Developers want condo conversion at Pagoda

Part of the Pagoda Hotel in Pawaa could become a residential condominium under a plan by Kamehameha Schools and developer Peter Savio to satisfy an affordable-housing requirement tied to building new condo towers in nearby Kakaako.

Kamehameha Schools and Savio plan to convert one of the Pagoda’s two buildings, a 162-unit low-rise referred to as the Pagoda Terrace, into fee-simple condos for sale at moderate prices.

The Pagoda’s main 12-story building with 197 rooms and famed floating restaurant would remain, though one day it may be replaced by a new, bigger hotel, Savio said.

Plans for the condo conversion are still preliminary. Prices for the studio, one-bedroom and two-bedroom units with full kitchens haven’t been determined, according to Savio, who said he hasn’t decided whether to upgrade the units or sell them as they are.

In either case, Kamehameha Schools, which owns the land under the Pagoda Terrace, will seek to count the Pagoda condos toward affordable homes it must produce under a state-approved master plan that allows the trust to develop up to 2,750 homes largely in seven high-rises on 29 acres in Kakaako.

The requirement under Hawaii Community Development Authority rules is that 20 percent, or 550 units for the Kamehameha Schools master plan, be affordable to people earning no more than 140 percent of Hono­lulu’s annual median income.

HCDA rules in effect when the trust’s master plan was approved in 2009 also require that the affordable units be in Kakaako.

The trust has asked to deliver some units outside Kakaako but within urban Hono­lulu, which HCDA allows under rules it revised last year that don’t apply to the trust’s master plan.

Under the revised rules, HCDA may require additional affordable units if they are within urban Hono­lulu but outside its Kakaako boundaries running between Ala Moana Boulevard and King, Piikoi and Punchbowl streets.

Kamehameha Schools proposes that the 162 Pagoda units count toward the equivalent of 100 units in its affordable-housing requirement, in effect providing a bonus of 62 units on a site that’s within a mile of the Kakaako boundary.

The trust also said in an application to HCDA that another benefit of its plan will be quicker delivery of affordable housing.

A public hearing on the trust’s request is scheduled for 9 a.m. June 13 at 9 a.m. at HCDA’s office.

Chuck Wathen, an affordable-housing advocate and developer, said he views the proposal as a positive trade-off. "If we can get more units, I’m totally in support of it," he said.

Kamehameha Schools negotiated several unique provisions with HCDA in 2009 that included trading affordable-housing credits with other developers.

Pertaining to the Pagoda, Kamehameha Schools intends to sell the land under the Pagoda Terrace parcel to Savio, who bought the hotel on leasehold land from the hotel’s original developer in December 2010. Savio would sell the units as condos and receive credits for affordable housing that he can transfer to Kamehameha Schools.

If approved, the Pagoda Terrace would be the second affordable-housing project for Kamehameha Schools tied to its Kakaako master plan. The trust began construction in January converting a four-story office and retail building at 680 Ala Moana Blvd. into 54 studio and one-bedroom rental apartments targeted at median-income workers.

The trust has not sought any permits to build any of its approved condo towers, but has arranged to sell local developer Alexander & Baldwin Inc. a block fronting Ala Moana Boulevard between South and Keawe streets that once was home to a Comp­USA store. A&B intends to build a high-rise on the site but has not set a timetable.