Nonprofit in process of acquiring historic Manago Hotel to remodel into workforce housing

A Honolulu-based nonprofit was awarded $5.5 million from Hawai‘i County to develop South Kona’s historic Manago Hotel into affordable workforce housing.

The hotel, which opened in March 1917 along Hawai‘i Belt Road in Captain Cook, isn’t expected to close for at least a few more months as Mental Health Kōkua is still in the process of acquiring the property for the Manago Mauō project, which will convert the hotel’s rooms into 72 rental units.

The nonprofit, created in the 1970s to help people recovering from mental illness, was awarded the grant through Hawai‘i County’s Affordable Housing Production Program.

“This is strictly a workforce housing development for community services personnel,” said Mental Health Kōkua Chief Executive Officer Greg Payton said. “Tenants who will live there will be serving our community.”

Those who will qualify for housing will be people who work for nonprofits, social service agencies, hospitals, the fire and police departments and others.

The units will be available to households earning no more than 140% of the area median income, calculated by the U.S. Department of Housing and Urban Development. The affordability period for these units will be in perpetuity.

Payton said the Manago Hotel restaurant will not close, adding the Manago family has “graciously tentatively agreed to share their signature recipes, including their famous pork chops.”

“Our plan is to provide much-needed workforce housing and to continue the legacy of the Manago restaurant,” Payton said.

The County anticipates funding to be released by March 1 to the nonprofit for the project. The funds would be used to acquire the hotel, and subsequent plans include minor infrastructure enhancements, according to a County exemption notice form.

Mental Health Kōkua is one of seven grant recipients from the Hawai‘i County Affordable Housing Production Program that will receive funding to renovate the hotel once it is acquired.

The Hawaiʻi County Office of Housing and Community Development is finalizing grant agreements and environmental reviews for each project, including the acquisition of Manago Hotel. Once grant agreements are executed in the next few months, funds will be released, allowing the purchase to move forward.

Once awarded funding, organizations have five years to develop affordable housing projects. An extension can be approved at the discretion of the housing administrator.

The Affordable Housing Production Program was approved by the County Council in June 2022 and signed into law by Mayor Mitch Roth. The law appropriates a minimum of $5 million per year to the Office of Housing and Community Development to facilitate programs that support, increase and sustain the supply of affordable rental and owner-occupied housing on Hawai’i Island.