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The Honolulu Advertiser

Posted at 12:24 p.m., Thursday, October 26, 2006

State legal opinion could hamper Kukui Gardens sale

Advertiser Staff

Gov. Linda Lingle said today it would be illegal for the U.S. Department of Housing and Urban Development to approve the prepayment of a federally backed loan to the owners of the Kukui Gardens affordable rental complex.

Kukui Gardens Corp. is seeking HUD approval to prepay its mortgage so it can sell the 857-unit, low-income apartments near Chinatown to San Francisco-based Carmel Partners for $130 million. Tenants say the sale would lead to the displacement of hundreds of low-income residents and senior citizens.

During a meeting with Kukui Gardens tenants this morning, Lingle said a recent opinion by the Attorney General's office concluded that HUD is barred by law from approving such prepayments. "We cannot afford to lose such a large number of affordable units to our lower-income residents," Lingle said.