The Hawaii Community Development Authority has given Downtown Capital LLC permission to develop a second residential tower in Kakaako at 801 South St. despite the vocal opposition of hundreds of local residents.

Ryan Harada, a principal at Downtown Capital, said the company is pleased with HCDA’s approval and that the required adjustments to the proposal are not a big deal.

He expects sales of condos in the tower to start in March or April, and said that the project could break ground as early as June.

The development includes a 46-story residential tower and a 10-level parking garage. Since HCDA considers the project to be “workforce housing,” the tower will be much more densely populated than most other buildings in Kakaako.

“It’s too much in too little space,” Kakaako resident Ariel Salinas told Civil Beat after Wednesday’s HCDA hearing.

It is the sixth project the HCDA has approved in 2013 — a sharp increase over previous years that has been facilitated by an improving economy.

The proposal drew more than 1,000 pieces of testimony and inspired weeks of protests that raised questions about HCDA’s ability to manage development in the neighborhood. Salinas was one of dozens of people who testified in the overflowing hearing room.

HCDA spokeswoman Lindsey Doi said that despite how vocal some opponents of the project were, more than twice as many people submitted testimony in favor of the project. Some Kakaako residents in favor of the development highlighted the great need for housing near downtown Honolulu. Many supporters were union members who work in construction-related industries.

But despite support for the project, critics’ voices were more prominent during the four hours of the hearing.

Opponents said not enough has been done to address their concerns about the new tower’s potential impact on sewers, population density, traffic and housing affordability. Even state lawmakers have gotten involved, drafting bills for the next legislative session that will reevaluate the HCDA’s powers and composition.

HCDA Director Anthony Ching spent more than an hour responding to concerns about the project but his responses didn’t seem to soothe the project’s opponents who filled several rows of seats and stood and sat on the floor, nearly all in matching red shirts.

State Rep. Scott Saiki, who represents Kakaako along with Sen. Brickwood Galuteria, cautioned the HCDA against approving the project. “We join in the concerns raised by Royal Capital residents,” said Saiki, referring to people like Salinas who reside at Royal Capital Plaza, which is adjacent to the proposed tower. Part of that building’s views will be blocked by the proposed structure. “They raise legitimate questions that extend beyond impacts on their building,” Saiki said.

He also criticized the HCDA because its decision-making board remains incomplete. The board was missing two members for months. Gov. Neil Abercrombie appointed a new member on Tuesday, but Saiki said that’s not enough because the board still lacks a cultural specialist.

Ching has maintained that the missing seat isn’t affecting the agency’s business. But Saiki said that while the HCDA might be able to reach quorum, it shouldn’t make such crucial decisions without a cultural specialist on the board.

Affordable Housing?

One of the most contentious questions about the new tower is whether it will create enough additional affordable housing in the area. Sixty-five percent of the units sold at Downtown Capital’s first tower at 801 South St. fell within HCDA’s definition of workforce housing, which opponents say shows that the condos aren’t helping enough average workers.

The second tower is also being built under the HCDA’s workforce housing rules, which require the developer to offer 75 percent of the units to people earning between 100 and 140 percent of median income in the area during the first 60 days that the condos are on the market. That includes four-person households earning salaries between $86,300 and $120,830.

Unlike “affordable housing,” which generally refers to subsidized living space for people earning 60 percent or less of an area’s median income, the condos at 801 South St. will cater to working professionals, including two-income “working class” families. Ching said that this could refer to, say, a family with headed by a police officer and a nurse.

According to HCDA, the cost of a two-bedroom condo in the new tower could range from as little as $318,223 to as much as $727,262 depending in large part on the interest rate.

Harada, from Downtown Capital, said that the company intends to offer units at about $500,000 for a two-bedroom home. “For the average Hawaii worker, this is the most affordable project,” he said.

But Salinas argued that estimates by the HCDA and the developers are wrong. He conducted his own calculation, which he insists is proof that the developer are understating the final sales price of the condos.

Salinas said that the developer is underestimating interest rates, which could dramatically alter the cost of each condo. According to Doi at HCDA, Downtown Capital used a 2.9 percent interest rate to calculate the cost of the condos in its development plan.

But HCDA board members dismissed Salinas’ testimony and maintained that the project is within the agency’s rules governing workforce housing.

“Anybody who has done anything in real estate can look at this by rule of thumb and can tell you that that is very affordable,” said Brian Lee, chairman of the HCDA board.

“I’m also discouraged by the act of throwing up all kinds of things against the wall, all kinds of opposition simply to oppose and slow down a project,” Lee told Salinas, provoking hisses and cries of objection from the audience.

But Salinas maintains that his affordability analysis is correct and developers are missing key facts.

“It seems like this decision was made over a year ago and the strategy was just to fulfill the legal requirements to get it approved,” Salinas said.


DISCUSSION QUESTIONS: Do you think HCDA made the right decision to approve the second tower at 801 South St.? Where should the balance be on housing, development and quality of life?

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