,300.

The board’s concern is that the property’s 54-year-old electric infrastructure and underground pipes need immediate attention. Without a government program, Makalapa would have to double the monthly charges, which would hurt its low- and moderate-income members. The board says it’s trying to decide how to move forward.

At Kauluwela I, Danielle Tucker, a board member, says the 126-unit property is feeling a pinch from higher carrying charges, “but compared to what the price of housing is outside of our little niche, it’s manini, you can handle it.”

She adds that the co-op has been a “godsend” for her family for generations. She moved in with her mother and sister when she was a high school senior in 1971. She raised her son there, and today, her niece, nephew, mother and grandson live on the property.

“Kauluwela I has been the reason for … prosperity and I don’t mean get rich. I mean when you’re safe and sound and you can afford a place,” she says.

With government agencies stepping up their housing production, Chang thinks one opportunity would be for a state entity to pilot the co-op model. Another would be for an organized group, like a union or church, to create a co-op in partnership with the government.

“I will continue to support an avenue for prioritizing not just government developers, but…most, if not all, cooperatives in Hawai‘i that would be required to reinvest their profits in building a house [rather than] pulling it out for the private use of the owners,” he says.