Saving Kukui Gardens will be good for all of us
THERE is no serious argument against preserving affordable housing in Hawaii. Everyone understands how difficult it is to rent or buy in our overheated market. The crux of the matter is the price tag.
In 1970, local developer Clarence Ching built the Kukui Gardens workforce housing complex on 22 acres on the outskirts of Chinatown for $15 million. The federal Department of Housing and Urban Development guaranteed the 40-year construction loan and attached its usual deed restrictions to the project requiring affordability for the life of the loan. That affordability period ends on May 1, 2011.
In January 2006, Kukui Gardens Corp., which owns Kukui Gardens, announced its plan to sell all 857 units of the property, potentially displacing the 2,500 residents. The reaction to this announcement was unexpectedly strong. The residents of the complex and the nonprofit Faith Action of Community Equity strongly resisted the sale because of their concerns that the property would go to market rates. The plight of the residents found widespread sympathy in the community.
WHILE THE outcry against losing Kukui Gardens rose, KGC found a buyer, California-based Carmel Partners, in March 2006. The agreed-on price was $131 million, but the deal has not yet been completed due in part to a lawsuit filed by FACE and the Kukui Gardens Residents Association. In the meantime, during the 2006 session, the Legislature passed and Gov. Linda Lingle signed into law Act 288, which calls on the state to either negotiate for a five-year extension of affordability at Kukui Gardens or to negotiate the purchase of the property. If neither of these occurs within a "reasonable" time, then the state is required to purchase the property by condemnation.
Taking $131 million as a starting point price, does it make sense for the state to condemn Kukui Gardens? The answer is clearly yes.
Putting 2,500 people out on the street not only would result in a number of Kukui Gardens residents becoming homeless, but it also would drive up prices for the rest of us. Estimates to build 857 units from scratch fall in the $350-$400 million range. Thus, even though the $131 million price is substantial, it is much cheaper than the alternatives.
IF HAWAII is going to continue to have a middle class, we are going to have to figure out a way to provide workforce housing and housing for our kupuna. While we need to provide more housing, we cannot afford to lose the inventory we already have.
Saving Kukui Gardens is a critical part of maintaining what we have. The 22-acre parcel also is big enough that more workforce units could be added once the state makes the purchase. The proximity of bus lines and the proposed rapid transit route to the area makes it even more attractive as a site for workforce housing.
The funding bill I introduced, House Bill 667, has passed both the House and the Senate and the differences are being worked out in a conference committee. Kukui Gardens is a test case of our commitment to provide workforce housing in Hawaii. We can and should save it.
Rep. Karl Rhoads, a Democrat, represents District 28 (Palama, Chinatown, Downtown, Sheridan). He is vice chairman of the Human Services & Housing Committee.