Kukui residents demand pledge
They tell the pending buyer of the complex to keep it affordable past the 2011 deadline
Kukui Gardens residents and supporters say they want a pledge that the San Francisco-based company set to buy the Chinatown housing complex will keep it affordable well beyond 2011, when a federal mandate to do so expires.
Drew Astolfi, staff director of Faith Action for Community Equity, which is helping Kukui Gardens tenants, said in a news conference yesterday that a Carmel Partners official told him and others recently that the company plans to sell Kukui Gardens in eight years for a profit.
If Carmel sells, it likely means that Kukui Gardens will lose its affordability. Astolfi estimated the property would have to be sold for between $170 million and $200 million for Carmel to make money off its investment.
Carmel is buying the complex for $130 million, sources say.
Last night, Carmel managing partner and chief investment officer Christopher Beda said in an e-mail that the company would not sell Kukui Gardens "immediately after 2011."
He also said that it "is impossible to say how much we would sell it for since we have not completed the purchase."
Steve Gilley, broker for Kukui Gardens Corp., the nonprofit that owns the complex, also said Carmel told board members it would not sell the complex right after the mandate is lifted.
"I don't know where they come up with these crazy ideas," Gilley said. "Carmel ... they're a company that buys. They have no plans to redevelop. They want to operate the property."
But Carol Anzai, president of the Kukui Gardens Tenants Association, said she is worried because she has not been able to pin down Carmel on what it plans to do after 2011.
She also said Carmel officials told her "in so many words" that they planned to flip the property.
"They want to make their money," she said.
On Tuesday, lawmakers passed a measure that would allow the state to intervene in the sale of Kukui Gardens to keep it affordable. Gov. Linda Lingle has said losing the complex's affordability would be a blow to the state.
Housing and Community Development Corporation of Hawaii Director Stephanie Aveiro also testified in support of the bill, which would allow the state to condemn the 857-apartment housing complex to preserve its affordability.
Beda called measure "very extreme."
"We believe that the private sector is much more efficient in owning and operating rentals," he said. "For these reasons, condemnation is not an appropriate response. We believe that through negotiation with all parties we can find a solution."
The late philanthropist Clarence Ching built Kukui Gardens 36 years ago with a $16 million federal loan. Under the terms of the loan, the complex must remain affordable through 2011. U.S. Housing and Urban Development officials must also approve the sale of Kukui Gardens.
U.S. Rep. Neil Abercrombie has written a letter to HUD to inquire about the approval process and whether residents will be able to comment on the sale.
Also at yesterday's news conference, tenants and supporters said they were disappointed that the Kukui Gardens Corp. did not pick a lower bidder that would have possibly been able to sustain the complex's affordability.
"At that price, Carmel can't keep affordability," said the Rev. Bob Nakata, an advocate for affordable housing. "It makes it clear where the buyer wants to go."