Friday, February 21, 2003

Council approves lawsuit
over Ewa Villages project

By Rick Daysog

City officials have received the go-ahead to sue one of the developers of the troubled Ewa Villages housing project.

City & County of Honolulu

The City Council unanimously approved on Jan. 29 a resolution requested by city Corporation Counsel David Arakawa to sue Unity House Inc. and its development arm Lokahi Greens at Ewa Inc. for the return of $1.2 million.

The proposed legal action comes after the U.S. Department of Housing and Urban Development, which financed much of the redevelopment cost of the 600-acre project, demanded that the city return $1.2 million that Unity House earned on the project.

Deputy Managing Director Malcolm Tom said the city and Unity House are attempting to resolve the dispute, which could affect federal funding that the city receives from HUD.

"Hopefully, the discussions can lead to a settlement," Tom said.

Jim Boersema, a spokesman for Unity House, said his client also is interested in resolving the dispute. He characterized the discussions as ongoing but could not provide details.

Unity House is a nonprofit labor organization set up in 1951 to assist Hawaii Hotel Workers and Teamsters union members and retirees. Through its Lokahi Greens subsidiary, the company developed a 96-lot parcel in the historic Ewa Villages community.

Unity House purchased the lots from the city in 1998 for $9.2 million by using $7.3 million in HUD grant money issued by the city housing department.

HUD, in a March 7, 2002, report obtained by the Star-Bulletin under a Freedom of Information Act request, alleged that Unity House improperly earned $1.2 million in so-called "program income" on the sales of the Ewa Villages homes.

Under HUD's financing terms, profits from the sale of Ewa Villages homes cannot be kept by Unity House and must be returned to the federal agency.

The HUD report said the federal agency could seek the return of the full $7.3 million that Unity House used to finance the deal if the city does not repay the $1.2 million.

Critics have cited Unity House's purchase as a sweetheart deal that permitted Unity House to purchase the land with little money down and that allowed the city to pay off millions of dollars in bonds issued on the Ewa Villages restoration project.

Since its inception more than 12 years ago, the Ewa Villages development has been the target of several legal actions, including lawsuits by home-

buyers alleging construction defects, and the 2001 conviction of former city housing official Michael Kahapea for stealing more than $5 million in city relocation funds.

City & County of Honolulu

E-mail to City Desk


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