Lingle fighting end to oversight of Kukui Gardens

Owners of the affordable rental complex are trying to "prepay" the mortgage

More than 45 residents clapped and cheered after Gov. Linda Lingle announced that she is opposing Kukui Gardens Corp.'s "intent" to prepay the mortgage on the state's largest affordable rental complex.

If prepayment is blocked, Kukui Gardens would remain under the oversight of the U.S. Department of Housing and Urban Development.

"She gave us that feeling that she's behind us 100 percent," said Winona Sardinha, who has lived at Kukui Gardens since its opening 36 years ago.

In a letter Wednesday to Brian Montgomery, HUD assistant secretary and federal housing commissioner, Lingle stated that it would be illegal to allow the prepayment, based on a recent opinion by state Attorney General Mark Bennett.

"The law says the only way HUD can approve a prepayment request is if they can show there's not a need for affordable housing anymore and that that project is not fulfilling that need," Lingle said. "No one could prove that in this case because we have a lack of affordable housing.

"Our state cannot afford to lose these affordable units," Lingle said yesterday at a news conference at Kukui Gardens' recreation center.

"We are going to use every legal means we have to stop the prepayment if it's requested," she said.

As of last week, Lingle said a formal request to prepay the mortgage had not been filed with HUD by Kukui Gardens Corp.

HUD is expected to make a decision on the prepayment issue sometime after December.

Lingle said that if prepayment were to be approved, HUD would have limited or no oversight over the apartment complex.

"This is something positive," said Carol Anzai, president of the Kukui Gardens Association. "We finally have something that is concrete."

Cheryl Fukunaga, project manager for HUD in Honolulu, said she could not comment on the prepayment issue because of a lawsuit filed against the federal housing agency earlier this month on behalf of Kukui Gardens and Faith Action for Community Equity, seeking to block the mortgage prepayment.

A spokeswoman for Kukui Gardens Corp. said members are interested to hear what alternatives Lingle plans to propose for the apartment complex.

Chanu Lee, senior associate of Devine & Gong, who met with state officials yesterday to discuss her proposal to have a nonprofit buy the apartment complex and keep it affordable, said, "I think stopping the prepayment is the first step, and the governor has clearly come out very strongly saying that she is supportive of keeping Kukui Gardens affordable."

Chris Beda, managing partner of Carmel Partners Inc., a private real estate firm based in San Francisco that has offered to purchase the apartment complex for $130 million, had said that they are committed to keeping the complex affordable through 2011, the year Kukui Gardens Corp.'s loan to pay off the mortgage expires.