Nonprofit enters fight for Kukui Gardens
Financing is said to be lined up for a purchase, but Carmel Partners cries foul
A San Francisco-based consultant who grew up in Hawaii is expected to talk to Kukui Gardens residents today about her plan to keep the state's largest apartment rental complex affordable.
Chanu Lee of Devine & Gong, a consulting firm that has preserved and developed more than 10,000 affordable-housing units throughout the country, said she has a commitment of $80 million from a mortgage lender for the purchase of Kukui Gardens.
"We have proposed a win-win situation where a nonprofit would come and be able to purchase the property for $80 million," Lee said yesterday at a news conference held at Kukui Gardens. She identified the lender as Capmark, formerly known as GMAC Commercial Mortgage Corp.
Lee also said her firm has a commitment for $20 million from Enterprise Community Investments, Inc., a tax credit investor based in San Francisco.
"Combined, we would be able to purchase the property and also do rehab of $20 million to fix up the property and keep the place affordable for current residents in perpetuity," she said.
Carmel Partners Inc., a San Francisco-based real estate firm, has offered $130 million for the 857-unit complex.
Carmel Partners officials said they plan to keep the units affordable for current residents. But Lee said under Carmel's proposed bid, there is no way that Kukui Gardens can be preserved as an affordable-housing complex.
Lee also questioned why the nonprofit Kukui Gardens Corp., which owns the complex, should accept the high bid from Carmel Partners. "It's a nonprofit organization. A nonprofit is not a profit-making entity," she said.
Chris Beda, manager partner at Carmel Partners, said they were dismayed that there is an attempt to sell Kukui Gardens to a nonprofit, because his company is currently under contract to purchase the complex.
"It is our understanding that the sellers have a fiduciary responsibility to sell the property for the best possible price for the beneficiaries of the estate," Beda said in a written statement.
"Furthermore, we believe that a for-profit business with our successful track record and model can manage the property and distribute subsidies more effectively than a nonprofit," he said. Carmel is committed to comply with the Department of Housing and Urban Development use agreement to keep the rental complex affordable through 2011.
"We're focused on trying to come up with other subsidies out there to extend the affordability beyond 2011," Beda said.
A spokeswoman for Kukui Gardens Corp. said board members have not reviewed the alternative proposal and cannot comment until they have a chance to review it.
Lee and Drew Astolfi of Faith Action for Community Equity are expected to meet today with Ted Liu, director of the Department of Business, Economic Development and Tourism, as well as City Councilman Todd Apo, chairman of the Affordable Housing Committee, to discuss the latest proposal.