Low-cost rental project bill fails

It dies in conference committee; Front Street Apartments backers to try again next year

Residents and lawmakers are hoping that a bill to keep rent affordable at the Front Street Apartments in Lahaina can be revived next year -- before the rents rise to market rates in 2019.

Senate Bill 1266 made it all the way to conference committee before it was deferred on April 27, tabling the bill for now but keeping it alive for 2018, when the two-year legislative session ends.

The failure of the bill to advance came as another blow for supporters after its companion, House Bill 1553, died in the House of Representatives in February.

"I'm feeling so deflated. We lost two bills. All these people are in jeopardy of being homeless," said Chi Pilialoha Guyer, vice president of the Committee for Residents at the Front Street Apartments. "We put so much energy into testifying and into really hoping."

About 250 to 300 people live in the 142-unit, affordable Front Street Apartments. State and private developers financed the complex that opened in 2001, but a tax code loophole allows the owners, Front Street Affordable Housing Partners, to put the project up for sale after 15 years. If no buyer can be found, the units could be rented at market rates.

The state wouldn't purchase the project because owners were asking $15.4 million, nearly double its appraised value of $8.7 million. The county said it didn't know about the issue soon enough to take action.

Alarmed residents said that many tenants couldn't afford higher rent. In January, lawmakers introduced identical House and Senate bills to keep the apartments affordable.

The Senate bill would have directed the state and county to pay $250,000 each to fund negotiations between the government, Front Street Affordable Housing Partners and landowner 3900 Corp. If negotiations to keep the apartments affordable through at least 2032 didn't pan out, the bill would have allowed the state to purchase the property using the power of eminent domain.

The measure passed through both chambers with full support, and dozens of residents testified heavily in favor of it.

"I know the Senate side was trying very hard. We were all trying to get it through," said Sen. J. Kalani English, one of the Maui lawmakers who introduced the bill and was on the conference committee. "It was just one of the unfortunate things that it didn't make it."

He doesn't think money was the issue.

"To be frank, I think a lot of stuff got overshadowed by the (Honolulu) rail," said English, who represents East Maui, Upcountry, Molokai and Lanai. "That just kind of sucked the oxygen out of every room."

However, he said, the break will give lawmakers "a little bit of breathing space" and time to rethink.

"We remain committed to trying to get this passed next year, either through a new bill or, when conference comes around, picking this one up again," he said.

West and South Maui Sen. Roz Baker, who also was involved in introducing the bill, said she wasn't sure why the measure didn't make it through this year. However, reasons didn't concern Baker, who was focused on what lawmakers could do in the future.

"It actually did not die," she said. "We can take it up when we get back, and we'll continue to work to see if there's some other avenues that can be explored."

Baker planned to meet with the Hawaii Housing Finance & Development Corp. before returning to Maui "to see if the fact that it's still in conference could give us another solution.

"We want that property to stay in affordable and low-income rentals because that's really the premise on which it was built, and the tax credits were used," Baker said. "Even though there may be a legal loophole there, I think it's bad faith if the owners don't work with the county and ultimately the state to make sure that those residents have some stability in their lives."

Carol Reimann, director of the county Department of Housing and Human Concerns, said the county has enough money in its West Maui affordable housing fund for negotiations if the bill were to pass.

"Even though Front Street Apartments is not a county project, we actively lobbied and put our full efforts into supporting SB 1266," Reimann said. "We were very disappointed to hear that the bill was deferred in conference committee and will work with the state to get it resurrected next session. In the meantime, we are hopeful that the state will come up with solutions whereby we can offer county assistance."

But Victor Geminiani, pro bono attorney for the Front Street Apartment tenants, wanted the county to be more proactive instead of waiting for the state. Front Street Apartments may not have been a county project, but it's definitely "a county problem," he said.

"It's ultimately affecting county residents," he said. "It's (the county's) homeless budget that's going to be affected. It's their citizens that are going to be out in the streets."

Geminiani was hopeful that the affordable apartments could be saved if the bill were to pass next year.

"We have 2¢ years before this property goes to market rates," he said. "You've got plenty of time, but somebody has to start taking leadership to move this forward."

A project representative has been unresponsive to multiple calls seeking comment. However, Front Street Affordable Housing Partners has opposed the bill. Attorney William Meyer III warned the House Finance Committee on April 4 that the bill would "result in costly and protracted litigation."

The owners believed the bill was "an inappropriate and constitutionally infirm use of the power of eminent domain" and would "vigorously oppose any eminent domain proceeding," Meyer added.

He said that if the state were to purchase the housing complex, it could possibly sell for between $30 million to $40 million at market value.

Geminiani had doubts, given that the property was appraised at $8.7 million just last year and was for sale for $15.4 million. He hoped the county or state would get another appraisal before moving forward.

Tenants have set up a Facebook page to share their stories. Visit Facebook.com/save frontstreetapartments for more information.

* Colleen Uechi can be reached at cuechi@mauinews.com.