Continued...

In October 2006 the Kukui Gardens tenants association and FACE filed a lawsuit in U.S. district court in Hawaii charging the planned sale would violate the National Housing Act provisions regulating HUD mortgage prepayments. The suit also argued that the sale would constitute discrimination against non-white tenants, because they are about 1.5 times more likely to lack affordable-housing access than white tenants. Federal law mandates nonprofit groups be given a reasonable chance to acquire HUD-subsidized developments put up for sale. Four nonprofits originally expressed interest in purchasing the development; the lawsuit charges Kukui Gardens Corp. did not fairly consider their offers before negotiating with a for-profit developer.
The issue of HUD permitting owners to pre-pay the mortgage when they dont have to has come up repeatedly, and HUD has for years taken a position that is contrary to plain language of federal housing law, said Jack Cann, attorney for the San Francisco-based Housing Preservation Project, which represented FACE and the tenants in the lawsuit. So anyone who wants to sue HUD has pretty good grounds to do so.

Meanwhile, organizers and residents knew community pressure and public opinion would be essential to their struggle. Using an approach that interfaith groups nationwide have applied to workplace struggles, FACE enlisted local clergy to talk to Kukui Gardens Corp. board members and other stakeholders. This was especially appropriate given that the Ching Foundation is a faith-based Catholic organization.

FACE organized pickets and demonstrations and took residents and clergy to visit City Hall and the offices of Kukui Gardens Corp. and Carmel Partners. They interrupted a Kukui Gardens Corp. board meeting. At an Accountability Assembly in March 2007, 850 people rallied in a cathedral demanding local elected officials do their part to save affordable housing.

FACEs style of organizing is somewhat more assertive than Hawaii is used to, said Nakata. It was like a reintroduction of the tactics of the heyday of the labor movement. A lot of that was carried by the tenant organizing. They were loyal, 30 to 50 people could be counted on to turn out at all the rallies and demonstrations.

Most residents many of them senior citizens of Chinese or other Asian ethnicity had never participated in community organizing or activism.

Were new to this, said Anzai. We had rallies, demonstrations, sign-waving, going to the capital, to the offices of the developers and the sellers. We were all nervous, totally. Wed never done anything like this before. Hawaiian people just dont go out in public, especially Asian people; we are really conservative and shy. Im not one to go out and hold up signs. But we had to do it, so we did it.
After about 14 months of campaigning, in the spring of 2007, an unofficial agreement was reached which residents and organizers see as a big victory. As this issue of Shelterforce went to press the final details of a settlement, which will essentially split Kukui Gardens in half, were being ironed out.

The state will buy half of the 22-acre development and turn it over to a nonprofit development company that will maintain it as affordable housing for at least 55 years. Carmel Partners will be able to develop the other half as office, retail, and restricted-income housing meaning tenants can make no more than a designated percent of the states median income. Beda declined to give exact details of the income restrictions, but said it would include units for people making 80 percent of state median income for a certain amount of time; and later on the limit would be raised to 140 percent of median income. While this arrangement doesnt put a ceiling on the rent Carmel can charge, Beda characterizes it as affordable.

The rents might need to be artificially lowered to fill the units with that restriction, he said.

And if things go as planned, low-income tenants currently living in Carmels part of the property will be relocated into new units which will be built on the affordable half of the property.

The settlement was negotiated in large part by the development firm Devine & Gong and their development consultant, Chan U Lee, a Hawaii native who grew up across the street from Kukui Gardens and worked pro bono for a year and a half with FACE and the residents. We couldnt have done it without them, said Astolfi.
The affordable half of the development, which is estimated to cost about $80 million in rehabilitation, new construction, and rent-subsidy costs, will be financed through state funds and federal tax incentives. Half of those units will be allocated for residents making less than 30 percent of the states median household income, and the other half for those making less than 60 percent of median household income. That means $11,000 to $29,000 a year; and $22,000 to $58,000 a year, respectively, depending on family size. Current Kukui Gardens residents who dont meet those income ceilings will be allowed to stay until 2011.
Implementing the settlement will involve lots of people moving within the project, said Cann. Its a less than perfect resolution, but on the other hand the federal mortgage would be completely paid off in 2011 and then nobody would have any leverage at all. So the fact that they tried to sell it before 2011 in a way that violated federal regulations was propitious. It gave the residents a chance to step in and force negotiations.

In the next four years, HUD-insured mortgages will expire on at least 394 projects with more than 40,000 units nationally, according to Cann. Organizers hope that the Kukui Gardens victory can provide lessons for housing groups nationwide fighting both HUD mortgage pre-payment efforts and fighting to keep projects affordable once HUD-insured mortgages expire.

And in Honolulu, the fight for affordable housing is far from over. Even as the Kukui Gardens victory was falling into place, in February 2007 Honolulu Mayor Mufi Hannemann announced he wanted to sell 12 affordable-housing projects owned by the city, claiming they are too costly to maintain and manage. The mayor said buyers would be obligated to keep the projects affordable, but residents and housing activists are skeptical.

Nakata thinks the success of Kukui Gardens residents will help protect affordable housing at the city developments. For the future in housing, this has had a very positive impact, he said. This will be a major part of the solution to the housing problem here. The government and key House and Senate leaders came around to being very supportive, and we helped make housing and the homeless one of the top issues in the state.

This is a lesson for people who come to Hawaii and try to invest, added Tam. Hawaiian people are soft-spoken generally, but dont get us upset!

This has made people more confident and stronger, confirmed Anzai. “We thought we could never do what we did. Now we know we have that power. Its people power, thats what it is.”