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The Honolulu Advertiser
Posted on: Friday, March 29, 2002

Charity to run Palolo Homes

By James Gonser
Advertiser Urban Honolulu Writer

The state has completed the transfer of ownership for the Palolo Homes public housing project to a private nonprofit group, clearing the way for long-overdue repairs.

Dahlia Asuega stands in front of Palolo Valley Homes units along Ahe Street that will be remodeled.

Cory Lum • The Honolulu Advertiser

At a public ceremony at Palolo Homes tomorrow, the Mutual Housing Association of Hawai'i will become official caretakers of the 306-unit, 32-acre project. Mutual Housing plans to invest

$19.9 million to renovate the complex and will give residents a voice in running the facility.

"This is truly a momentous occasion for the residents of Palolo Homes," Gov. Ben Cayetano said. "From this day forward, working with MHAH, residents have the opportunity of controlling the destiny of this special community."

Palolo Homes is the state's largest public housing facility and the first to be privatized. Others are expected to follow.

The complex was built in the early 1950s, and 68 of the units are uninhabitable because of problems with lead paint, asbestos and leaking roofs. The rest need plenty of work.

Renovations are expected to begin next month and will take about a year.

Ron Lim, special assistant to the governor for housing, said the state has about 1,400 public housing units in 11 projects, of which about half don't generate enough rent to cover costs.

At Palolo Homes, the average rent is about $295, and the state's costs total about $455 a month.

"We have an annual deficit of $2,000 per unit, or $600,000 per year for the project," Lim said. "We have $18 million in deferred maintenance at Palolo, and it is impossible to get from the Legislature. A private owner can raise capital through the sale of tax credits. The state cannot do that."

Because Mutual Housing is private, it will be able to use Section 8 housing assistance vouchers from the U.S. Department of Housing and Urban Development to raise the rent while keeping the price the same for tenants.

The HUD subsidy will raise rent to an average of $560 a month, Lim said, "and that covers the upkeep. Now we have sustainability. Tenants will still pay $295, so they see no increase."

Mutual Housing will manage Palolo Homes under the mutual housing concept, whereby residents participate in management of the property. Mutual will partner with residents to develop leadership, job readiness and general life skills programs to promote self-sufficiency.

Dahlia Asuega, past president of the Palolo Homes Residents Association and

an employee of Mutual Housing, said the improvements will have a positive impact on residents.

"It took a long time, but it was well worth our struggles to see our dream become a reality," Asuega said. "Along with myself, I know many other members of this community have anxiously waited for this day."

Reach James Gonser at jgonser@honoluluadvertiser

.com or 535-2431.