Wednesday, April 21, 1999

Section 8 tenants
warned, reassured

Some property owners appear
to be laying the groundwork to
break free of rent-cap

By Gordon Y.K. Pang


Management companies of the Maunakea Tower and McCully Circle apartments say they have no intention of getting rid of their Section 8 tenants.

Affordable housing advocates, however, still are warning residents of other apartments that changes in the Section 8-subsidized status of their buildings may mean higher rents or the sale of the units, which could leave them on the street.

The Maunakea Tower and McCully Circle were spotlighted by the Affordable Housing and Homeless Alliance and the Legal Aid Society of Hawaii at a news conference yesterday as two buildings at risk of losing Section 8 status because of recent actions by their landowners.

"The plan is not to displace anybody," said Peter Purtell, regional property supervisor for HAPI Management, which manages the 380-unit Maunakea Tower in Chinatown.

A 20-year agreement that requires the landowner to keep the units at no more than $542 a month is being canceled in August, Purtell said.

But most of the tenants in the building will be eligible for individual Section 8 vouchers, allowing them to continue paying no more than 30 percent of their income in rent, with the rest of the tab picked up through federal housing assistance, he said.

U.S. Housing and Urban Development official Michael Flores said Maunakea Tower owner THC-Ginza Joint Venture is expected to apply for state housing tax credits as it refinances and refurbishes the project.

That should place a ceiling on the maximum amount tenants would have to pay at $863 -- the HUD-published fair market rent for Oahu in 1999 -- even if they are not eligible for Section 8 assistance, Flores said.

Norman Shigemura of Loyalty Enterprises, property manager of the 99-unit McCully Circle, said owner Frederic Chun has no intention of ending its project-wide Section 8 assistance agreement with HUD.

Shigemura said he and Chun never even discussed the idea of converting the building to market units.

Kathleen Hasegawa, executive director of the Affordable Housing and Homeless Alliance, said residents of both Maunakea Tower and McCully Circle still need to be watchful despite the assurances of Purtell and Shigemura.

Hasegawa said Maunakea Tower residents don't know how much either their vouchers or rents will be under the new setup.

She also questions why Maunakea Tower's owner has filed incorporation papers allowing the building to become a condominium.

Hasegawa also noted that McCully Circle's owner has paid off its mortgage to HUD, while Maunakea Tower's owner is in the process of doing so. Such moves call into question the long-term motives of the landowners, she said.

Affordable-housing proponents and Flores believe tenants from all Section 8 projects need to be aware that changes to their buildings' policies could leave them displaced.

"It's very important to make people aware of the situation, not only the residents but the agencies and government officials, so they can be prepared to deal with the potential problems," Flores said.

Section 8 programs of the 1970s were attractive to developers because they offered incentives such as low-cost loans and rental subsidies.

Today, at least some property owners are paying off their loans at an optional, accelerated rate to break free of rent-cap restrictions.

"There are still a lot of unanswered questions," said Hasegawa, whose agency believes that as many as 2,000 of 3,274 units statewide could be eliminated from Section 8 rolls.

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