It’s a complex deal that also includes $42 million worth of renovations to the apartments, and has been a source of tension for residents and affordable housing advocates.
Among the concerns are that certain residents — particularly those who live in what is described as workforce housing — would be displaced by the sale of the complexes.
In general, those are residents making between 80 percent and 120 percent of the area median income and are people who are teachers, construction workers, police officers and other young professionals.
There’s also some worry that the city isn’t making the best financial decision when considering rental assistance subsidies it has promised to provide to as part of recent negotiations with Faith Action for Community Equity.
“If they pass this thing then the next council and administration get to live with it,” said Chuck Wathen, CEO of the real estate firm Pier Management Hawaii. “No one understands the full implications of what’s being proposed and what the financial repercussions are.”
Wathen bid on the apartment complexes, losing out to Honolulu Affordable Housing Partners. That group is a consortium made up of Highland Property Development out of Auburn, California, Richard Gushman, a well known Honolulu developer, and Stephen Gelber, who is a real estate and tax attorney in the city.
Wathen said the sale agreement between the city and the Honolulu Affordable Housing Partners shows that the amount of low-income housing will be increased at the sacrifice of workforce housing, which is something that’s sorely needed in Honolulu.
He also said he’s crunched the numbers and found that the city won’t be making as much money as should be expected because it still needs to pay for rental assistance subsidies for some residents as well as account for paying off certain debts for bonds and community development block grants.
Honolulu officials wanted to sell the affordable housing complexes because the city was losing between $6 million and $7 million annually on operating and maintaining the apartments.
The current deal with Honolulu Affordable Housing Partners will stop this bleeding in addition to increasing the amount of housing available to people who are below the 80 percent area median income range.
Up until last week FACE had been apprehensive about the sale of the complexes. Some of the main concerns involved Honolulu Affordable Housing Partners raising rents and displacing residents. There was also some anxiety that the group is in business to make money.
“We were concerned because they’re not a nonprofit entity,” said Jun Yang, an organizer with FACE. “And they didn’t have a true plan for the lowest income properties.”
Three of the city’s complexes — Kanoa Apartments in Palama, the Bachelors Quarters in Ewa Villages and Pauahi Hale in Chinatown — serve very low income individuals who make less than 30 percent of the area median income.
Yang said these can be people who are transitioning from homelessness, on fixed incomes and as a result are the most vulnerable to changes in rent.
FACE made clear during recent budget committee meetings that it would not support the city’s affordable housing deal if these individuals didn’t get some assurance that they would be protected.
But this needling resulted in some possible changes to the deal, one of which includes a commitment from the city to expand its rental subsidy program for tenants who might be in danger of being displaced as a result of rising rents.
The other is that Honolulu Affordable Housing Partners will find a nonprofit to take over the three lowest income apartment complexes and use federal funds to help facilitate that deal.
“That really makes us feel a lot more confident that this is going to work out the right way,” Yang said. “(But) it’s ultimately the responsibility of the developer that the residents are not going to lose their homes.”
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