A state agency has terminated a public-private partnership for redeveloping one of Hawaii’s oldest and biggest public housing communities after design and budget difficulties with the billion-dollar project.

Board directors of the Hawaii Public Housing Authority voted unanimously last week to cancel a plan with a private developer to turn Mayor Wright Homes, a low-rise housing project in Kalihi serving low-income households, into a high-rise complex for residents with a wide range of incomes after six years of work on the plan described as revolutionary and badly needed.

A team led by Texas- based Hunt Development Corp. was tentatively selected by HPHA in 2014 to replace Mayor Wright’s 364 rental homes built on 15 acres in 1953 with 2,500 rental homes largely in four towers, a central park, a community center, retail stores, rooftop recreation decks and an early childhood public school.

However, the developer and HPHA had trouble agreeing on the design of an initial phase.

An estimated cost increase to $1.7 billion from $1.3 billion for the entire roughly 10-year project, and a missed deadline to start construction by the end of last year, also were factors in terminating the deal under which taxpayers were expected to shoulder 20% of costs.

HPHA contends that Hunt neglected to address concerns raised by staff and board members over design and budget issues.

“The HPHA worked so hard to get to a place where the redevelopment of Mayor Wright Homes was something that the community would be proud of and look forward to,” Hakim Ouansafi, the agency’s executive director, said in a statement. “Public-Private Partnership doesn’t mean providing a blank check from the taxpayers to the developer. The HPHA has been clear with Hunt that its unilateral design changes and $400 million budget increase were not acceptable. It’s unfortunate that we had to make this decision, but it was necessary.”

The agency intends to find a new developer for the project.

Hunt blames HPHA for delays on environmental, zoning and development agreement issues, and said building 550 new homes at Mayor Wright would be ongoing today if the agency had approved the design for an initial phase with one tower.

“Unfortunately it has become clear the HPHA is incapable of acting in good faith as a true partner,” Steve Colon, president of Hunt’s Hawaii division, said in a statement. “The real victims in this decision are the people of Hawaii who will lose 2,500 units of affordable housing.”

Renewing and expanding Mayor Wright was supposed to be a major contribution toward Gov. David Ige’s goal to produce 10,000 new affordable rental homes by this year.

Under Hunt’s plan about two-thirds of the 2,500 new apartments, or 1,650 units, would be reserved for low- and moderate-income residents. The other 850 would be rented at market rates.

Realizing the Mayor Wright project appeared on track a few years ago with Hunt signing a development agreement in 2017 after its competitive bid was selected in 2014, followed by completion of an environmental impact statement in 2018.

But final design work ran into trouble in late 2018, and Hunt missed a deadline to start construction by the end of last year.

According to minutes of an August 2019 HPHA board meeting, Hunt presented detailed designs for the first phase that differed significantly from a prior conceptual plan.

Changes included reconfiguring retail space, adding more community space, reconfiguring homes wrapping a parking garage and increasing the number of parking stalls while reducing parking structure height.

Kevin Auger, HPHA’s redevelopment officer, said during the August meeting that the fundamental issue was that stakeholders including community members helped produce the conceptual plan in comparison with a proposed design plan that was universally not well received.

Auger also said Hunt gave no justification for the budget increase.

“The HPHA needs to be able to explain that increase and that explanation has not been provided to HPHA,” the minutes state.

Hunt contends that its detailed design for the initial phase isn’t significantly out of line with its conceptual plan and that HPHA rejected the design without specific reasoning.

At HPHA’s board meeting last month, minutes indicate that Ouansafi said Hunt decided to stick to its original conceptual plan.

Hunt also has produced preliminary designs for a tower on a different corner of the property that it suggested, at last week’s meeting, could be a “path forward” as a new initial phase with construction starting in 2023.

Under terms of the development agreement, HPHA may be responsible to pay for work produced by the developer and retain such work. Hunt said it has spent $3.7 million working on Mayor Wright.