Kauai sues LIHUE >> Kauai County has filed a $1.1 million lawsuit against Habitat for Humanity Kauai, alleging the charity that helps low-income people build their own homes has failed to repay a 1997 loan and has no hope of ever doing so.
housing charity
over unpaid loan
The lawsuit against Habitat for
Humanity seeks $1.1 millionBy Anthony Sommer
tsommer@starbulletin.comThe money, all of it federal funding, was to help build up to 125 homes for low-income families on Kauai. County officials said the project is dead, and they would rather use the money to provide low-cost rental housing for poor people.
The Kauai organization is affiliated with Habitat for Humanity International, based in Americus, Ga., and one of the world's best-known charities. Former President Jimmy Carter regularly gains publicity for the agency by volunteering as a construction worker on its projects.
The lawsuit, filed in Kauai County Circuit Court, seeks to foreclose on a $980,000 mortgage the county provided for Habitat for Humanity. It seeks an additional $117,000 in late fees.
Habitat for Humanity officials did not respond to a request for comments.
The Kauai County Housing Department said it remains a supporter of the charity. "Habitat has done more to provide housing for low-income people on Kauai than any other agency," said Housing Director Ken Rainforth.
Typically, Habitat for Humanity provides building materials and volunteer labor to help people build homes on their own land, Rainforth said. The charity uses government grants only for what it calls "wall out" expenses -- utility connections, permit fees, driveways and other features outside the house structure.
In its first effort on Kauai, Habitat for Humanity built 20 homes using a $200,000 government grant. At $10,000 per home, Kauai County considered it was getting good value in providing low-income housing, Rainforth said.
The project on which Kauai County claims the group has defaulted involved a plan to build an entire subdivision, far beyond the scope of anything it has attempted before on Kauai.
The loan has a history that dates to Hurricane Iniki in 1992.
In 1994 the Department of Housing and Urban Development gave Kauai County $41 million in disaster funds to help rebuild homes. Habitat for Humanity applied for $5 million of the total and was allocated $2 million.
The charity built 51 homes, the vast majority of them on Hawaiian Homes lands, for just over $1 million. Rainforth said Habitat for Humanity ran into a brick wall trying to find house lots outside Hawaiian Homes lands that would be affordable for poor people. The charity still had not spent $980,000 of the $2 million it had been allocated.
Ultimately, Alexander & Baldwin Inc. offered to sell Habitat for Humanity 24 acres of undeveloped subdivision land in Eleele for the $980,000, which Rainforth said was a favorable price at the time.
In 1997 the Kauai County Council agreed to make the $980,000 a mortgage loan to the charity that would be repaid by 1999 when the subdivision was completed and the lots sold. The agreement called for Habitat for Humanity to use the services of a reputable subdivision developer to build the project.
The plan originally called for 125 homes but was later changed to 95 homes on larger lots.
Since 1997 nothing has been touched on the property. The charity was unable to obtain any additional loans to build the infrastructure -- such as streets and utilities -- for the subdivision.
It was estimated at one time that Habitat for Humanity would have to come up with $3.8 million to prepare half the site, Rainforth said. Those costs would be passed on to the lot buyers and put the home sites out of the reach of low-income families.
"We went to Habitat for Humanity and said we're no longer willing to try to make this work. We said, 'Pay us, or give us the title to the land.' They did not respond," Rainforth said.