Kukui group readies lawsuit

Residents say they will sue today over plans to redevelop the affordable housing

A group of residents at Kukui Gardens was expected to file a lawsuit today against the U.S. Department of Housing and Urban Development and Kukui Gardens Corp.

Also expected to be named in the lawsuit are Kukui Gardens Inc. and Carmel Partners, a San Francisco-based private real estate firm.

The Kukui Gardens Association and Faith Action for Community Equity (FACE) allege that HUD violated the National Housing Act by "adopting an unlawful policy" that will negatively affect "Kukui Gardens tenants and the availability of affordable housing in Hawaii," their news release said.

Carmel Partners proposed in May to purchase the 857-unit complex on the edge of Chinatown for $130 million.

A couple of months later, Kukui Gardens Inc. issued a notice to residents that it was going to prepay the mortgage on Dec. 23, which would release the property from HUD requirements involving transfer of the property.

"The suit alleges that the National Housing Act explicitly prohibits prepayments for those projects like Kukui Gardens that continue to meet a need for affordable low-income housing in the area," the news release said.

Kukui Gardens was built in 1970, financed by a $16 million Ford Foundation loan that required the developer to keep rents affordable until 2011 under HUD's oversight. If HUD allows the prepaying of the Kukui Gardens loan, it could lose oversight over rents.

"We're afraid that they'll be able do whatever they want to do. That's the scary part," said Carol Anzai, president of the Kukui Gardens Association.

"It's an ongoing battle. I feel good because we've got a lot of people behind us," she said. "Everybody has sworn to support us, hopefully they're going to keep their promises."

Anzai said she could not comment specifically on the lawsuit yesterday. Officials at the Legal Aid Society and FACE were also unavailable for comment.