Kim right,
developer owes
city $10 million

The money is due as a result of the
Harbor Court fee converstion agreement

By Gordon Y.K Pang
Star-Bulletin

The city is owed $10 million as a result of the Harbor Court fee conversion agreement, city attorneys said yesterday, in an about face from what Mayor Jeremy Harris said last week.

"Once again, the mayor didn't do his homework," City Councilwoman Donna Mercado Kim said.

On Thursday, Kim said the city was owed $12 million on the luxury condominium project. About $2 million of that was for back lease rent on commercial properties and $10 million was from a resolution requiring the developer to buy fee-simple interest the 120 condominium units.

Harris agreed that the city was owed $2 million in back lease rent. But he disputed Kim's claim that the city was owed $10 million from the fee conversion agreement.

On Friday, Harris said city attorneys told him that Harbor Court Developers was not obligated to purchase unsold fees, although Kim and other Council members said documents showed that the agreement included the sale of all units.

Kim said she and others viewed the same documents as Harris "and it was clear it was not an option."

"I take the blame for that," Corporation Counsel David Arakawa said yesterday. "We did not make it clear to the admin."

Deputy Corporation Counsel David Laxson told Council Budget Committee members yesterday that Harbor Court Developers is required to purchase the fee-simple interest on any of the 120 residential condominiums not sold to leaseholders by July 1, 1997. "It was treated like an option but it is not an option," Laxson said.

The agreement stated: "In the event that the entire residential leased fee shall not have been acquired by the expiration of the closing period, then, lessee shall purchase the remaining unsold portion of the residential leased fee."

Laxson said the agreement was treated like an option because "it was in the best interest in the city to work something out" with Harbor Court Developers, who asked they be sold the fee on the units.

Kim also criticized the administration for extending the July 1 deadline to purchase the fee interests without Council approval or knowledge.The Council originally approved the sale of the fee interests in 1994.

Laxson said that when an agreement between the city and Harbor Court's lenders is reached, it would be forwarded to the Council for approval.Kim and Councilman Duke Bainum said they are frustrated that settlement talks have dragged.

"Can you tell the Council when negotiations will be pau and either we can take back the 20 to 25 units, whatever it's going to take to get that amount of money, or foreclose and then sell at an auction? Isn't it about time we start looking at options like that?"

City attorneys are "irresponsible" for allowing "an open-ended extension" to take place, Kim said.

Mike McCormack of McCormack Harbor Properties said his company continues to hold a 50 percent interest on the condominiums. AHI Trinity Investment, which is owned by Trinity Investment Trust, holds the remaining interest as lender.

Laxson said it would be in the best interest of AHI Trinity to work out an agreement with the city to stop claims that could be made to seize the residential building.

McCormack said that during negotiations, the five-story Nuuanu Court/Queen's Court building which is adjacent to the twin Harbor Court towers has been offered to the city as a settlement of claims against Harbor Court Developers.

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At least 15 in tax
office to be spared

City Council's Felix says the division
can't get work out without them

By Gordon Y.K. Pang
Star-Bulletin

At least 15 of 38 employees facing layoffs in the city Real Property Tax Division will keep their jobs through June 30, 1999.

City Council Finance Chairman John Henry Felix said at least 15 assessors, clerks and other employees will need to stay if the division is to be able to carry out its work.

"I think cutting those positions was premature," Felix said.

Both Mayor Jeremy Harris and Budget Director Malcolm Tom "concur with my recommendation," he said.

Felix said even if Harris won't put the positions back in the budget, he will recommend strongly that the Council does.

Last week, the city notified 94 workers that they were being laid off. Carol Costa, city information director, said then that notices wouldn't be sent out to the workers in the real property tax office until October, because they wouldn't be laid off until January.

Meanwhile, members of the City Council's Finance Committee were told yesterday the city's new computer-assisted mass appraisal system is going to cost at least $750,000 next year in computer hardware and software purchases.

The move to a new system was one of the reasons given by Harris' administration for the layoffs in the Real Property Tax Division.

Employees are needed to handle a new computer assessment system, as well as the move from one-year assessments on properties to three-year assessments as proposed by the mayor.

Felix said recent news that tax assessments in Waikiki and downtown were altered had no bearing on his decision to push for keeping 15 more positions.

The administration had no comment on Felix's plan, Costa said.

Felix also said he is "putting my best case forward" to stop the administration from merging the city Data Processing Department with the Budget and Finance departments. Data Processing Director James Remedios has told the Budget Committee his agency will be hard-pressed to do its duties, as written, under a merger.

A controversial proposal by the administration to study relocating the Ala Wai Golf Course will be nixed by the Budget Committee.

Felix noted that a study now is nearing completion on placing a "double-decker" driving range at Ala Wai.