Retirement complex
may soon be a reality

Construction on the
Kahala Nui project could
start in January

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By Craig Gima
cgima@starbulletin.com

If the sale of $185 million in bonds goes as planned, construction is expected to begin in January on a six-story retirement complex on the Star of the Sea church and school grounds in Kahala.

The Kahala Nui project has taken more than a decade to come to fruition and had to overcome community objections, financial problems and a scandal within the Episcopal Church that led to the resignation of former Episcopal Bishop Donald Hart in 1994.

The project, originally known as Hale O Malia, reorganized under Chapter 11, found a new developer and financial advisers, and appears to be on the verge of becoming reality.

"We had confidence that the project was there and there was a market there and it would benefit the (Star of the Sea) church and the people who lived there," said Charles Swanson, chairman of the board of directors of the nonprofit organization that shepherded the development of the project.

When completed in about two years, the so-called "life care" project will include two towers and a health center with 270 one- to three-bedroom apartments, 62 units for assisted living, 60 skilled nursing beds and underground parking on a 6.6-acre site Ewa of the current church building between Waialae Avenue and Malia Street.

Construction costs also include building a new early-learning center, offices and residences for priests, a gymnasium and other improvements for Star of the Sea.

The Catholic Church will get a fee and annual lease payments for the use of the land.

The Legislature and the state Department of Budget and Finance has approved $142 million in tax-free special purpose revenue bonds for the project.

An additional $43 million in taxable bonds are also being sold.

Part of the money raised will pay off some Hale O Malia creditors, but the Episcopal Church, which guaranteed a $4 million loan for the original project, will not get its money back.

The life-care concept is different from other retirement communities in that people who buy into the project are not buying the apartment in a traditional real-estate transaction. They will pay a fixed monthly fee, and if they need assisted-living or nursing facilities, there will be only a small increase in monthly costs, Swanson said.

"If you went to an independent retirement home that didn't have life care, you would pay considerably more," he said.

Swanson said the project also will be able to handle Alzheimer's patients.

The initial cost to move into a one- to three-bedroom unit will be between $330,000 and $750,000. The monthly maintenance fees run from about $1,700 to $3,800, with a fee of $895 for a second person to live there.

The project is 79 percent pre-sold, Swanson said.

Richard Turbin, chairman of the Waialae-Kahala Neighborhood Board, said area residents are concerned about congestion and traffic associated with the project.

"It's not exactly a high-rise, but it gives a kind of high-rise ambiance to what really is meant to be, what has been, an old suburban neighborhood," he said.

Community members raised similar objections to the project in 1992, but the City Council granted it a zoning change to allow it to proceed. The zoning and permits for the project are still valid.

Turbin said even though Kahala Nui developers do not need neighborhood board support, they have been meeting regularly with the board and trying to address concerns over construction.

The Episcopal Church in Hawaii was originally involved in the project when it fell apart in 1994. The corporation owed more than $13 million and had about $35,000 in its accounts. Episcopal Bishop Donald Hart resigned as leader of the church, largely because of a decision to have the church guarantee a $4 million loan for the project.

The Episcopal Church pulled out of the project and suffered a financial crisis to meet its debts. The contract with the original general manager for Hale O Malia, Tony Garcia, was canceled.

The project was reorganized, with Greystone Communities Inc. of Texas taking over the development and management of Kahala Nui.