Christy Decker worries she may need to relocate from Chinatown Gateway Plaza if the city’s deal to sell 12 rental housing complexes to Honolulu Affordable Housing Partners LLC succeeds. Five blocks away, Lynne Ditchen worries that she won’t see promised improvements at Winston Hale if the deal fails.
Both can no longer work due to disabilities. Both are on fixed incomes. Both are in downtown Honolulu housing complexes owned and managed by the city. And both are nervous as Mayor Kirk Caldwell’s administration tries to complete the controversial deal.
Their differing views reflect a broader debate over whether the city should provide more units for lower-income residents at the expense of those considered just below median income levels, the so-called "gap group."
Call it the tale of two housing complexes.
After the buyer in December accused the city of defaulting on the agreement and the city demanded that the partners give assurances they had a reasonable chance to close the deal, the two parties agreed on Monday to continue talks in hopes of finishing the transaction by the March 31 deadline.
While some City Council members have questioned the viability and value of the deal, Caldwell officials have warned that failure to close the sale could have serious financial impacts, including a $20 million hole in the current year’s operating budget, the loss of $7 million for the city’s Housing First initiative to tackle homelessness, and the city’s continuing operation of the complexes at an annual loss of $8 million.
Tenants like Decker and Ditchen, however, said they have a personal stake in the issue and say their voices are not being heard.
Decker, 34, has lived in the 200-unit Chinatown Gateway Plaza for about five years. The unit overlooks the historic Hawaii Theatre.
Decker took medical retirement from the Air Force after she was diagnosed with multiple sclerosis about 13 years ago. Her condition has worsened over time, making it impossible for her to work.
A once-active woman who once dreamed of being a firefighter, the Hawaii island native said that today, "physically, I can’t do a 40-hour week."
Decker receives about $2,800 a month in income, which puts her at under 60 percent of Hawaii’s area median income for a single person, and she pays $783 a month in rent for her one-bedroom unit.
The 2013 median income for an Oahu family of four is $97,900 annually under federal housing guidelines. For a single person, it is $68,600.
The city now designates 40 of the 200 units for those making 80 percent of area median income or less, 80 units are for so-called "gap group" households making up to 120 percent of median, and 80 units are rented at market rates.
The Honolulu Affordable Housing Partners proposal calls for changing that mix to eliminate all gap group units, and then designating 119 units for those making 60 percent of median or less and the remaining 81 units as market units.
The agreement allows the buyer to raise rents up to 10 percent for 10 years, and to be kept affordable to those making 60 percent of median for the rest of the 65 years.
Steve Lohse, a member of the Chinatown Gateway Plaza Tenant Association, said Decker and other tenants may not be able to afford the yearly rent increases allowed for the affordable units, or may be forced out of the affordable category, because it would be lowered to 60 percent from 80 percent, and have to pay market rates.
Lohse said the caps in rent hikes do not extend to parking and that the $60 a month Decker now pays for a stall may go up to $180.
"I better start digging my hole now to put some money away if I can," Decker said. "You can only absorb that (annual increase) for so long."
She may need to move into another building and possibly take on a roommate.
Ditchen, 61, lives in the walk-up Winston Hale apartment complex across the stream from Aala Park. While Decker has a "stack" washer-dryer, the community laundry area fronting River Street offers views of the homeless who have gathered along the sidewalks.
Ditchen worked for decades in Honolulu as a security guard. "I worked for the best," she said proudly, noting that at one point she was a supervisor on the University of Hawaii at Manoa campus. A series of physical ailments, chief among them sciatica caused by years of chasing after people, forced her to retire early.
Ditchen receives about $928 a month in income, which puts her at about 30 percent of median area income for a single person and she pays $315 a month in rent for her studio. Ditchen said everyone in the complex makes about 30 percent of median.
All 90 of the units are studios and, under the buyer’s plan, all would remain in the affordable category.
Ditchen said her asthma has worsened in the past year because of mold under her kitchen cabinets that current management, under contract with the city, neglected to remove.
The buyer has pledged $50 million in improvements to the complexes and Winston Hale tenants were told their complex will benefit greatly from that proviso.
Ditchen said it appears the buyer is following the model used by another affordable housing operator who bought the nearby Kukui Gardens complex from the state several years ago. Ditchen, who grew up in Kukui Gardens and whose mother still lives there, said significant improvements have been made there and are continuing.
City Council members who raised objections to the deal are doing so for political reasons, Ditchen said.
Meanwhile, Ditchen said, she and her neighbors are nervous.
"Nobody knows, day to day, what’s going to happen," said Ditchen, who looks forward to the promised improvements and longer-term affordability.
William Rice, the principal for buyer managing partner Highland Property Development LLC of California, said the buyers maintain they are doing the right thing by focusing on the group that makes 60 percent or less.
"By increasing the number of 60 percent area median income units, we are able to accomplish a far greater amount of renovation and long-term affordability based on federal programs (the group) is utilizing," Rice said. "This will improve accessability, lower energy costs and greatly improve the homes of over 1,200 families."
Lohse, the Chinatown Gateway resident, and other critics of the deal point out that besides the loss of gap group units, the city is starting to turn away others with incomes far lower than 60 percent of median because the guidelines are geared toward those making 60 percent.
Pam Witty-Oakland, city community services director, said the objective of the sale as approved by Council members was to help those making 80 percent of median or less, and that the deal accomplishes that.
At no point, under the agreement, are rents of any affordable units allowed to rise beyond 30 percent of their income.
Rents at many units in the complexes for sale, including Chinatown Gateway, have been far below the existing 80 percent guideline and would not reach that level for a number of years, Witty-Oakland said. "The rents there are so below the standard because we have not kept up with cost increases involved with running the properties … and below what the norm is based on the 30 percent standard."
Existing federal and state programs provide subsidies and other help to those with income furthest below median, and those will continue under the new management, she said.
Additionally, the deal sets aside $5 million in proceeds from the sale for a rental assistance program to help those having difficulty meeting any possible rent increases, Witty-Oakland said.
"Our goal was to minimize rental hardships, and while we acknowledge there are competing values, (the) proposal will create 65 years of substantially lower overall rents than what was required (by the city’s request for proposals) and many more residents will have benefited than have been negatively impacted," Rice said.
Lohse said he isn’t buying it and worries that the deal will adversely affect Chinatown’s character over the long haul. "This bad sale preserves neither gap- nor low-income affordability while destroying the deliberate mixed-income structure of Chinatown," he said.
