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Nonprofit
may buy state-
owned housing

Palolo Homes I and II
will be privatized next year if
negotiations are successful

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By Ian Lind
Star-Bulletin

A state-owned public housing project in Palolo will be sold to a nonprofit group next year if a plan set in motion last week by the Housing and Community Development Corp. of Hawaii is successful.

Directors of the housing agency, which administers public housing programs statewide, voted to begin negotiations with the Mutual Housing Association of Hawaii, which has been pushing to take over the Palolo project.

Negotiations will cover the sale of over 300 state-owned apartments in Palolo Homes I and II, but not 118 federally owned units.

Mutual Housing has proposed to buy the project, rehabilitate existing buildings and then take over day-to-day management.

Sharyn Miyashiro, Housing and Community Development Corp. acting executive director, said negotiations could be wrapped up within six months.

The proposed sale is seen as the first step in a long-term effort to privatize all existing housing projects and get the state out of the business of owning and operating public housing.

"We would like to move ahead as kind of a pilot project so we can see how this works out," Miyashiro said.

Ron Lim, the governor's special assistant on housing and a Housing and Community Development director, described the proposed sale as "a voluntary mutual marriage between Mutual Housing and Palolo Housing."

"This has been in the works for over two years," Lim said. "Residents want it and the nonprofit wants it."

Dahlia Asuega, president of the Palolo Residents Association, urged Housing and Community Development to move ahead as quickly as possible.

"There's no time to delay because of the deterioration of the state-owned property," Asuega told the state agency.

Conditions in Palolo Homes have deteriorated in recent years because annual losses of about $500,000 have prevented the state from keeping up with needed repairs and maintenance.

Dozens of Palolo Homes units have remained vacant due to problems with lead paint, leaking roofs and asbestos, Asuega said.

During this year's legislative session, residents worked with House Speaker Calvin Say, whose district includes Palolo, to pass a resolution in support of "a mutual housing demonstration project" in Palolo.

In July, Asuega presented the Housing and Community Development board with a petition signed by 300 Palolo Homes residents in support of the deal, and in August the Palolo Neighborhood Board voted to go on record in support of the proposed sale.

The Mutual Housing Association of Hawaii was incorporated in 1992 to develop, own and manage quality housing for low-income families.

The group has two other projects. The 174-unit Lihue Court was purchased in 1994, while the 76-unit Kekaulike Courtyards project was acquired this year.

The group has received high marks for involving residents in management decisions and for coordinating programs and services, including job training and employment efforts.

"We're impressed with how they involve residents in deciding how to make Palolo housing a better place to live," Asuega said.

"It's going to take some very creative financing to make the (Palolo) project viable for the long term when it is running deeply in the red and has the added burden of seriously deferred maintenance," said David Nakamura, Mutual Housing executive director.

Nakamura said the Palolo project will require issuance of housing bonds, as well as government commitments to reserve a block of Section 8 vouchers that would be used to subsidize rents.