Kukui Gardens talks 'positive'
Tenants meet with the prospective buyers amid fears that rents will skyrocket after 2011
The prospective buyers of Kukui Gardens met privately yesterday with tenants of the 857-unit affordable-housing complex to calm fears that rents will skyrocket once the project is sold.
"All we can say is that we had a private, confidential meeting that was positive," said Carol Anzai, head of the Kukui Gardens' Tenants' Association.
The Rev. Bob Nakata of Faith Action for Community Equity, a multifaith group that has been organizing the residents, said attendees agreed not to discuss details of the meeting.
"We agreed to a condition of confidentiality. The meeting seemed positive," Nakata said. He said the prospective buyers said they are bound by the seller's request for confidentiality.
Carmel Partners Inc., a private real estate firm based in San Francisco but with offices stretching from Washington, D.C., to Hawaii, is paying about $130 million for the 36-year-old rental project on the edge of Chinatown, according to several people close to the deal.
Under terms of the 40-year mortgage, the new owners must keep rents affordable until the expiration of the loan in 2011.
For weeks, tenants and their advocates have been protesting the sale, arguing that Kukui Gardens Corp., which built and operates the complex, has declined to reveal the identity of the potential buyer because the buyer is a redeveloper that will raze the project for upscale housing.
Kukui Garden Corp. has said that it has signed confidentiality agreements and will not identify the buyer.
Cheryl Fukunaga, project manager for HUD, has said that once a buyer is selected, HUD will decide whether to approve their assumption of the loan. She said that the buyer will likely be subject to an agreement that would require it to hold rents at their affordable rate until 2011 even if the balance on the loan is prepaid.
Fukunaga said, "After 2011, we don't have any other mechanisms to control affordability."
Carmel Partners has taken over other HUD projects, which are the legacy of the years of former President Lyndon Johnson's "Great Society," when the government tried to provide financial incentives to private developers to build affordable rental housing.
Kukui Gardens is one of hundreds of such HUD projects that are reaching their maturity and will be up for grabs by developers. Kukui Gardens was built for $16 million with Federal Housing Authority money.
In Hawaii, Carmel bought the Aloha Surf Hotel for $15.7 million in June 2005 and is converting the hotel to condominiums. At the same time, it paid $79.5 million for 520 units of housing on the former naval base at Barbers Point.
Star-Bulletin reporter Mary Adamski contributed to this report.