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Thursday, July 30, 2020
Seller Scores $1.2M Flip on City 'Affordable' Housing Deal
By News Release @ 4:41 AM :: 599 Views :: Honolulu County

City adds affordable housing with 754 McCully Street property

City acquired building at 754 McCully Street.

City adds affordable housing with 754 McCully Street property

News Release from City and County of Honolulu, July 29, 2020

HONOLULU – The Department of Land Management completed the acquisition of a three story apartment building at 754 McCully Street to add to the City's affordable housing rental portfolio. The building consists of eight large one-bedroom units and two large two-bedroom units. Each unit comes with a large usable lānai and all units were fully renovated at the time of acquisition with new flooring, new kitchen cabinets and appliances, new bathroom cabinets and fixtures, and a fresh coat of paint.

(Editor’s Note: These were affordable as private-sector units.  The city has added exactly ZERO affordable units to the available supply in Honolulu.  This is a waste of $4M that could have gone to build new units.)

“We continue to meet the challenge of providing additional affordable housing here on O‘ahu,” said Mayor Kirk Caldwell. “Increasing our housing inventory remains a priority of this administration, especially during the pandemic as thousands in our community remain unemployed or struggling to make ends meet. Making Honolulu more livable for those in the lowest income brackets is necessary if we want to continue to thrive as a close-knit island community.”

The purchase closed on May 6. Hawai‘i Affordable Properties, Inc. (HAPI) was retained by the City as the property manager. The building is ideal for families and the rent is set at $1,200 for the one-bedroom units and $1,500 for the two-bedroom units. The rents are set at less than 60% of the Area Median Income.

(NOTE: These rents are in line with what the private-sector landlord was charging.  Zero net gain of affordable units.)

The City continues to address the critical shortage of affordable housing by seeking quality rental housing units that can provide immediate inventory and can be integrated well into our communities,” added Department of Land Management Director Sandra Pfund.

The acquisition price was $4 million and was funded by an appropriation lead by City Council Budget Chair Joey Manahan, a strong advocate for affordable rental housing.

(The sellers, MKK Enterprise, LLC, had purchased the building for $2.8M in 2019.  They took out only one building permit for a $10K ‘alteration’.  Profit $1.2M in 9 months.  See details below.  Bizarrely, MKK's manager, Michael Kim, is not listed as making any campaign contributions in state races.)

“The critical need for affordable housing is only getting greater with the stresses of the coronavirus pandemic,” said Council Member Manahan. “This property at 754 McCully Street responds to that need for truly affordable housing where it’s needed most, in Honolulu’s urban core.”

Since 2016 the City has acquired, completed or is in development to add 1,328 housing units to the City's affordable rental housing portfolio, now totaling 2,508 units. Under Mayor's leadership the City has more than doubled the number of existing City housing units.

—PAU—

Land Court Records: TMK 1-2-3-030-011 

BREG: MKK Enterprise, LLC 

owner Michael Kim

agent Won Cho

Trade Names include: “THE BEACH WAIKIKI BOUTIQUE HOSTELlocated at 2569 Cartwright Rd, Waikiki the sign on the building reads “The Beach Waikiki Boutique by Crony.”

05/06/2020
$4,000,000
FEE CONVEYANCE
Deed
05/06/2020
T11083149
1193274

08/14/2019
$2,830,000
FEE CONVEYANCE
Deed
08/20/2019
T10823159
1180994

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