A new law aimed at reforming the Hawaii Community Development Authority, the state agency that manages development in Kakaako, is a victory for Kakaako residents who spent months protesting the approval of new high rises in their neighborhood last year.

But despite their legislative success, development in Kakaako is likely to equal or exceed last year’s pace, when the agency approved six new projects in the 600-acre district.

Developers seem unfazed by new rules and HCDA has already considered three project applications related to the district this year, including a residential building by MJF Development Corp., a mixed-use project by Keauhou Lane LP and Gerding Edlen LLC, and another mixed-use project by Castle & Cooke Homes Hawaii and Kamehameha Schools. HCDA Executive Director Anthony Ching said he is expecting four more applications this year.

Gov. Neil Abercrombie signed House Bill 1866 into law April 30 after months of intense legislative scrutiny of the agency. The law revamps the agency’s board membership, imposes a height limit for new buildings and makes other changes aimed at increasing the agency’s effectiveness and accountability.

The law doesn’t go into effect until July 1 and some provisions aren’t effective until March next year. Ching said the agency is getting started on the rule-making process, which he estimates could take about a year.

During a meeting Wednesday morning, Ching said several of the provisions in the law have no practical application because they reiterate what the agency already does.

Anita Hofschneider/Civil Beat

Hawaii Community Development Authority Executive Director Anthony Ching listens during a hearing at the agency’s office in Kakaako on May 7, 2014.

But changes include a requirement for HCDA to hold extra public hearings for projects that are seeking exemptions to the rules and giving the agency the power to allow developers to pay cash instead of complying with reserved housing requirements, which are intended to ensure that some units are sold below market rate.

Although some of the changes are significant — for example, the agency will have almost an entirely new board next year — Ching said the bill won’t make it harder or easier for the agency to achieve its mission of revitalizing Kakaako.

“I don’t think it changes anything,” Ching said, referring to the new law’s impact on the pace of development in Kakaako. “We are still obliged to render decisions in a fair and consistent manner.”

Changes in Board Membership

But even as Kakaako continues to grow, sweeping changes are in store for the HCDA boards, which have been criticized as giving the governor too much power.

Currently, four of Abercrombie’s Cabinet members sit on each of the HCDA’s three boards. For months, the governor left seats for community representatives and cultural specialists vacant on each of the boards, giving his Cabinet a majority of votes. The situation is ironic because back in 2006, Abercrombie criticized HCDA’s board composition as giving former Gov. Linda Lingle too much influence and called for the agency to be abolished.

In addition to Abercrombie’s influence, the Kakaako board has also been criticized for having too many ties to developers. One board member, Lois Mitsunaga, works for the firm Mitsunaga & Associates, a construction firm that received a contract from the HCDA in 2011. Abercrombie’s most recent appointee, Brian Tamemoto, has been criticized for his ties to Kakaako developer Kobayashi Group.

Under the new law, the governor will have just two of his Cabinet members on the Kakaako board, the finance director and the transportation director. Other members will include a cultural specialist, at-large members and representatives of the Kakaako community. Two of the at-large members will be chosen from lists provided by the Senate President and House Speaker, respectively. The county department of planning and permitting will have an ex officio seat.

To prevent seats from sitting empty, the new law requires that the governor fill vacancies within 30 days.

“We will be guaranteed to have a newly composed authority as of March 1,” Ching said.

Cash in Lieu of Reserved Housing

The law also allows the HCDA to accept cash from developers instead of requiring them to abide by reserved housing requirements, which dictate how many units the developers must provide below market rates.

Anita Hofschneider/Civil Beat

Construction at 801 South St. Tower A in Kakaako on May 7, 2014. A second tower, known as 801 South St. Tower B, is also planned, but has been hotly contested by residents of the neighboring Royal Capital Plaza.

House Majority Leader Scott Saiki, who introduced HB 1866, said he pushed for that option because not all the reserved housing units are currently being sold to people of lower income levels and the additional money could help fund more affordable housing projects.

HCDA previously had the authority to accept cash-in-lieu until the Legislature removed it in 2006, said Saiki, noting that the idea was discussed at length throughout the legislative session.

But HCDA Kakaako board Chairman Brian Lee said the agency should proceed with caution when using that power.

“I think we should be careful how we exercise this. It appears that there’s a danger of allowing developers to buy their way out of the reserved housing requirements,” Lee said.

Ching agreed and said that the agency will draw up a set up criteria to determine when developers can pay cash instead of setting aside lower priced units.

“It is a compelling social policy question that we should not take lightly,” he said.

Bernard Nunies, a representative from the community group Kakaako United, also said he’s worried about the implications of the new rule.

“If you’re going to pay in cash, you defeat the whole purpose of providing that affordable housing,” he said.

New Height Limits

One major victory for those who oppose rising towers in Kakaako is the new law’s imposition of a 418-foot height limit.

The developer Forest City Hawaii had proposed a 650-foot-tall building at 690 Pohukaina St. which would tower above the City and County of Honolulu’s height limit of 350 feet. But a building that tall would now be impossible under the new law.

Anita Hofschneider/Civil Beat

Construction continues on 801 South St. Tower A in Kakaako on May 7, 2014. Residents of Royal Capital Plaza have filed a lawsuit resisting the second part of the project known as 801 South St. Tower B.

But Jon Wallenstrom, president of Forest City Hawaii, said the new limit doesn’t discourage the company, which will work within the new rules.

“I don’t think height is a requirement of great architecture,” he said.

Forest City Hawaii isn’t the only developer who is undeterred by the new rules.

Ryan Harada, spokesman for Downtown Capital which is building two towers at 801 South St., said the law won’t really affect the company. The company had concerns about the bill earlier in the session, but Harada said the final version is fine.

“I think it was a good compromise,” he said. “I like to think that the Legislature had listened to us.”

Nunies from Kakaako United also said that the law is a step in the right direction. But he and other Kakaako residents think there’s still more to be done to improve HCDA’s management of development in the neighborhood.

Some residents are even taking legal action. Residents of One Waterfront Towers have taken their dispute to court. And on Wednesday, the condo association of Royal Capital Plaza in Kakaako urged the HCDA board to overturn the approval of a second tower at 801 South St., which would drastically block many of the views in the building. The board decided to make a decision at a later date.

Although Nunies said that he’s happy with the passage of HB 1866, he said Kakaako United still plans to continue its advocacy for improved infrastructure and responsible development.

“With the current board and the recent addition of Tamamoto, I just wonder how much more development will be fast-tracked through HCDA before all of these changes are implemented,” he said.

Contact Anita Hofschneider via email at anita@civilbeat.com or on Twitter @ahofschneider

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