The Maui News

A bill passed earlier this month by the Maui County Council will allow attorneys to start work on condemning the ground lease for the Front Street Apartments, where rents are set to rise to market rates in August 2019.

On Sept. 7, the council passed Bill 69, authorizing the county to spend $250,000 toward preparing the condemnation of the ground lease. Mayor Alan Arakawa signed the bill the same day, county spokesman Rod Antone said. The funds match the $250,000 already set aside by the state Legislature during this year’s session.

“We are happy that the Maui County Council is joining the state in correcting a grievous wrong,” Barbara Henny, chairwoman of the Front Street Apartment Tenants Group, said in a news release.

“Many would otherwise be homeless.”

The 142-unit apartment complex was built in 2001 and was supposed to be affordable for 50 years. However, due to a loophole in federal tax code, the developer will be able to raise the rents to market rates in August 2019.

Many tenants have said they could not afford an increase in rent; some are retirees or disabled tenants on fixed incomes. Henny said that 80 percent of the residents work, many at more than one job.

Craig Hirai, executive director of the Hawaii Housing Finance and Development Corp., said in June that acquiring the ground lease would allow the state to maintain the current rents for tenants.

Tenants said that building owner, Front Street Affordable Housing Partners, was willing to negotiate with the state but has broken off talks in the past and has refused the county access to appraise the property.

Adam Dornbush, representative for the project owner, said in May that the owner was “not interested in selling its interest in the subject property.”

The tenants group also said that the federal government, county and state have already spent close to $20 million toward the development and operation of the apartments, including tax credits, tax exemptions and county waivers. Tenants also have spent an estimated $20 million over the past 16 years in rent and subsidies.

Council Member Stacy Crivello, who chairs the Housing, Human Services and Transportation Committee, said that after the passage of the bill, the next step is for state and county attorneys to form a memorandum of agreement working toward the condemnation.