Builder, Council bargain on tower

The developer of a McCully condominium complex seeking a list of exemptions from city zoning land laws will get them — but only if it can provide more homes to families in lower income brackets.

The City Council’s Zoning and Planning Committee gave preliminary approval Thursday to Resolution 15-89, which exempts developers of the 180-unit Ohana Hale condominium complex from 17 requirements of Hono­lulu’s Land Use Ordinance.

But developer MJF Development Corp. — following a rarely seen, hourlong, public negotiating session before the committee — will now be required to make 20 percent of its units available to those making 80 percent of median income or less. Before Thursday’s meeting it had planned to have 60 percent of the project available to those making 120 percent of the median income or less. In 2014 federal housing officials declared the annual median income for a family of four on Oahu was $82,400.

Among the concessions the developer is seeking:

» A height variance for the 189.5-foot, 21-story building, in an area that limits buildings to 150 feet tall.

» A density variance allowing it to build at a floor-to-area ratio of 7.89, significantly higher than the maximum allowable density of 2.5.

» A waiver from a rule that would require it to contribute an 11,360-square-foot park, or fees of $3.7 million.

» An exemption from needing to pay $156,000 in fees for plan review and building permits, other permits and a storm drain connection fee.

» A deferral from paying more than $500,000 in water and wastewater connection fees until it can secure a construction loan.

» An exemption allowing it to create 207 parking stalls, rather than the required 217 stalls.

» An exemption from city guidelines requiring tall buildings not face in the mauka-makai direction.

"The exemptions that you folks are asking for are rather significant," Zoning Chairman Ikaika Anderson said when explaining why the committee wants a larger amount of units devoted to lower-income families.

"Even though the list of exemptions is long, in order to post up a project like this, even with all those exemptions, the margins are very thin," said Franco Mola, MJF’s president and chief executive.

"As you can imagine, these projects are quite difficult to proc­ess and quite difficult to finance," Mola said. The developer is banking on federal housing loans that define affordable housing as units within reach of those making 140 percent of median income or less, and the project plan falls within that range, he said.

The development could have received federal tax credits if it were a rental project, Mola said. "But we felt that ownership in this area is a much-needed commodity."

The problem with selling homes to those making 80 percent of median or less is that for many in that category, qualifying for a home loan "becomes an issue."

Councilwoman Ann Koba­ya­shi, who represents McCully, said she initially supported the project when developers promised the McCully-Moiliili Neighborhood Board to make 60 percent of its units available to those making 100 percent of median or less.

"I do support the project because we do need the housing, affordable housing," she said. "But we want it to meet the demands of the area, and the need."

Mola looked jarred when asked by Anderson to consider making 10 percent of the units available for those at 80-100 percent of median and 10 percent for those making under 80 percent.

After a long pause, Mola said, "It would be very difficult to go below 80." Making homes available to those at 60 percent of median would be "virtually impossible without dramatically changing the financing of this project."

To address Mola’s concerns that there might be a lack of qualifying buyers at the lower income requirements, the committee agreed to a provision that allows the developer to shake free of the requirements after 90 days and move into a median income level above it for a 90 days until the homes are either sold or are marketed at market rates.

At that point Mola agreed to provide the lower-priced units.

George Atta, director of the city Department of Planning and Permitting, said he had no problem with what Council members were asking.

The project sits at 929 Pume­hana St., a 14,400-square-foot property bounded by King, Pume­hana and Alga­roba streets, just makai of the former site of King’s Bakery.