Kakaako condo sparks
debate over affordability

A&B plans to build a 42-story high-rise, slating
18 percent of the units as affordable

A&B Properties Inc. secured approval yesterday from a state redevelopment agency to build a 42-story, 352-unit condominium tower in Kakaako, with a portion reserved for so-called affordable housing.

It wasn't a slam dunk for the developer, though. A debate over enforcing affordability provisions in Kakaako, which is predicted to become one of the fastest-growing residential neighborhoods on Oahu, caused two members of the Hawaii Community Development Authority to cast dissenting votes against the project.

The number of affordable housing units planned for the high-rise is seven units shy of the required 20 percent.

A&B is offering only 18 percent of its units to HCDA's affordable-housing program. Instead, the company will pay the authority $1.2 million to fund other affordable housing options, said the HCDA's executive director, Daniel Dinell

Stanley Shiraki voted against giving A&B its permit. "Why are we giving up reserve housing for money?" he said.

HCDA has been bound since the mid-1980s by an administrative rule that requires developers to dedicate 20 percent of their projects as affordable units. However the requirement was lifted in September 2001 because of the terrorist attacks, and the agency reinstated the requirements last September. The Hokua, Moana Pacific and 909 Kapiolani condominium projects squeaked in under the waiver.

A&B's 2.7-acre project, called Keola Lai, is the first Kakaako condo development to face the renewed requirements. The company bought the property at 600 Queen St. last August for $14 million, records show.

"We expect to build a quality high-rise that will be well received in the marketplace," said Stanley Kuriyama, A&B Properties' chief executive.

The fee-simple development will cater to moderate-income buyers, with condominium prices starting at $340,000 for a one bedroom unit, $445,000 for a two-bedroom condo and $695,000 for a three-bedroom unit. Maintenance fees, which include water, cable television and maintenance of the common areas, will cost most owners around $400 a month.

The company told the state that it will offer 14 one-bedroom units for $290,643 and 49 two-bedroom units for $358,317 to qualified buyers.

"It's a good way for buyers to get into the market and enjoy the benefits of home ownership," Dinell said. About 30 percent of the residential units built in Kakaako since 1982 meets the guidelines.

"In the past, the administrative rule has been effective in delivering much-needed units in the urban core," he said.

Paul Kimura, another dissenting HCDA member, expressed concern about project's impact on tight parking in the neighborhood. The property, which is across from the Honolulu Fire Department headquarters, is used for parking by employees of the Honolulu Advertiser as well as members at Gold's Gym and Word of Life church.

Ultimately, the need to build more condos in Kakaako won over concerns about the project's affordability or impact on the neighborhood, and a majority of HCDA members approved A&B's proposal.

"Seven units won't make that much of a dent in affordable housing, but some of the price points on 20- to 30-year-old buildings are really high. We need to get more units out there," said Michael Goshi, HCDA board member.

If sales go well, construction will start next year, with a target opening in 2008, said Rick Stack, project manager. The company will release 85 units for presale later this month.

Whether the project will benefit lower-income buyers remains to be seen, said Lehua Rosa Malott, a counselor at the Hawaii HomeOwnership Center. "Frankly what they are calling affordable, isn't what I would call affordable," Rosa Malott said. Most buyers would have to earn more than $5,600 a month and carry zero debt to buy one of Keola Lai's below-market units.

"The poorest of the poor are getting totally shut out," she said.