Saturday | May 27, 2017
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Takeover bid

Hawaii County previously turned down an opportunity to take over a Kailua-Kona affordable housing complex that is now likely to be transferred from a state agency to a private religious school, a county official said Monday.

The Hawaii Housing and Finance Development Corp., which owns several affordable housing projects across the state, has tried, unsuccessfully, for years to sell or otherwise get rid of Kamaaina Hale, Executive Director Karen Seddon said Monday. The HHFDC board approved on Thursday to transfer the 128-unit complex on Kuakini Highway to University of the Nations, which is located adjacent to the housing complex.

Kamehameha Schools owns the land on which Kamaaina Hale is located and must approve the lease transfer before it can be completed.

Hawaii County Housing and Community Development Administrator Stephen Arnett said HHFDC approached the county months ago and asked if the county wanted to take over Kamaaina Hale. Arnett said he declined.

“My recommendation would be we don’t do anything with it, because of the cost,” Arnett said. “I don’t see us being able to recoup the cost (of repairs).”

An issue several developers pointed out to HHFDC, and one that deterred the county from taking on the project, is that the lease with Kamehameha Schools only lasts through 2031. Lease rent on the property also keeps rising, Seddon said. In 2006, the annual lease was $57,600. This year, the amount was $385,000 and it’s scheduled to increase to $420,000 in July. Add that to mounting maintenance costs — Seddon said the units have an asbestos popcorn ceiling, some asbestos flooring and other issues — and HHFDC was losing money on the project. About half the rental units have been unoccupied for years, because the agency doesn’t have the money to fix them to be rented again.

“It didn’t get as much attention as it probably should have over the years,” Seddon said. “It’s a cash-losing project. It just needs a really big fix up. It just looks like it takes more and more to dig it out of its hole.”

HHFDC issued a request for proposals from potential buyers for the property in 2011. Seddon said it didn’t get any offers.

Then, earlier this year, University of the Nations officials learned from Kamehameha Schools that HHFDC was trying to get rid of the property. Vice President Chong Ho Won said they approached HHFDC with an offer to take over the lease for the remaining 18 years, completing some improvements while maintaining the affordable housing requirements. Right now, HHFDC requires two-thirds of the units be rented to people who earn no more than 80 percent of Hawaii Island’s median income. One-third of the units are reserved for renters who earn no more than 50 percent of the island’s median income. A two-bedroom unit in the complex rents for about $900 to $1,200 a month, Seddon said.

The community “can be assured the policies and guidelines, anything HHFDC has set up, will not be modified at all,” Won said. “It’s a win-win situation. It’s always good to have a good relationship with our neighbors.”

Seddon noted that many University of the Nations faculty are considered to be volunteers, making a low enough income to meet the income requirements. Won said while students may come and go, faculty tend to stay in the community longer.

He has lived in Kona a decade, he said.

“We have many long-term residents,” he said. “Please consider our staff local, too.”

Existing leases will remain intact, and Won said the school is planning to keep the property’s management team in place. University of the Nations would like to form a separate nonprofit organization, eventually, to manage the complex. HHFDC will remove the asbestos, within the next few months, then university workers can begin remodeling the units for rent.

Kamehameha Schools spokesman Kekoa Paulsen said late Monday school officials learned about the possible transaction Monday morning, when the Honolulu Star-Advertiser published an article about the HHFDC meeting. Paulsen said school officials wouldn’t be able to comment on the possible lease transfer until they had more information about the proposed agreement.

The school group hasn’t seen any proposals yet about extending the lease beyond 2031, he added.

“Any extension would have to be evaluated on its merits when we get it,” Paulsen said.