Homestead panel enters renter dispute

By Vicki Viotti
Advertiser Staff Writer

State homesteading officials have agreed to intervene in a persistent dispute between a private managing agent and tenants in a Kapolei rental subdivision, the first of its kind on state Department of Hawaiian Home Lands property.

A group of renters representing the Ho'olimalima Tenants Association appeared Monday before the Hawaiian Homes Commission, the panel that oversees the trust of assets supporting the issuance of leases to beneficiaries who, under federal law, must have 50 percent or more Hawaiian blood.

Ho'olimalima, built nearly four years ago, comprises 70 single-family homes located within DHHL's Villages of Kapolei. They were intended to provide a steppingstone to home ownership for beneficiaries who remain on the homesteading waiting list largely because they can't qualify financially for a mortgage.

Since then the relationship has soured between the management company, Mark Development Inc., and some of the tenants, who formed an association to fight what it considers harsh rules and eviction policies.

Mark Development officials in the past have countered that the company must strictly enforce rules because it is liable for heavy fines if tenants fall short of stringent tax-credit requirements. Yesterday, company president Craig Watase said the complaints originate from "the ones that are violating the rules." According to Watase, most tenants are happy to follow regulations in exchange for reduced rents.

Watase said rents for the three- and four-bedroom units go for between $700 and just under $1,000 a month — for homes that can go for up to $2,500 on the rental market.

After the commission hearing Monday, held at Ka Ho'oilina Na Kuhio Community Center in Waimanalo, Chairman Micah Kane said the panel would investigate how it might help settle the complex dispute.

"It's been the toughest issue I've had here," Kane said.

The major points in the conflict:

• According to lawyers for the Native Hawaiian Legal Corp., who presented written testimony, DHHL has a trust responsibility for the renters and "must continue to have a supervisory role." In the past, Kane said, state attorneys have cautioned against intervening in the dispute because the state could then become liable for losses of the $12 million tax-credit fund underpinning the development.

"We're concerned about the exposure to the (Hawaiian Homes) trust," he said. "We have to walk gingerly."

• The project, financed through a federal low-income housing tax-credit program, was marketed as a "rent-to-own" development. Some applicants said they believed this term meant they would build up equity over the 15-year term, but instead they are ensured only of an option to purchase the home at that point.

• Legal Aid Society attorneys, who have defended some tenants in eviction proceedings, argued in written testimony that some of the rules imposed by Mark Development violate the state landlord-tenant code. Among these is a minimum income level; tenants who experience a drop in income below the minimum have six months to correct the deficiency or face eviction, even if they don't miss a rent payment.

But almost all the hearing time on Monday was spent in airing complaints from some of the tenants. One of them, Val Zamora, said her family has been hit with violation notices for being "illegally parked" — a violation she questions because the streets are owned by DHHL. Then there have been the repetitive requests for more and better photos of family members that the managers want to keep on file, including all her children.

"When we first came here we thought it was a dream come true for us, but today, it's a nightmare," she said.

Kane said his initial review of Mark Development management indicated that their rules were legal, although he acknowledged disagreeing with "some of their tactics," including the installation of surveillance cameras aimed at selected residents. The commission has resolved to take another look at the problem.

"We have to," he said. "It puts someone who's outside the (Hawaiian) family between family members."

But Watase said the rules have passed legal muster. Strict enforcement allows Hawaiian families who are qualified to get a chance to rent in the project.

"What grinds me is we're forgetting that the real victims are out there on the Hawaiian Homes list, families truly deserving and not getting the chance," he said.

Reach Vicki Viotti at vviotti@honoluluadvertiser.com or 525-8053.