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Front Street Apartments tenants pleading to keep rents affordable

By Staff | Jan 18, 2018

Tenants at the Front Street Apartments will seek state lawmakers’ support to keep their rents affordable.

LAHAINA – Dialysis patient Helen Bullion is among the hundreds who fear they will become homeless, as efforts are made to convert their low-income housing into market-priced homes in West Maui.

“I don’t know where I’ll go,” said Bullion.

Days before the opening of the Hawaii Legislature on Jan. 17, tenants of Front Street Apartments are seeking support to keep rents affordable at their homes, noting that some $40 million in public investment has been provided to develop and retain the project, including up to $15.6 million to the owners in state and federal tax credits for the low-income project.

The Maui County Council on Dec. 5 unanimously passed a resolution urging state lawmakers to keep the rents affordable at the apartments, saying promises were made by the developer in 2001 to keep rents low for 50 years.

The West Maui Taxpayers Association, with more than 2,000 members, has sent letters of support to lawmakers, noting that failure to keep the apartments’ rents affordable will increase the number of homeless in Lahaina, second only to Waikiki as a visitor destination.

Homeless shelter officials on Maui said there’s a two-year waiting list for affordable housing.

“We don’t have the capacity to take them in,” said Monique Yamashita, executive director of Ka Hale A Ke Ola Homeless Resource Center.

“We’re already at maximum capacity.”

Talks between the state and building owner Front Street Affordable Housing Partners broke off last year after the end of the state legislative session, and talks this month appeared to have come to an end, according to a legislative source.

When contacted Monday, a Partners official indicated there was a misunderstanding and that his group was still open to negotiations.

Maui County officials estimate the county has spent at least $5 million in benefits to support the developer and landowner, including more than $2 million in property tax exemptions over the past 16 years.

Tenants at the 142-unit complex estimate they’ve contributed in rent more than $20 million, including personal payments and federal rent subsidies during the past 16 years.

A survey done by tenants showed an estimated 70 to 80 percent of renters worked at one or more jobs, and 20 percent were either disabled or retirees.

In 1999, SunAmerica Affordable Housing Partners Inc. proposed developing the 142-unit Front Street Apartments on 8.7 acres with a 50-year lease from landowner 3900 Corp., asking the Maui County Council to place it on a fast track with a number of benefits.

The requested benefits included rezoning five parcels from residential to apartment and waiving the usual requirement of contributing 1.5 acres of public parkland as well as developing underground utilities.

Less than six years after the building owners signed a contract with the state to provide low-income housing, SunAmerica was part of an investors coalition pushing for federal tax rule changes, trying to pave the way for either selling low-income multifamily housing after 15 years of compliance or converting them into market-priced homes.

The new tax rules signed by the U.S. Treasury went into effect in 2012, despite criticisms from advocates of low-income housing.

In early August of 2015, Front Street Affordable Housing Partners said it was exercising its IRS option to sell the apartments or convert them into market-priced homes. The Partners noted that an increase in ground lease rents made operations difficult.

The Partners added that another difficulty was that it has been unable to increase rents in the last seven years because of the government formula for determining rents, even though costs are rising.

Critics note that while the appraised value is stated as $8.7 million, the Partners were asking for $15.3 million – well above the appraised value.

The Partners have said no buyers, including the state or county, came forward to meet the asking price, so the Partners exercised the option of beginning to convert the low-income rentals to market-priced rents and gave low-income tenants until August 2019 to either leave or pay market prices.

The Front Street Apartment Tenants Group, representing apartment renters, has argued that the Partners in 2001 were aware of the schedule of the ground lease increases during the 50 years and willingly signed the agreement with the state.

The group said based on a schedule agreed upon in 2002, the landowner 3900 Corp. charged a ground lease of $18,900 in 2001 and was to raise it to $25,900 a month.

The tenants group said the development of the appraisal at $8.7 million, as well as the asking price of $15.3 million, was paid and provided by the Partners, and that like any person looking at real estate prices, independent estimates are needed.

The group said it feels the county should take a hard look at the benefits provided to the Partners and roll back the benefits, including the zoning and tax exemption with penalties, since it appears to constitute a breach in the original agreement.

The state has intervened in the past to protect hundreds of low-income renters facing eviction, including in 2006 the purchase of the low-income Kukui Gardens, a place where many low-income Chinese families have resided after the redevelopment of Chinatown.

The state also purchased 600 acres of farmland in Waiahole, then later Waikane, to preserve the taro farming community in Windward Oahu in the late 1970s, as rents were raised by more than 200 percent to evict farmers and pave the way for urban development.

Also in the 1970s, Honolulu Mayor Frank Fasi offered city land in Westloch in Waipahu to 130 Filipino residents of Ota Camp, and Gov. George Ariyoshi successfully initiated a move to build low-rent housing on the city land with an option that allowed the residents to apply rents toward buying their houses.

Bullion said she would like to go to the State Legislature to testify, but her regular dialysis treatments prevent her from leaving Maui.

Reuben Pali, a Native Hawaiian born and raised in Lahaina, said he broke his back in a vehicular accident and continues to have back problems that sometimes require him to use crutches.

Pali said he and his wife, Rhonda, who has lupus, work part-time teaching music to children at their after-school Maui Music Mission – an activity that they are struggling to run, despite their disabilities.

Asked what would happen if charged market prices, Pali said, “I wouldn’t know where we would go.”

Many of the tenants are single parents raising children or grandchildren or supporting elderly parents.

“I’m taking care of a Filipino grandchild,” said tenant Sharon Serafica.

Several other tenants, who are Tongans and Hispanics and speak little English, have difficulty understanding why they’re facing eviction through raised rents.

The Rev. Stan Franco, housing co-chair of Faith Action for Community Equity-Maui, said his organization is working with the tenants to build support for them on the Valley Isle.

Franco, whose group has members from more than a dozen churches and non-profits, said he hopes to help gain the support of other organizations statewide, especially in Honolulu.

“Our kuleana is to take care of people who live here and need shelter,” he said.

“To me, it’s a sin not to provide safe shelter.”

(Gary T. Kubota, a former Lahaina News editor, has received several national journalism awards, including recognition from the National Press Club and the National Association of Home Builders. He is helping the Front Street Apartment Tenants fight eventual eviction.)