Seniors in a Kakaako housing complex are worried they will end up on the street after receiving notices that their rent is scheduled to go up to $916 per month, a sharp increase from the current monthly rate of $675.

The development, Na Lei Hulu Kupuna, is across the street from Mother Waldron Neighborhood Park at the corner of Halekauwila and Cooke streets. It has 75 studio units and is part of the Kakaako state redevelopment district that’s seen a recent influx of high-end condominiums.

Garett Kamemoto is acting executive director of the Hawaii Community Development Authority, the state agency that’s in charge of zoning in the district. He said the agency previously owned 1 percent of the facility but sold it to Mark Development because the private developer promised to upgrade the aging building.

Alfonsa Omengebar Hokulani, 81, says she’s been unable to sleep well since hearing about rent increases in the Kakaako complex. Anita Hofschneider/Civil Beat

The other 99 percent of the building was owned by Bank of Hawaii. Mark Development paid nearly $2.9 million for the property.

The change in property ownership went into effect on Dec. 29, according to a letter Mark Development sent tenants.

Residents received letters on Jan. 25 asking them to sign a new lease with the higher rent by Feb. 15 or vacate the premises by March 1.

“I am stressed out,” said Alfonsa Omengebar Hokulani, an 81-year-old resident who has lived in the building for seven years. “I cannot sleep at night.”

Part of the problem is the ambiguity about the rent increases and when they would take effect.

Some residents who receive subsidized rent — and pay closer to $500 per month – were told they would continue to receive subsidies for the next year but don’t know what will happen after that. Others who don’t receive any subsidies and pay $675 per month fear having to pay the full $916 immediately.

Mark Development plans to meet with residents Tuesday. They’re so concerned that some of them have called the governor’s office and reached out for help from Unite Here Local 5, a union for hotel and service workers.

The 2018 fair market rent for a studio in Honolulu is $1,261, according to the U.S. Department of Housing and Urban Development. Many seniors on fixed incomes rely on subsidized rents to afford the high cost of living in Honolulu, including medical expenses and food.

In a 2014 letter, Mark Development’s president Craig Watase said no residents would be displaced by the sale. A 2015 Honolulu Star-Advertiser article quoted Watase saying, “Most tenants will pay the same or less under our plan.”

Updated: In an interview Monday, Watase said he doesn’t remember saying that. But he does say that despite rising rents, tenants will ultimately benefit from improved facilities and no one’s rent will go up overnight. His plan is to subsidize residents for six months to a year depending on their income levels.

For people earning the highest incomes — about $43,980 or higher — their rent will stay at $675 for the next six months and then rise to $1,099 by next year, a nearly 63 percent increase.

Those earning lower incomes will pay the same rates for a year before their rent goes up to either $916 or $733. Watase says he plans to help them find outside rental subsidies to make up the difference after a year.

Watase still doesn’t want to displace anyone but says “nothing is guaranteed.” Tenants are “going to have to figure out how to cover the gap by the end of the year… (there) potentially might be some pain a year from now.”

Watase doesn’t have sympathy for tenants earning $43,980 or more who were grandfathered into the project. “We really don’t feel sorry for the guys who are making 60 percent of area median income because they’re making hay.”

Still, he says he’ll do what he can to help those who are struggling. “I’m not going to make anyone move out because they can’t afford another two hundred bucks… Maybe we can’t subsidize everything but we’ll subsidize the most needy.”

Mark Development leases land from the state Hawaii Housing Finance and Development Corporation for $1 a year and received millions from the city’s Affordable Housing Fund to renovate the building. Watase says the project currently has a positive cash flow but more revenue is needed to cover the cost of upgrading individual rooms, common areas, elevators and the project’s exterior.

Watase’s company raised rents $100 since taking over property management of the building back in 2012. He says that was necessary and long overdue because rents had barely changed since the project was established in the early 1990s.

Mark Development has already poured hundreds of thousands of dollars to upgrade the facility, adding solar panels and making sure doors are accessible to disabled people.

Watase hopes that the rental increase forces people to look for rental subsidies, cut unnecessary spending, look for work and seek out public programs like food stamps and MedQuest. “It is what it is,” he says of the reality of rising rents.

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