Honolulu Weekly

Last week, Honolulu Advertiser reporter Rick Daysog broke the story that a deal had been reached that would guarantee affordable housing at Kukui Gardens from now until Al Gore commands the seas to rise and all of O’ahu becomes a water park.

This news that local non-profit group Faith Action for Community Equity (FACE) and the potential new owner of the site, Carmel Partners, had reached a deal should have been met with a resounding cheer, especially from the state. After all, according to the new deal, the state would only have to fork over $55 million to assist the non-profit in buying the property, a significant drop in price from what the Lege and Lingle were prepared to pay less than a year ago.

Last session, the House and the Senate drafted a bill allowing the state to condemn Kukui Gardens and seize it by eminent domain. By doing so, the state would prevent the owners of the property, Kukui Gardens Corp. (KGC), from selling the complex to Carmel for $130 million. Lingle signed the bill, making it law. Condemnation, unfortunately, wouldn’t come cheap. It would likely cost somewhere around $200 million.

When the terms of the new deal were announced, we should have heard cheers; after all, FACE and Carmel just saved the state a lot of money. We didn’t. We heard grumbles. In particular from Senate President Colleen Hanabusa and Ted Liu, director of the Dept. of Business, Economic Development and Tourism.

Hanabusa and Liu think the deal needs a thorough review, and that’s a sensible proposal all around, one that protects the state and taxpayers.

The senate president told the Honolulu Star-Bulletin, ‘Assuming that the Legislature would support such an expenditure, I doubt very much that they would support an expenditure and simply turn it over [to a non-profit].’

In the same report, Liu was quoted as saying, ‘We have encouraged everybody who’s been involved to try to work something out with the caveat that whatever they work out we’ll have to take a look at, understand, analyze and agree toÖWe’re not going to be rushed into this.’

Their concerns, of course, are valid. The plan should be carefully scrutinized, especially if this is a scenario where FACE and Carmel have crafted a deal in private and then dumped it on the state. But what if Hanabusa and Liu were already familiar with the terms of the deal? Would their cautionary concerns still be as valid?

According to Drew Astolfi of FACE and Chanu Lee of Devine and Gong Inc., the San Francisco financial development firm specializing in affordable housing that negotiated the deal, both Hanabusa and Liu knew about the terms. Astolfi says that he met with the senator to discuss the deal on several occasions, showing her the cost of the proposed deal compared to the cost of acquiring the property through imminent domain; Lee says she met with Hanabusa in October of last year.

Both Astolfi and Lee say that they have been in contact with Liu throughout the negotiation process and that he was aware of the terms of the deal. In fact, Lee says that they regular sent spreadsheets to the governor’s office and were in constant contact with Liu. Astolfi maintains that the economic director was personally involved in supervising negotiations between FACE and Carmel.

Astolfi is shocked that objections are being raised by Hanabusa and Liu. He believes the deal is not only sound but cheaper than what the state would pay to save the property through condemnation. Astolfi also points out that the state has a poor track record as a landlord, so it makes sense to keep Kukui Gardens out of government hands.

The deal, of course, isn’t done for, at least not yet. As with most deals, the devil is in the details. And in this case, it’s up to Lee and Astolfi to perform an exorcism.