How Can State Save Kukui Gardens?

State lawmakers are considering a package of bills that will determine the fate of some 2,500 residents of Kukui Gardens. The project is poised to be sold by its current owners to a San Francisco group.  That has raised fears by the tenants, many of them low-income, that they will be priced out of their homes.

“We’re old. We cannot move and go to far from the city, you know? We like to live there forever and ever,” said Yuk Dun Chun, who has lived at Kukui Gardens for 36 years.

An agreement was reached between the two parties to allow a non-profit group to buy half of the site’s 22 acres and keep roughly 420 units affordable.  EAH is the lead non-profit group that helped broker the deal.  It also worked out a plan for about $44 million in conventional financing.  It says it needs another $55 million to consummate the deal.  And so, it is turning to the state for the money.

“We look at affordable housing as a public resource. Therefore, we think it’s the same as a public school or anything else. Affordable housing has to be out there in order to balance our marketplace,” said Kevin Carney, vice president of EAH. “It’s been documented in legislative reports that we’re (Hawaii) very, very short of rental housing and Kukui Gardens represents three years of production statewide for rental housing.”

EAH also hopes to build replacement housing on its site.  That may be necessary since hundreds of tenants who live on the property owned by the San Francisco group may be forced to move out.

Members of Faith Action for Community Equity, also known as FACE, have been working on behalf of the tenants of Kukui Gardens.  FACE has said the new owners plan for a mixed development of retail, commercial and residential units on their share of the property.  

EAH said it hopes to build the new units to accommodate some of the displaced tenants.  However, analysts working with the non-profit groups say there will be some folks who fall through the cracks. Analyst Chun Yun Lee said a rough estimate of about 600 tenants make too much money to qualify for low-income housing EAH is offering.  But they more than likely make too little to afford any of the residential units the new owners will reportedly build. Lee said there have been discussions to build enough units to accommodate everyone, but so far, it is just talk.

EAH has also made clear it would like ownership of the land so it may move forward with its plans unhindered. However, some state lawmakers have expressed reservations about doling out $55 million of taxpayer money without some measure of state control or interest. Senate President Colleen Hanabusa has said she does not want the state to manage the project but would like state ownership of the property to ensure some measure of accountability.

“We’re going to look at it how we’re going to fund it and what’s the role of government.  Because this is not only is it a settlement, but it appears to me this is a request the money go to a private non-profit to continue to do that.  I’m concerned that if government is going to spend taxpayer money to that extent, what is the accountability?” said Hanabusa during a January 24 interview.

However, EAH is wary of the extent of state control and whether it would hinder its plans to build more affordable units.

“If there were strings attached which would make it more difficult to get things done, then we may not be interested,” said Carney. “We prefer to have that flexibility rather than get involved in bureaucratic process whereby we are not allowed to improve the property to the quality that we’re used to.”

“There are other affordable housing complexes that already have non-profit owners and you can put the affordability in perpetuity even with a non-profit owner. So you wouldn’t necessarily be losing anything if the state didn’t have actual control over it because you could write in the perpetuity and it’s binding,” said State Representative Karl Rhodes who represents the Kaka’ako-Iwilei district.

Another bill would call for the state to buy the property outright through eminent domain.  However, all parties agree that would be the most expensive option and should only be explored as a last resort.

As for the Lingle Administration, the governor has said she is committed to long-term affordability.  Dan Davidson, executive director of the Hawaii Housing Finance and Development Corporation said it is too early to say whether $55 million is too steep a price to pay to preserve Kukui Gardens.

“We don’t want to pre-judge any option right now and we expect to drill down in the numbers and expect to be ready to make our report very shortly,” said Davidson.

That report is a financial analysis of Kukui Gardens and what options will best benefit the state and the community.  Davidson said that report should be ready sometime next week when it will be submitted to the governor for review.

As for state lawmakers, four House bills addressing the Kukui Gardens matter were passed today by members of the Human Services and Housing Committee.  They now move on to the House Finance Committee for further consideration.

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