Dispute over
Harbor Court
nears resolution

A $12 million plan is expected
to be passed by the City Council

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By Gordon Y.K. Pang
gpang@starbulletin.com

The city's lingering dispute involving the fee-simple interests of residential units at Harbor Court may soon be over.

The City Council is expected at its Dec. 12 meeting to approve a plan that would have AHI Harbor Limited Partnership purchase the city's fee interests in 84 residential units for $12 million -- $7 million now and $5 million over the next five years as AHI sells the fee-simple titles.

The agreement calls for 5 percent interest to be paid on sales in the first three years and 6 percent in the fourth and fifth years.

Additionally, the city would be in a "secured position" to collect on the balance of the $5 million should AHI default.

The Harris administration, the Council and Harbor Court officials have been wrestling with the issue for years.

Harbor Court's original developers built the twin towers on city-owned land along Nimitz Highway as a leasehold project. In an attempt to attract purchasers, the developer agreed in 1994 to buy the fees on the units with the intent of then selling them to those purchasing units.

But continued slow sales forced the project into bankruptcy.

AHI, lenders to the original developer, inherited the original developers' commitment to purchase the fees.

Different Council members have attempted at various times to take the lead in brokering a resolution -- Jon Yoshimura, Duke Bainum, John Henry Felix and former Councilman Mufi Hannemann.

Bainum was credited by the Harris administration and his colleagues for closing the deal.

"I feel this agreement strikes a balance between the taxpayers' interest and the city's need to get out of the housing development business once and for all," Bainum said. "We got a good financial deal for the taxpayers. At the same time, we're getting the leaseholders out of a very bad spot."

City Managing Director Ben Lee said, "I think the $12 million is the best agreement negotiated between the City Council and the developer."

Under the agreement, the city gets to keep the fee interest in commercial units of Harbor Court, as well as a set number of parking stalls that are used for municipal parking.

Earlier this year, Council members rejected a plan to take over ownership of the six-story Queen's Court across Bethel Street from Harbor Court plus $7 million cash to settle AHI's obligations to the city.

Harris officials said the building could be used to house city agencies that are now renting space from privately owned downtown office buildings.

But a majority of Council members said they felt the cost of renovating the never-used Queen's Court would negate any savings from renting elsewhere.

"It would have been a bad financial mistake," Bainum said.