Officials remove developer from $100M housing plan

HONOLULU — A $100 million public housing project has been further delayed after Hawaii officials voted to end a partnership with a private developer.

The Hawaii Public Housing Authority’s board unanimously voted Thursday to end its 6-year master development agreement with affordable-housing development firm The Michaels Organization, The Honolulu Star-Advertiser reported (http://bit.ly/2wPzGRL).

The partnership between Michaels and the state agency was formed to build about 450 new rental homes — most of them for low-income Honolulu residents.

With Seattle-based developer Vitus Group, the group completed an initial $135 million phase that revitalized two 16-story towers. Their next move was to replace 176 one- and two-story public housing units that had become obsolete.

Negotiations for the second phase of the housing plan between the developer and the state agency remained at a standstill for four years, the authority’s executive director, Hakim Ouansafi said.

“We have been and remain at an impasse,” he said.

He and the board did not give further details about the dispute but said it led to the contract’s cancellation.

Michaels had been ready to get started on the second phase once renovations on the twin towers were complete, according to Brandon Hegland, managing director of Michaels affiliate Interstate Realty Management Co.

Officials with Michaels argue the relationship between the state agency and developer changed when Gov. David Ige’s administration entered and claim the agency wanted to change the terms in the development agreement.

“When we entered into the contract, we thought that’s what we would follow,” said Elizabeth Char, a Michaels development officer.

With the agreement terminated, the agency is free to search for another developer, Ouansafi said.