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The Honolulu Advertiser
Posted on: Thursday, May 18, 2006

Hale Alii developer pleads for 'relook'

By Suzanne Roig
Advertiser East Honolulu Writer

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HAWAI'I KAI Real Estate developer Mike Klein is struggling with plans to build new affordable housing units in Hawai'i Kai's last large parcel of undeveloped land.

Under an agreement reached with the city in 2000, Klein was to build 100 units by 2007 in his Hale Alii condominium project at Hawai'i Kai Drive and Keahole Street. He has built 31 units there to meet the city's requirements for affordable housing in the community.

Klein missed the deadline in December to get city approval for the remaining 69 units and sought an extension that would give him until 2010 to build them, but his request was denied by the city's Department of Planning and Permitting on March 6.

Hale Alii will total 296 units and, as currently designed, will be stair-stepped with the lower buildings near the road and the taller buildings against the mountain on the rear of the five acres.

"We have an existing affordable housing plan for the 100 units and just because we got a denial, doesn't mean our existing plan is dead," Klein said.

To move forward, Klein must get approval from the City Council. He plans to seek amendments to the unilateral agreement that outlines the development guidelines for the parcels of land, including the affordable housing requirements. He would like the City Council to agree to accepting 100 affordable units total, with the remaining units to be built by 2010. If that doesn't happen, he potentially could be required to build 147 affordable housing units instead of the 100.

A higher number of affordable units, however, would require the developer to redesign his project, eliminating underground parking, changing the construction materials, roofing and the open courtyard that expanded the setbacks from the standard 10 feet from the sidewalk, Klein said.

"It's a very, very complicated process at (the city) Department of Planning and Permitting," Klein said. "The (Department of Planning and Permitting) has offered to relook at the decision not to give us the extension of time. We have to provide them with information. We don't know if that relook will put us where we need to be so we have taken (on) the dramatic process of amending the Unilateral Agreement."

Klein will have to submit paperwork to make a case that there is a "compelling" reason for reconsideration, said Henry Eng, director of the city Department of Planning and Permitting. Klein said he has not submitted his application yet because he is in the process of "up-front" negotiations with planning staff and he first wanted to make a presentation to the Hawai'i Kai Neighborhood Board, which he recently did.

Klein is founder of the nonprofit Hawai'i Intergenerational Community Development Association, and the major shareholder in the for-profit 21st Century Homes, which are the builders of Hale Alii. The plan is to rent the 69 affordable housing units to senior citizens for 10 years.

Klein also will be seeking a zone change so that he can build his project up to nine stories, and wants to receive affordable housing credits that could be used to lower the number of affordable units he has to build under pending revisions to the city's Affordable Housing guidelines.

During his presentation to the Hawai'i Kai Neighborhood Board last month, he asked for support for an extension of time but did not disclose that the city had denied his initial request.

The board voted 8-2 in favor of the request.

'TOO EXPENSIVE'

Klein purchased the property with the understanding that he would have to build affordable units based on an agreement reached 20 years ago when Kaiser Development owned the land and asked the city to rezone the area from preservation to apartment. Affordable housing requirements at the time called for the owner of the land to make at least 10 percent of the units affordable after 1,200 units were built in surrounding parcels of land.

Today, the city requires developers to make at least 30 percent of their housing units affordable to low-income households or they must pay fees in lieu of building the affordable units. Developers also can obtain credits for each affordable housing unit they build, Eng said.

But in the case of the Hale Alii development, Eng said the unilateral agreement "specifically states that credits cannot be substituted for units."

The affordable units can either be for sale or rent, with rentals offered for a minimum of 10 years, Eng said.

In 2000, the agreement that runs with the Hale Alii land was amended to 100 total affordable units that had to be built by 2005. Eng said the deadlines were established as "incentives to get 100 affordable units by 2005."

The completed 31 affordable units will be rented for 61 years at rates that are 30 percent of the median household income. Rents average $710 a month including electricity, Klein said.

There are not many developers building affordable housing because it's just too expensive, he said.

"I plan to build another 100 units in Hawai'i Kai," Klein said. "There are many options on the table here. It's not a do-or-die situation. Affordable housing needs to be done."

That could be welcome news for residents dipping into their savings every month to pay their rent, Klein said.

But Klein is struggling to complete the project, which led to missing the deadline.

Klein said he needs more time because of a "myriad of reasons," including backlogged consultants, revisions to the plans, the time it took to get a park plan approved and to get the lot line adjustment.

"There are many options on the table," he said. "It's not a do-or-die, sink-or-swim deal. But every day we go beyond this day costs go up. "

Said Eng: "The consequence of missing the deadline is that the developer no longer has the option of building 100 units (total) for low-moderate income households to meet the affordable housing condition, and now must build 178 units for low-income households."

Klein said he doesn't see it that way.

If forced to build more units, Klein said he would have to amend his current building design.

"We have spent an enormous amount of time to incorporate the community's concerns in terms of view planes," said Joe Brown, 21st Century Homes president. "We have gone through considerable expense and time to make our plans aesthetically pleasing. The extension of time allows us to keep the building format the same.

"The market units will subsidize our affordable housing. Delays cost money. We're trying to build affordable housing. We need help."

COMMUNITY SUPPORT

Wayne Levy, a member of the Hawai'i Kai Neighborhood Board who voted in opposition to Klein's request for more time, believes the board voted without all the facts before it.

"He threatened us with an ugly building if he has to build more ... housing and is not allowed to do it his way. I don't see how that's for the greater good especially when the affordable housing is for only 10 years," Levy said.

The board voted to support Klein's request despite Levy's concerns.

Lester Muraoka, Hawai'i Kai Neighborhood Board chairman, voted to support the request for an extension and to amend the unilateral agreement because he wants the developer to maintain his current plan.

"The developer would have to create a different plan due to the parking structure and construction material," Muraoka said. "Also, the developer had worked extensively with the community to come up with the current design and this process might have to start again."

The support of the community carries weight when the city considers requests such as Klein's, Eng said.

Reach Suzanne Roig at sroig@honoluluadvertiser.com.