Posted on: Monday, March 26, 2001

Harbor Court offer weighed

By Robbie Dingeman
Advertiser City Hall Writer

The city administration is analyzing a new settlement proposal on the troubled Harbor Court development complex, but at least one member of the City Council is skeptical of the offer.

Harbor Court is a downtown condominium tower built in 1989 by Harbor Court Developers on a former city parking lot. When the real estate market declined and the units didn't sell, the project fell behind on lease rents and on paying the city to buy out the lease-fee interest in the land for the project.

Developers purchased some of the lease-fee interest from the city but owe $12 million more.

In a memo, Councilman John Henry Felix raised questions about a proposal in which developer AHI Harbor Limited Partnership would pay the city $7 million as a down payment on the Harbor Court lease-fee interest and the leasehold interest in the Queen's Court building.

The Queen's building is also part of the Harbor project.

The Office of Council services' analysis, Felix wrote, said that it "would result in the city incurring an economic loss of almost $16 million" once all costs are considered.

Two of the reasons for the loss would be a loss of property tax revenue and lease rents.

Felix compared the new proposal to an earlier one that would have required an initial $7 million payment and $5 million in future payments.

The initial analysis prompts a lot of questions, Felix said. "I just cannot comprehend buying into this deal," he said.

City Managing Director Ben Lee said the deal he is looking at would result in the city taking over the Queen's Court building, renovating it, and moving a number of city offices there.

Lee said he will be briefing council members about the proposal over the next two weeks, possibly in time for them to take initial action at their April 4 meeting.

Finding space in a city-owned building could save the city more than $700,000 a year, Lee estimates.

The city is leasing office space in two nearby buildings. Lee said offices at 711 Kapi'olani Blvd. house city staff for the Department of Transportation Services, O'ahu Transit Services, the Liquor Commission and some Department of Community Services offices. And the annual lease rent for those offices totals about $580,700.

More community services offices, some Honolulu Police Department personnel and the Department of Human Resources lease space in the Standard Financial Building for an additional $196,400.

Lee said the city is trying to determine where each of the offices would move.

The city would consider which offices should be moved within Honolulu Hale, which should go to Kapolei and where others should go.

For example, Lee said, it would be preferable to move the city's Neighborhood Commission office from a fourth-floor office to the ground floor to better serve the public.