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Friday, September 29, 2000



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Delinquency
rate on OHA loans
drops -- to 60%

It remains high by
industry standards


By Pat Omandam
Star-Bulletin

There is a 60 percent delinquency rate for loans made to Hawaiians under a federal program administered by the Office of Hawaiian Affairs.

But that is good news, said Kaulana Park, manager of the Native Hawaiian Revolving Loan Fund.

Park told the interim OHA board yesterday during a presentation that the percentage of delinquency loans has dropped to 60 percent from 70 percent in August 1999 as a result of better support to borrowers and improved program management.

The program's delinquency rate is high by industry standards, he explained, but these are generally high-risk loans to people who have been denied financing from at least two commercial banks.

More than half the loans were for starting small businesses, which was difficult to do in Hawaii's economy during the 1990s, he said. "The rate is the lowest it has ever been."

The federal program was started in 1989 to provide loans to Hawaiians who want to expand an existing business or start a new one. It receives about $2 million annually in matched funds from OHA and the federal Administration for Native Americans. It currently has a balance of about $12 million.

"We are dealing with the best of the worst -- native Hawaiians who can't qualify (for commercial loans) and this is the last and only stop," said OHA Chairman Clayton Hee, who said the delinquency ratio is understandable, but not acceptable.

The program provides microloans of up to $10,000 and maximum regular loans of $75,000. The money can be used to buy equipment, add inventory, improve leased commercial space or used for working capital. But it cannot be used to buy land or construct buildings, for home improvements, loan consolidation or as a down payment for a house. The interest rate is currently between 4.25 percent and 4.5 percent, Park said.

From its inception to Aug. 31, the program has received 15,952 requests for information and has given out $17.1 million in loans, Park said. The amount of the total outstanding loans is $4.5 million, with another $238,000 pending disbursement, he said. "The more good things you do, the more work you're going to get," Park said.

Yesterday, the interim board approved minor changes to the program that allows its advisory board members -- who review and approve loans -- to serve a maximum of six years instead of four.

The trustees also changed the definition of what constitutes a nonperforming loan. Trustees Dante Carpenter and Nalani Olds voted against that proposal, fearing it would make it harder for Hawaiians to get loans.


OHA eyes post
office building


By Pat Omandam
Star-Bulletin

With plans scrapped for a retail complex at the downtown post office building, the Office of Hawaiian Affairs wants to see if the historic building could become its new headquarters.

OHA Chairman Clayton Hee asked administrator Randy Ogata yesterday to review the specifications of the post office building to see how much it would cost to purchase and renovate the building, which was once home to the state Department of Hawaiian Home Lands.

Now that plans for a galleria there have fallen through, the building has been put on the real estate market. OHA should take a look at it, Hee said.

OHA's current 10-year lease at Pacific Park Plaza expires in February 2001, and OHA officials have scouted new headquarters for the agency. About two dozen sites have been reviewed, and deputy administrator Ronald Mun has been waiting for two months to make his narrow list of recommendations to the board.

The agency is looking for about 30,000 square feet of office space in the downtown corridor that comes with extra amenities and concessions, including a big boardroom and ample parking. Possible sites for OHA include the First Hawaiian Bank and the Hemmeter Building.

Another possibility is to remain at Pacific Park Plaza, where there are several vacant floors that could result in a better negotiated lease for OHA. The agency currently occupies the 5th and 12th floors and pays $900,000 a year lease rent there. It also has satellite offices on the neighbor islands.

Ogata said he will study the downtown post office site and said he has not assigned a broker to begin negotiations.

He said the post office building has about 100,000 square feet of available space, and the U.S. Post Office has a long-term lease in the building. Ogata said the rest of the building remains empty. Ogata said Mun will make a presentation at the next board meeting Thursday in Hilo.



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