State should not delay consideration of Kukui financing

THE ISSUE The state is being asked to provide $55 million in financing for protecting and adding to the affordable units at Kukui Gardens.

AN agreement between low- and moderate-income residents of Kukui Gardens and a California real estate company that has been in the process of buying the housing complex should prevent the eviction of most of the residents. The state needs to provide $55 million in financing, a sensible commitment toward affordable housing as long as residency is limited to qualified tenants.

San Francisco-based Carmel Partners Inc. caused alarm a year ago when it offered to pay $131 million for Kukui Gardens on the edge of downtown Honolulu. About 2,500 people live in the 857 units built in 1970 as affordable, tax-exempt housing under Federal Housing Authority rules.

Carmel would be relieved from the FHA affordability requirements upon completion of the Kukui Gardens board of directors' plan to pay off the mortgage before its 2011 expiration date. Last year's Legislature intervened, giving Gov. Linda Lingle the authority to condemn the property if the policy of affordability were to be abandoned. Lingle supported the measure and signed it into law.

According to the new agreement, the tenants' organization, called Faith Action for Community Equity, would buy and renovate 415 of the current units and build an additional 400 affordable units through subsidy programs, including the state financing. Residents of the units to be retained by Carmel would have the opportunity to move into the added affordable units by 2011.

The agreement deserves the Legislature's scrutiny. Senate President Colleen Hanabusa expressed concern that the state "turn over that kind of money and then turn around and walk away from any kind of guarantee" of affordability.

House Speaker Calvin Say said the Hawaii Housing Finance and Development Corp. should be the owner of the units and manage them as affordable. That would not be necessary if the state were to arrange for the complex to be managed by a company experienced in implementing state and federal rules for affordable housing.

Ted Liu, director of the state Department of Business, Economic Development and Tourism, said his agency must "understand, analyze and agree" to the plans. He said the department is "not going to be rushed into this."

Legislators seem to be similarly cautious, but they should not engage in prolonged consideration of the proposed deal and the alternative -- condemnation. Say said the Legislature will decide by the end of April whether to provide financing, but that might be too late. Drew Astolfi, director of the tenants' association, said he expects Carmel Partners to close the deal by the end of March.