Developing condos tricky near last station site

The city’s mass-transit line is supposed to move people and spark development of affordable housing, but these two objectives are on paths that could clash at the end of the line.

On Kona Street next to Ala Moana Center, developer SamKoo Pacific intends to start building a predominantly affordable condominium tower early next year. The site also has been eyed by Mayor Kirk Caldwell for a rail station complex possibly with affordable housing and by the Honolulu Authority for Rapid Transportation for possibly extending the $8.2 billion system to the University of Hawaii at Manoa.

Both rail-related ideas appear to threaten delivery of 310 new affordable homes.

“We believe in affordable housing,” said Timothy Yi, president of SamKoo. “The need of the market is there.”

SamKoo, an affiliate of a Korean company, explored building the planned tower as a luxury condo tied into the Ala Moana station several years ago.

Yi said his firm spent $3 million and two years on that plan but abandoned it over issues that included city requirements, city planning delays and a weakening luxury condo market.

In conjunction with the change, HART moved its station site away from SamKoo’s property last year, and SamKoo revised its tower plan. The now 513-unit condo, The Central Ala Moana, is designed with 310 units for local residents earning between the median income and 140 percent of the median income, which the city regards as the high end of affordable housing.

But then in December, Caldwell reached out to SamKoo officials to discuss the company perhaps developing a denser condo along with a transit complex on its site and adjacent property.

“That came out of the blue,” said Lowell Chun, president of local consulting firm Pacific Catalyst, working with SamKoo.

Caldwell has included $60 million in his draft 2019 budget to condemn private property for an Ala Moana “intermodal transit plaza” that could include affordable housing developed through a public-private partnership, though no specific property is targeted for condemnation.

Chun said SamKoo opposes the concept for its property because it would likely take years to acquire adjacent real estate and hammer out a development agreement while SamKoo incurs property ownership costs amid a trend of rising interest rates that makes development and housing more expensive.

SamKoo is already building one condo tower, Kapiolani Residence, at 1631 Kapiolani Blvd., which has mostly affordable units.

Separate from the mayor’s idea for the area, HART drafted several conceptual drawings for accommodating a rail line extension to UH. One option runs through SamKoo’s Central Ala Moana property.

It’s possible that another considered path is selected, yet concern has registered over heading off SamKoo’s condo project amid lofty and rising Oahu home prices.

At a Jan. 23 City Council Planning Committee meeting, some Council members weren’t keen on HART’s view of SamKoo’s site.

Abbey Mayer, director of planning, permitting and right of way for HART, described the site as a less complicated option for extending rail compared with other scenarios.

“It’s kind of an easy target as far as how do we leave (Ala Moana for UH),” he said.

Councilman Trevor Ozawa responded with disappointment that the agency left itself with unattractive options that include upending a project with 310 affordable homes.

“This is disheartening to hear, as the Council has been working very hard to increase incentives to developers providing affordable-housing options,” he said.

Councilwoman Kymberly Pine added, “To stop a 300-unit affordable-housing project that’s going to happen now, or very soon, is hard to swallow.”

Councilman Ikaika Anderson said he prefers extending rail through part of Ala Moana Center because the mall will benefit from tens of thousands of riders using the station.

“I’d rather condemn General Growth property,” he said referring to mall owner General Growth Properties.

SamKoo representatives didn’t participate in the Council meeting.

Chun said it would be a shame to lose affordable housing for an extended rail line that isn’t certain.

Yi said the planned tower is a special opportunity because it will provide moderately priced homes without minimizing amenities or living space like other recent affordable-housing projects.

For instance, planned amenities include a pool, fitness center and dog park. Living spaces range from 400 square feet for studios to 1,500 square feet for three-bedroom units. Interiors are slated to feature quartz countertops from Spain, Samsung appliances, self-closing cabinets and possibly electronic front door locks activated by fingerprint.

”We’re trying something new with affordable housing,” Yi said. “It doesn’t have to be cheap. It doesn’t have to look affordable.”

Preliminary price estimates for affordable units range from about $280,000 for studios to $700,000 for three-bedroom units.

The 202 market-priced units could sell from about $580,000 for one-bedroom units to $1.4 million for three-bedroom units.

SamKoo isn’t seeking taxpayer financing, but intends to seek benefits from a state agency, the Hawaii Housing Finance and Development Corp., such as a general excise tax exemption in exchange for making 60 percent of the units affordable to moderate-income households.

The developer anticipates seeking approvals from HHFDC around July and from the City Council at the end of summer. If all goes well, SamKoo could start selling units by the end of the year and break ground early next year.