City may sell
leased-fee interest
in Kukui Plaza

If the deal is OK'd by the
Council, the city will get
$4.5 million for its largest
leasehold condo project

By Gordon Y.K. Pang
Star-Bulletin

The city hopes to collect $4.5 million by selling the leased-fee interest in the residential, parking and commercial properties of its largest leasehold condominium project.

The City Council must still approve the sale to the Association of Apartment Owners of Kukui Plaza, the condominium association for the twin-tower complex bounded by Nuuanu Avenue, Beretania, Fort and Kukui streets.

The Council Budget Committee will discuss the matter at its meeting Wednesday.

At issue are 908 residential units, 1,007 parking stalls and 44 commercial spaces in the Kukui Plaza complex downtown. The city will keep about 800 parking stalls for municipal use.

Realtor Michael Pang, who has extensive dealings in leasehold conversion, described the voluntary conversion of Kukui Plaza as a "win-win" situation.

The city gets a nice cash transfusion, while the leaseholders get to pick up the leased-fee interests at good prices, Pang said.

The condominium association is buying the fee interest and, in turn, will sell it to respective lessees, said Richard Ekimoto, association attorney.

One-bedroom units will go for about $3,500; two-bedrooms, between $5,100 and $6,500; three-bedrooms, between $8,000 and $8,500; and parking stalls, about $400 each, he said.

Prices were negotiated with the city during a two-year period after the association received authorization to go forward from more than 75 percent of the lessees.

Pang said the relatively low prices for the fee interests are the result of the complex's high density and low lease rent. "You've got almost 1,000 apartments there," Pang said. "That's a very dense project for the amount of land."

Further, lessees were required to pay only $1 a month in lease rent, a price that was fixed for 75 years when the units were first sold in the mid 1970s. That gave the city incentive to sell the lease fee interests, Pang said.

Kukui Plaza was originally sold as an affordable complex, with affordable units selling for $24,000 and market units from $42,000.

Budget Chairwoman Rene Mansho said she endorses the sale.

Not only does the city get cash and move a step closer to removing itself from the housing business, she said, but "this represents a good opportunity to help our residents become landowners."

---

http://www.co.honolulu.hi.us