Council panel rejects sale of city rentals
By Johnny Brannon
Advertiser Staff Writer
A City Council panel yesterday rejected Mayor Jeremy Harris' proposal to sell eight apartment buildings, and postponed decisions that could allow the sale of downtown commercial properties and the refinancing of $10 million in sewer bonds.
The actions add fuel to the heated debate over the city's annual budget, and raise the possibility that sewer fees will be increased so the bonds can be paid off on schedule rather than over a longer period.
Council members said the administration planned the apartment sales poorly and needlessly frightened hundreds of low income, disabled or elderly residents.
City budget director Ivan Lui-Kwan said the intent was to allow such tenants to buy their apartments at the same cost as renting them, and for the city to pay off debt associated with the buildings and build up a reserve fund.
But council members said the plan would have removed hundreds of units from a tight rental market. It also would have allowed the units to be sold later at market rates. The administration originally proposed selling 12 buildings that included more than 1,200 units.
"We're not going to sell these properties and kick people out," said Councilwoman Barbara Marshall. She and others on the council's Budget Committee said they would not approve the sale of apartment buildings unless rent limits for low-cost units are required in perpetuity. That could make it difficult or impossible to sell the buildings.
The panel postponed giving the administration authority to sell the city's interest in downtown commercial properties known as Queen's Court and Harbor Court. Council members said they wanted to ensure a two-step process that required their final approval before any sale was completed.
The administration hopes to raise $34 million from the downtown properties to balance Harris' proposed $1.2 billion operating budget for the fiscal year that begins in July. Most council members are open to the idea, but say it's a one-time fix that would leave a $34 million budget hole the following year.
Refinancing the sewer bonds would allow the city to save $10 million in debt payments next year but increase the eventual cost to taxpayers by requiring interest payments for up to 30 more years.
"It looks good now because you're not raising sewer fees, but in the long run everybody suffers," said Councilman Romy Cachola.
The administration had indicated last year that sewer fees would have to increase, and many were surprised that the proposed budget Harris unveiled in February kept fees level.
"I thought it was really magical when the mayor stood up and proudly announced that we would not have to raise sewer fees, but this is just fooling the public," said council Budget Chairwoman Ann Kobayashi.
Councilman Charles Djou likened the administration's plan to paying off one credit card with another while going further into debt.
But deputy city environmental director Tim Houghton said refinancing was in line with the administration's policy of keeping any tax or fee increases to a minimum. The plan would free up $10 million this year and prevent a sewer fee hike without affecting the pace or order in which sewers are repaired and replaced, he said.
Marshall said she hoped constituents would contact their council members and indicate whether they prefer to pay higher sewer fees now or later.
"That's the dilemma we face," she said. "Do we saddle future generations with higher and higher debt service, or do we bite the bullet and pay the price now?"
The administration had hoped to sell the Chinatown Gateway Plaza, Harbor Village, Marin Tower, West Loch Village Elderly, Westlake Apartments and Foster Gardens apartment buildings. The plan also included selling the city's leasehold interest in the Manoa Gardens Elderly and Kulana Nani apartments.
Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.
