Residents suspicious of plan to sell housing

The first apartment complex to go on the block will be difficult to sell

Mayor Mufi Hannemann's announcement yesterday that the city would sell its 12 affordable-housing properties shocked residents of Kulana Nani apartments, the first complex being put on the market.

Although Hannemann placed several conditions for any prospective buyer -- including an assurance that rents be kept low -- those who have relied on the Kaneohe complex's 160 affordable units for most of their lives were worried.

"If they sell it to someone and keep it affordable, that's one thing. If they can promise and have it in writing, that's OK," said Pam Mercado, who lives with her husband and three children and pays $663 a month for a four-bedroom and a parking stall. "But if they sell it just to sell it, who's to say the person that comes in won't make it sky high so we can't afford it?"

The city's decision to get rid of its 12 complexes came after a study by consulting firm REH Capital found that available buyers would be able to improve management of the units. Also, Hannemann said taking care of 1,257 rental apartments costs the city about $3.5 million each year, and noted that removing "these financial burdens" would benefit taxpayers.

"The sale will not proceed with any potential buyer no matter what they're willing to put on the table unless I have some sort of guarantee the units will be made affordable," Hannemann said.

REH recommended the city sell the units as long as three major restrictions are met:

» The units must remain rental apartments and cannot be sold as condominiums.

» Rents should stay at current rates based on federal Housing and Urban Development standards of median income.

» Annual rent increases will be limited.

The city has not determined a sales price, but Paul Garity of REH Capital said bids will be evaluated based on price, a maintenance plan and experience in affordable-housing management. A broker listed the property at $6.8 million but did not get any offers, he said.

Garity said there has been interest in buying most of the projects.

Hannemann said Kulana Nani would be the most difficult housing project for the city to sell for several reasons, including federal rent restrictions, Kamehameha Schools' ownership of the land beneath the complex, and expensive maintenance issues.

"On Kulana Nani we will be hard pressed to sell it without subsidizing part of the capital improvement," Garity said.

"Right now, some of (the residents) are frustrated that the city is not able to pony up ongoing funds to do some of the maintenance problems that they see," the mayor said.

In announcing plans for the sales, the mayor said the city would work with Kamehameha Schools, which owns the land where Kulana Nani was built, to keep rents affordable.

"Those restrictions would help us achieve our goal of ensuring these properties remain available to those who need it most," Hannemann said.

The city's lease with Kamehameha Schools at the Kulana Nani site expires in 2048, said Kekoa Paulsen, schools spokesman. He said if a deal is reached, Kamehameha Schools would simply transfer the lease to a new owner, but he noted that the trust would not have a say on rental prices.

"We don't operate the housing. That would be with whomever the city sells it to," Paulsen said.

For Mae Bruhn, who has five children and takes care of a nephew, those details could decide whether she will have a roof over her head.

The 42-year-old has rented a four-bedroom unit at Kulana Nani's third floor for more than 20 years, and she said her fixed income from Gomes Bus Co. is just enough for her monthly payments and food.

"I'm struggling just paying that," Bruhn said standing by her front door. "If they sell (and prices go up), where are we going to go? We have no place to go, and we are going to be homeless."

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PROPERTIES THE CITY COULD SELL

Here is a list of the 12 affordable-housing properties that the city wants to sell:

PROPERTY NAME	(BUILT)	ADDRESS	UNITS
Bachelor's Quarters	(1938)	91-1216 Renton Road	10
Chinatown Gateway Plaza	(1990)	1031 Nuuanu Ave.	200
Chinatown Manor	(1993)	175 N. Hotel St.	89
Harbor Village	(1991)	901 River St.	90
Kanoa Apartments	(1955)	846 Kanoa St.	14
Kulana Nani	(1972)	46-229 Kahuhipa St.	160
Manoa Gardens	(1992)	2790 Kahaloa Drive	41
Marin Tower	(1994)	60 N. Nimitz Highway	236
Pauahi Hale	(1982)	126 N. Pauahi St.	77
West Loch Elderly	(1993)	91-1450 to 91-1480 Renton Road	150
Westlake Apartments	(1973)	3139 Ala Ilima St.	96
Winston Hale	(1964)	1055 River St.	94