Law helps keep rental units affordable
Gov. Linda Lingle has signed a bill into law that would use the state's condemnation powers to intervene in the sale of Kukui Gardens, the state's largest affordable rental housing complex, which is being sold to a California real estate firm.
In May the Legislature, fearing a private developer might raze Kukui Gardens for more expensive housing, passed the measure, which requires the state to work with the developer to keep rents affordable. If that fails, the law allows the state to acquire the property through eminent domain without further approval from the Legislature.
About 2,500 low- and moderate-income residents live in the 857-unit complex on the edge of Chinatown.
"It's a very positive thing that the governor is following through on Kukui Gardens," said Bob Nakata, a member of the Faith Action for Community Equity, a multifaith group that has been organizing tenants.
Lingle, who signed the bill last week, could not be reached for comment.
Nakata acknowledged that Lingle was lobbied hard not to sign. "She could have vetoed it or let it become law without signing. But signing is clearly to her credit because it may not be cheap for the state (if it acquires the property)," he said.
Ted Liu, director of the state Department of Business, Economic Development and Tourism, said, "The governor has made it very well known that she is concerned about this potential transaction because of the impact it might have on the supply of affordable housing."
Liu said Lingle has made clear "her commitment to affordable housing" in meetings with the buyers and sellers.
Under the bill, the state wants affordable rents extended until at least 2016. The complex, built 36 years ago with a 40-year mortgage backed by the Federal Housing Authority, is under the jurisdiction of the federal Department of Housing and Urban Development and must be kept affordable until 2011.
HUD, which prefers nonprofit developers because they are more likely to keep housing affordable, must approve the sale and can attach conditions before the purchase is final.
Cheryl Fukunaga, project manager for HUD in Honolulu, said yesterday that their office has still not received notice or documentation of the sale from Kukui Gardens Inc., the nonprofit that built and operates the complex, to Carmel Partners, a San Francisco-based real estate firm that has taken over other HUD projects on the mainland. Carmel is paying about $131 million for the 22-acre project.
A spokesman for Kukui Gardens could not be reached for comment.
Carmel's Christopher Beda had no comment yesterday on Lingle's signing. Beda has said in the past that the firm is willing to work with state and federal officials and even a nonprofit to develop a subsidy program for residents after 2011. The Legislature's measure wants rents affordable until 2016.
At a meeting last month, Beda said, "Our long-term business plan is to operate Kukui Garden as rental housing. We would like to put to rest the wildly speculative statement about razing the property" for luxury housing.
Liu said, "It's a complicated transaction. There are potential solutions at the federal and state levels, (and) those must mesh with the interests of the buyers and sellers and still be consistent with the governor's commitment to affordable housing."
