Kukui Gardens lawsuit over sale is settled
The new owners of Kukui Gardens agree to maintain the complex as affordable housing under a settlement agreement announced yesterday.
Representatives of the Kukui Gardens Residents Association and Faith Action for Community Equity signed an agreement yesterday that settles the lawsuit they filed last year to stop the sale of the 857-unit complex, which houses about 2,500 people.
"I never thought this would happen," said Carol Anzai, president of the tenants group, whose members have seen their efforts to keep the downtown housing area intact gain support from community and church groups and funding from the state.
"Everyone has done their part to come up with what is a tremendous long-term affordable housing solution for Kukui Gardens," said Orlando "Dan" Davidson, executive director of the Hawaii Housing Finance and Development Corp.
Davidson has already signed the settlement as well as a sale agreement that will give Kukui Gardens Corp. $131 million for the 22-acre site. The sale of the property to Carmel Partners, a San Francisco-based real estate company, and the state development agency will be finalized Dec. 18.
The housing complex was built in 1970 by the late Clarence T.C. Ching. As a condition for receiving federal housing assistance, Kukui Gardens Corp. was required to provide affordable housing through the 2011 expiration of its mortgage.
The settlement agreement "guarantees that the property is going to be affordable long into the future," said Gavin Thornton, attorney for the tenants and FACE.
Under the agreement:
» Carmel Partners will pay $71.7 million for 12 acres. It agrees to maintain its 468 units at affordable rental rates for 55 years, according to terms released by the state. Rents set under U.S. Housing and Urban Development regulations continue to April 2011. After that, rents may be gradually increased but limited by HUD guidelines tied to household income.
» The Hawaii Housing Finance and Development Corp. will purchase the other 10 acres for $59.6 million. It will issue $45 million in tax-exempt revenue bonds, in addition to the $25 million in general obligation bonds appropriated under a bill passed by the 2007 Legislature.
"What we're immediately going to do is lease the acres to a nonprofit entity, EAH Inc.," said Davidson.
Ecumenical Association for Housing (EAH Inc.) manages other nonprofit housing, including Kukui Tower.
"This demonstrates that major hurdles can be overcome when parties work together," said state Rep. Karl Rhoads (D, Kakaako-Downtown), who attended yesterday's signing ceremony at the Legal Aid Society offices.
"This is huge for us," said the Rev. Alan Mark, president of FACE, an interfaith advocacy group which was instrumental in the past in getting state support for renovation of Kalihi Valley Homes. "FACE took on this issue two years ago. It has been a long battle."
The board of directors of Kukui Gardens Corp. is "pleased that Kukui Gardens will continue as a place for affordable housing," said public relations executive David Wilson, spokesman for the nonprofit company and for the Clarence T.C. Ching Foundation. "The beauty of this is that it continues beyond the end of HUD oversight."
The proceeds will allow the foundation to expand its capacity to support education and other charitable projects, Wilson said. "No longer will all its assets go into one basket," he said.
Representatives of Carmel Partners could not be reached.