HUD should act on Kukui housing deal
There's one more player to be heard from in the controversial sale of 857 affordable units at the Kukui Gardens complex in Downtown Hono-lulu: the U.S. Department of Housing and Urban Development.
In the interest of increasing the chances that Kukui Gardens' large stock of affordable units stay affordable in the long term, it's time for HUD to weigh in on the sale and the Kukui Gardens Corp.'s loan prepayment offer.
Last month, the nonprofit Clarence T.C. Ching Foundation put its plans to sell the property on the fast track by stating it would simply pre-pay its existing 40-year, low-interest HUD note, which runs out in 2011. The procedural move enables the foundation to bypass strict HUD oversight and sell to whomever it wants.
Oversight would have meant a closer look at the entire process, including why Kukui Gardens Corp. chose to reject a bid by the Ecumenical Association for Housing, a local nonprofit. Instead, the corporation chose Carmel Partners, a for-profit developer based in California, for a reported $130 million.
Any buyer of Kukui Gardens would still be obligated to fill out the existing 40-year affordable-housing commitment to 2011. But a significant difference is that had a nonprofit been chosen, the chances for meeting the more important social need — the long-term preservation of affordable housing in Honolulu — would have been improved.
HUD should now consider if the prepayment deal is in the best interest of the community.
The intent of offering low-cost loans in the first place was to create more affordable housing, but as this type of loan expires in Hawai'i and across the nation, the need for affordable housing is greater than ever.
HUD must do all it can to assure these existing units stay in the affordable-housing pool.
Refusing the Kukui Gardens prepayment offer would keep the sale under HUD's watchful eye and might give nonprofit buyers dedicated to affordable housing in perpetuity more time to come up with acceptable financing and a fair price.
HUD action to decline prepayment won't extend the 2011 expiration date. At that point the owners are free to sell to whomever they wish. In fact, as they originally proposed, they could sell today although the housing would have to remain in the affordable category through 2011.
But it might buy time to keep alive a scenario that allows for more of Kukui Gardens' 857 units to stay affordable in the future — a worthwhile goal in the midst of our current housing crisis.