STAR-BULLETIN / AUGUST 2006 Gov. Linda Lingle visits Kukui Gardens with Lawrence Ching, president of Kukui Gardens Corp.

State leaders leery about subsidizing Kukui Gardens

Without state help, units would stay affordable until 2011

Asking the state to pitch in $55 million to help Kukui Gardens remain affordable is raising serious concerns among state leaders.

As part of an agreement reached between Kukui Gardens residents and San Francisco-based Carmel Partners, the state would have to come up with the money to subsidize the purchase.

"They would like to have the $55 million in state money used to purchase the property and then everything conveyed to a nonprofit," said Senate President Colleen Hanabusa. "I have serious concerns about that, as I believe any taxpayer would.

"Assuming that the Legislature would support such an expenditure, I doubt very much that they would support an expenditure and simply turn it over. There must be some sort of preservation of affordable housing into the future," she said.

As part of the deal, the state Legislature would subsidize $55 million for two groups, Faith Action for Community Equity and Kukui Gardens Residents Association, to purchase half of the property from buyer Carmel Partners.

"Whether the state is simply going to turn over that kind of money and then turn around and walk away from any kind of guarantee, I think that would be irresponsible on the Legislature's part."

House Speaker Calvin Say has only heard about the agreement and, along with Rep. Karl Rhoads, introduced a bill to keep negotiations alive.

However, Say said the Hawaii Housing Finance and Development Corp. should be the owner of the units and manage them as affordable. He supports $55 million in funding to purchase part of Kukui Gardens.

"I hope so because if not, then everything falls apart. ... By the end of April, we'll find out whether we can fund it or not."

FACE staff director Drew Astolfi expects Carmel Partners to close the deal by the end of the first quarter, on March 31.

Representatives with Carmel Partners could not be reached for comment yesterday.

Before a reporter spoke with Hanabusa, some supporters of Kukui Gardens said they were excited about the deal, but others remained more cautious.

"We're just worried. It's a lot of money to ask for, and the state hasn't committed to doing it yet," Astolfi said. "It's a compromise. If the state won't fund the compromise, then everybody's back in court."

FACE President Alan Mark said, "All we're concerned about is we want to secure the $55 million. And they both (the governor and lawmakers) have made promises."

FACE and KGRA plan to rehabilitate 415 units of the current 857 units, plus add another 400 affordable-housing units through subsidy programs.

The 400 new affordable apartments would allow residents to move out of Carmel Partners' units before rates increase in 2011, said Chanu Lee, a consultant helping residents and supporters keep the complex affordable.

"We have encouraged everybody who's been involved to try to work something out with the caveat that whatever they work out we'll have to take a look at, understand, analyze and agree to," said Ted Liu, director of the state Department of Business, Economic Development and Tourism.

"We're not going to be rushed into this," he said.

Liu's department became involved after the Legislature passed a law last year requiring negotiations.

As part of the agreement, if the state does not fund the $55 million, then Carmel will keep the complex affordable until 2011.

Astolfi said all residents earn less than 120 percent of the median income.

"If you make it affordable forever for people making 140 percent of median income, you're really talking about displacement," he said.