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By George F. Lee, Star-Bulletin
Gov. Cayetano yesterday announced the state and the owners
of the Hemmeter Building.have agreed on terms of sale of
the historic structure -- provided state lawmakers
approve funding for it.

Hemmeter plan would
let state apply lease rent
toward purchase

By Pat Omandam
Star-Bulletin

The state and the owners of the historic Hemmeter Building have agreed to terms on the sale of the building -- and it all hinges on whether state lawmakers approve funding for it in the state budget, said Gov. Ben Cayetano.

"The only condition is providing the funding," Cayetano said. "If the funding is not provided, then the deal is off."

Cayetano said yesterday the state has a signed agreement with BIGI Corp. of Japan to buy the 128-year-old building for $22.3 million.

Moreover, the administration has come up with a proposal that doesn't require the Legislature to fund the purchase through state bonds. Lawmakers want to keep the bond ceiling at $200 million for this year and not go beyond that, the governor said.

Instead, Cayetano is asking the Legislature to include a provision in the state budget for the purchase under what is called a "certificate of participation." This certificate allows the state to earmark the $2.2 million it pays in annual lease rent for three floors of the Hemmeter building toward interest on a loan -- and eventually the principal -- to buy the building.

Cayetano said the loan would come from a private financial institution -- local or mainland. Such a plan was used to buy the State Office Building in Kapolei, he said.

Also, the $2.2 million is more than enough to pay the debt service or interest on the loan, the governor said.

"To me, that's a very, very sensible deal and I think that we should do it. In addition, we'll have another floor that we can rent, which would bring in more income to the state," Cayetano said.

The state administration also plans to create a state art gallery on the ground floor of the five-story building.

Senate Ways and Means Co-Chairman Andy Levin (D, Volcano), who had reservations about the Hemmeter purchase because of the building's opulent nature, said there's a strong possibility the provision will be included in the state budget.

The former Armed Services YMCA building was built in 1872 and underwent a $30 million upgrade in 1987 after former Hawaii hotel developer Chris Hemmeter bought it for $11 million. It was sold to BIGI Corp. in 1990 for $82 million.