The demolition of the 54-year-old building at the corner of Wells and High streets in 2013 was one of the early flashpoints between Mayor Alan Arakawa and the County Council. The council had approved a rehabilitation of the building and questioned whether the mayor overstepped his authority by leveling the structure.

The county is offering the nearly half-acre Wailuku site, which has been turned into parking for county workers, to the state in exchange for a half-acre slice of the 5.6-acre Kahului property at the corner of Kaahumanu Avenue and Kane Street, according to documents accompanying an item before the Hawaii Housing Finance & Development Corp. board last month.

The Kahului property has been identified as an ideal site for the relocation of the Maui Bus hub currently at the Queen Ka’ahumanu Center. The center will not be renewing the lease after it expires Jan. 31, 2020.

The county’s goal was to find a site as close as possible to the mall to prevent service disruptions, county transportation officials have said.

A stonewall built in 1939 by the Works Progress Administration sets the boundary of a state-owned parcel in Kahului that will be turned into affordable rental housing units and the Maui Bus hub. This photo was taken Tuesday.

The Wailuku property, which has been proposed as the site of a county office building by Arakawa’s administration, could become an office building or civic center for the state Department of Accounting and General Services, which currently controls the Kahului site, the documents show. The State Building and state courthouse are contiguous to the property, as well.

The housing corporation board’s role in the project covers what will be built around the bus hub — the Kahului Civic Center Mixed-Use Project, which involves multifamily affordable rental housing units.

It is too early in the process for specifics, such as how many units and total cost, said Kent Miyasaki, the housing information officer for the housing corporation.

“We still have to plan and design the project,” he said last week.

But the starting point of the housing/bus hub was a memorandum of agreement between the state Department of Accounting and General Services, which controls the Kahului parcel through a 1993 executive order; the Housing Finance and Development Corp, which will be the lead agency in building the affordable housing project; and the county, which needs the bus hub, Miyasaki explained.

This property, across the street from Sears, used to house Maui Economic Opportunity operations. This photo, taken Tuesday, shows MEO’s shuttered Hale Ho’ololi. The 5-acre parcel currently houses the state Department of Education’s adult school.

The memorandum of agreement, which was approved by the housing corporation’s board last month, called for the exchange of the slice of the state’s Kahului site for the county’s bus hub in exchange for the Wailuku site. The leases for the parcels would be $1 a year for 65 years.

The agreement also called for allowing a 75-year lease at $1 a year to the developer of the Kahului housing project, across the street from the Maui Beach Hotel and Sears.

The state Legislature has provided funding — $2.5 million in capital improvement money for the housing project and bus hub and called for $1.5 million of the $10 million Dwelling Unit Revolving Fund to go to the project.

Of the $3.2 million price tag for the bus hub, the county will put up $650,000, according to the housing corporation documents.

State Rep. Justin Woodson announced the housing corporation board’s decision in a news release last week.

“It is a good first step to provide much needed affordable housing in Central Maui,” said Woodson, whose district includes the Kahului project.

The affordable rental project will be a nice complement to the 164-unit Catholic Charities Housing Development Corp. affordable senior rental project under way across the street. The first phase of Kahului Lani, which includes about half of the units, is expected to be completed in 2020.

Unlike the demolition of the old Wailuku Post Office building, council Chairman Mike White said Monday that he recalled some discussions about a swap involving the Wailuku property. He believed that based on the size of the lots it’s a good deal because the Kahului bus terminal site is a little larger than the old Wailuku Post Office site.

Auditor Lance Taguchi examined the old Wailuku Post Office dispute last year and chided Arakawa’s administration for making the decision to tear down instead of rehabilitating the old federal building “in the dark.”

In response to the audit, Arakawa said: “Whatever happens with the old Wailuku Post Office property, whether we build a new building, sell the property or trade properties with the state, the council and the public will be involved, offering testimony and sharing opinions and ideas.”

County spokesman Rod Antone said that the land swap will have to be approved by the council, and the public will have ample opportunity to weigh in.

Taguchi’s audit took no opinion on whether Arakawa violated the budget ordinance, saying that was a question that needed to be litigated in the courts.

“He added that, in his opinion, a “reasonable person would conclude” that the rehabilitation of the Old Wailuku Post Office would not involve demolition but reuse of the existing building.

* Lee Imada can be reached at leeimada@mauinews.com.