Category Archives: Housing

The hotel next door

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I’ve been frustrated for the past week, finding lots of “dots” without being able to figure out what the picture will look like when the dots are finally connected.

Here’s an example.

You may recall that back in April, police officers responding to a 911 call shot and killed a 29-year old from South Africa, Lindani Myeni, outside a home at 91 Coelho Way in lower Nuuanu.

It still isn’t clear what Myeni was doing at the home, or why he attacked the responding officers.

State real property records show the current registered owner of the property is James H. Hall, a former contractor who moved to Hawaii from Wisconsin with his wife and four children at the beginning of 2009, after his business had gone bankrupt and their home was lost through foreclosure.

Records show Hall purchased Greentree Properties LLC, a Nevada company that held title to the Coelho Way property, in September 2018 from Honolulu attorney Gary Dubin, who has since been disbarred by the Hawaii Supreme Court. Three months later, Hall transferred title in the property from Greentree to himself.

A week after the fatal shooting, the Honolulu Star-Advertiser reported the home had previously been the subject of complaints about illegal short-term rentals.

In 2019 and 2020 the city Department of Planning and Permitting investigated seven complaints that 91 Coelho Way was being used as an illegal short-term rental. Rentals of fewer than 30 days are not allowed at the property, said DPP spokesman Curtis Lum.

In addition, according to the Star-Advertiser, police officers also responded to several other incidents at the home, including a car break-in, a possible COVID violation, a car accident, and a “miscellaneous incident.”

However, the complaints led to a dead end.

“Our investigation determined that the ads were for 30 days or more, which is not a violation,” Lum told Star-Advertiser reporter Peter Boylan. “On-site inspections of the property did not reveal an illegal short-term rental on this property.”

End of story? Apparently not.

What wasn’t known at the time is that the Hall applied for and received received four federal Payroll Protection Program loans during 2020 and 2021 that totaled over $215,000, including two that classed his businesses as operating a hotel or motel.

In each year, separate loans went to Greentree Properties LLC, the Nevada company owned by Hall since 2018, and to a sole proprietorship also owned by Hall, PPP loan records show.

All four loans were made by First National Bank Texas. These were the only PPP loans made by the bank in Hawaii.

Greentree received a PPP loan of $96,656 in 2021. Greentree’s loan application was approved on April 9, just two days before Myeni’s shooting. Despite applying for and receiving the PPP loan, based on a prior year’s payroll, Greentree Properties is not listed among companies registered to do business in Hawaii, state business registration records show.

Hall’s sole proprietorship received $29,165 in 2021, according to the PPP lookup at the website, FederalPay.org. Both company’s applications reported they were in an industry category for “Hotels (except Casino Hotels) and Motels.”

According to the North American Industry Classification System (NAICS):

This industry comprises establishments primarily engaged in providing short-term lodging in facilities known as hotels, motor hotels, resort hotels, and motels. The establishments in this industry may offer food and beverage services, recreational services, conference rooms, convention services, laundry services, parking, and other services.

FederalPay.org examined loan eligibility criteria, and estimated the annual payroll of $464,000 was required to qualify for the loan awarded to Greentree Properties in 2021.

The size of company’s PPP loan indicates that the number of employees on payroll during the eligibility calculation period (typically 2019) was higher than the 4 jobs reported as retained on the PPP application3. This could be caused by a reduction in employment since 2019, due to Coronavirus or other factors.

The minimum number of employees this company must have had in 2019 to qualify for the loan range received is 5. This estimation is accurate if all employees were paid at or over the $100k PPP salary eligibility cap….

Based on the standard PPP eligibility formula, it may be possible to estimate the payroll expenses represented by a company on their PPP application (see details above). In order to qualify for the PPP loan amount received, Greentree Properties LLC’s 2019 payroll expenses are estimated to be at least $463,949 (not accounting for salary amounts > $100k).

In the earlier round of PPP loans distributed in 2020, Hall received a loan of $20,800, while Greentree received a loan of $69,000. Both companies listed themselves in a different category, this one defined as “other services to buildings and dwellings.”

“This industry comprises establishments primarily engaged in providing services to buildings and dwellings (except exterminating and pest control; janitorial; landscaping care and maintenance; and carpet and upholstery cleaning),” according to the NAICS definition.

Examples of the types of services in this category include building exterior cleaning services (except sandblasting, window cleaning), swimming pool cleaning and maintenance services, chimney cleaning services, ventilation duct cleaning services, and drain or gutter cleaning services.

Greentree Properties LLC, a Nevada limited liability company, had been established in 2007 by former Honolulu attorney Gary Victor Dubin to hold title to the Coelho Way property. Dubin had sole control of Greentree from 2007 until September 2018, when he reportedly sold his interest in the company to Hall, court records show.

Then on November 26, 2018, Hall, now acting as the sole member of Greentree, executed a quit-claim deed transferring title to the Coelho Way property from the company to himself personally. Honolulu real property records now list Hall as the property’s sole owner.

Phasing out single family zoning?

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Many of us learned when growing up that the “best” way to live would be in a single family residential neighborhood, where other types of residences, duplexes, townhomes, apartment buildings, etc. are excluded. That ideal of a those nice, private boxes, each with a family separate from the rest, has been with us for a century. But the loss of natural spaces and rural areas to seemingly inevitable and unstoppable urban and suburban sprawl, and the automobile-dependent commutes from home to work and back, took the luster off the dream. And then came the nationwide housing crisis and epidemic of homelessness.

And now single family exclusionary zoning seems on the verge of becoming a thing of the past.

Minneapolis passed a new zoning law three years ago which permits duplexes and triplexes thoughout the city and, like Honolulu, higher density along transit lines.

Wikipedia reports:

In January 2021, Sacramento voted to permit up to four housing units on all residential lots to help the city reduce its housing shortage and to achieve equity goals by making neighborhoods with good schools accessible to people who cannot afford to purchase homes there.

In February 2021, the City Council of Berkeley, California voted unanimously to allow fourplexes in all neighborhoods, with Vice Mayor Lori Droste saying that this is “necessary as a first step in undoing a history of racist housing policies.”

And earlier this month, California Gov. Gavin Newsom signed a bill that effectively eliminates single-family zoning throughout the State of California. Even before that bill was signed into law, cities were breaking with the past.

A 2019 Oregon law “allows duplexes, triplexes, fourplexes, and cottage clusters (which are several smaller homes built around a community backyard or other green space) to be built on land zoned for single family homes in cities with over 25,000 residents,” again according to a Wikipedia summary.

Honolulu has experimented. Ohana Zoning was going to create more housing units. That doesn’t appear to have actually happened. And transit-oriented development reminded us that allowing increased density doesn’t necessarily mean more affordable housing.

On the other hand, we have been living through an unacknowledged experiment in allowing single family zoning to quietly fade away. We are now a city of housing scofflaws, where many–perhaps a majority–of those who own single family homes have worked around city zoning restrictions to create additional rental units. When we moved to Kaaawa in 1988, most of the homes were built on large single family lots. By the time we moved back to town in 2015, many of those large lots had been turned into condominiums that allowed multiple units. Many others just put up interior walls and added a kitchen or bath to create a rental unit. And, of course, everyone knows that as long as your rental doesn’t have all three of the necessities (sink, refrigerator, stove) then it is a legal room rental. Thus, some units offer a refrigerator, sink, and hot plate/toaster oven that can be easily removed temporarily if necessary. Parking becomes an issue, and to some extent traffic, and in some areas, sewage capacity could likely become an issue.

However, it’s an experiment that has largely worked and is a commonly accepted, if not legal way to increase the availability of housing.

Whether formally ending single family zoning would change anything isn’t clear to me. Few homeowners can afford to build multiple units on their property, so it could end up being a boon for speculators and developers, and could result in denser but gentrified neighborhoods instead of increasing the availability of affordable homes and rents.

I supposed much rests on how this new law plays out in California in practive, rather than theory.

A dissenting view of the Aloha Stadium redevelopment

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Last month I received an unsolicited phone call from a former islander now living in the San Francisco Bay Area who has a background in community development and affordable housing finance. He was anxious to call my attention to the state’s proposal to redevelop the 90-acre site of the aged Aloha Stadium, building a new but smaller stadium as part of what is being called the “New Aloha Stadium Entertainment District.”

He asked that I not use his name because of some specific problems, which he explained, that would result from going public.

The bottom line, he said, is this: “The taxpayers of Hawaii are getting screwed again….It’s a land giveaway to a private developer.”

“Affordable housing should be no-brainer,” he said, and should be the top priority for the state. The fact that the state is instead pursuing a deal that would give long-term development rights to a private developer, recognizing up front that “market changes” could reasonably justify changes from what is initially proposed, is “borderline criminal.”

“Who is the state’s leadership looking out for?” he asked.

He noted how unique the Aloha Stadium situation is.

“Even in the Bay Area, we don’t have 90 acres of avialable vacant public land, where no relocations of existing tenants will be required.” It’s also important that the Halawa site has access to public transportation, and is adjacent to a rail station (in the event Honolulu’s rail system is ever actually finished).

He believes strongly that instead of the proposed hotel, offices, and market priced or luxury homes with a token nod to affordable housing requirements (as we have seen at work in Kakaako), at least 50-60 acres of the site should be set aside for new workforce RENTAL housing like that being built in many mainland cities. This would still leave room for a new stadium to be built on the site.

“This means high quality, affordable rental apartments with rents affordable to teachers, health workers, service industry workers, and young professionals who cannot afford to buy,” he said, and could also include a percentage of supportive housing to help formerly homeless vets, elderly, and small families recovering from substance abuse, domestic violence.

Land costs and financing are usually the biggest hurdles affordable housing developers in Hawaii have to overcome. Yet here is a situation in which public land is available, and the state has already ponied up $350 million in public funds in the form of $50 million in general funds, and another $300 million in general obligation bond funding.

He said working families could expect to spend 30% to 40% of their monthly budget for such workforce housing as compared to 50% or more for many who are current renters, and would enjoy quality housing as compared to 50-60 year old substandard rental housing found in many parts of McCully, Moiliili, Kalihi, and Waipahu.

And although the “entertainment district” project has been fast tracked due to the supposed “urgency” of replacing the Aloha Stadium, one of the first official pronouncements was to tell the stadium’s anchor tenant, the University of Hawaii football team, that it cannot be guaranteed any special consideration, and that the terms, conditions, and costs associated with playing in the new stadium will be up to future negotiations with the developer finally selected.

In other words, when push comes to shove, a new stadium for UH football isn’t at all a priority. It’s just been used as a cover story to get the public to acquiesce.

My caller broke it down this way.

“It’s like you hire a contractor to build a house on land that you already own, and you provide them your credit card to use,” he said. “Then, after the house is built, you learn you will have to pay rent to live in it, and your hired contractor will decide what that rent will be.”

What kind of a crazy deal is the public being saddled with here?

What’s worse, the selection of a developer is being done in secret negotiations, behind closed doors. When the public actual terms are finally revealed to the public, it’s almost certainly going to be presented as a “take it or leave it” deal. Then, once the deal is approved and we’re locked in to one developer, “it is going to be hard to rein them in.”

In essence, a private developer is going to be allowed to steal the unique stadium site away from the state and Hawaii taxpayers.

“In the SF Bay Area, public officials would be run out of town for proposing something like this,” he said.

The other side of the housing crisis

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Here’s a little vignette about economic inequality to start out the new year. I suppose it’s an example of the 1% lifestyle, or maybe the .1%.

The housing crisis looks a lot different from up there at the top.

There’s a new house being built not far away, just around the corner at the end of Kealaolu Place. There’s a dust fence now around the lot, and an existing home is being demolished.

So being curious, I had to check real estate records to get more info.

The existing luxury home, the one that is being demolished, was just 12 years old, brand new in 2008, according to the city’s  building permit records. The building permit had been issued in March 2007.

The 2-story house is/was on an 11,500 square foot lot that stretches along Waialae Stream, with a panoramic view of Waialae Golf Course.  The existing home, the one currently being demolished, was valued for real property tax purposes (in 2020) at $2,849,100, land value of $1,471,700, for a total assessed value of $4,320,800.

Existing home currently being demolished

New owners bought the property in September 2018 for $4,400,000, real property records show. Yes, that’s $4.4 million.

And they applied for a demolition permit a year later, as well as a permit to build a new home.

The permit file says the new building will be a 6,589 square foot 2-story home with pool and two wet bars with an estimated construction cost, accepted by the city, of $1,800,000.

That comes out to just pennies over $273 per foot, if I calculate it correctly.

That is a dirt cheap per foot price for Honolulu, and I doubt someone willing to pay $4.4 million and then scrape off the existing house is going to replace it with something on the low end.

Don’t get me wrong. I’m sure it is going to be a gorgeous new home. I’m equally sure it won’t be built for $273 per foot.

I did a quick search for current costs for new construction in Hawaii and found these estimates for a single family home.

Single-family home

    • Low (per square foot) – $290
    • High (per square foot) – $780

It’s hard enough to process the degree of economic inequality that makes a $4 million scrape-off possible.

But then to have the city give up revenue by underestimating construction costs of this luxury home, which immediately reduces the permit fee. Okay, it’s not a huge discount, but to this ordinary person, that gift from the city in the form of a low-ball cost estimate just adds insult to injury.

I haven’t been able to find much at all about the current owners of the property, except that they also own several high priced Kakaako condominium units, including a 3,567 foot, 4-bedroom, 4-1/2 bath 36th floor unit in the 1108 Auahi Condominium currently valued for tax purposes at $6.1 million.

To be fair, the owners are paying over $39,000 of property tax this year on the Kealaolu Place property, records show. That will go down if or when it becomes their primary residence.