Just The Facts: 7000 Hawaii Kai Drive's condominium-conversion

There has been a lot of rumors swirling all around Oahu regarding Avalon Group's transformative 7000 Hawaii Kai Drive apartment rental complex in East Oahu. That said, here are the facts...and just the facts:

We gave our tenants 120-days advance notice that we will be filing for condos.  There seems to be a misunderstanding that we are evicting tenants. We are not. In fact we are continuing to advertise to lease units here for up to 1 year leases and we are renewing leases up to 1 year. The only leases that we are not renewing are those who have serious problems with paying rent (over 30 – 60 days delinquent in rent and utility payments etc.)  or those who are creating unsafe environment for other tenants.

Here are the details:

1. 269 units total project size

2. 54 units were designated for 80% of AMI rentals.  (50 required by zoning, 4 optional)

3. 215 were rented as market units that were generally priced from $2500 - $3800 per month.  But about half the project remained vacant since we opened for leasing.  We will be converting 213 of the market units into market condominium units to be priced from $479,000 to approximately $650,000 for 2 and 3 bedroom units. There are 9 4 bedroom 2 bath units that will be sold for around $700,000 - 750,000. 

1. We have 107 market units that are vacant and will be sold as condominium units for individual ownership.  The reason why the 107 units are important is that condominium rules require 50% of the project to be sold to owner occupants. It is our desire not to displace any current renters, as such we have made sure that 50% (213/2 = 107 rounded up) is vacant to be offered to owner occupants.  Presumably, that would leave 106 currently occupied units to be offered to potential investor buyers who would likely keep the current tenants for a longer duration. 

2. The existing tenants (except for the affordable housing unit tenants) were given the required 120 day’s notice for the conversion of condos.  The affordable housing tenants leases will be renewed to the extent that there are no delinquencies beyond 30-days or infractions that may affect the safety of other residents (such as bullying, drug use, smoking or other problems).  Only 3 tenants were not offered an extension due to these problems.

3. All existing tenants who have expressed interest in renewing their leases will be renewed.  Each of the existing tenants are given the following options.

                                                              i.      Option 1:  Identify desire to buy the units by 6/30 and they have unit 12/31/2018 to buy the unit. They will receive 15% refund of the rents paid for up to 2 years prior to their purchase.

(example $3500 per month rent paid x 2 years = $84,000 x 15% = $12,600 would be refunded to the renter)

                                                            ii.      Option 2: Let current lease expire when it supposed to and all standard leases allow an automatic month to month for same rent .  Under a month to month tenancy, tenants can move out with 28 days’ notice to the landlord or landlord can give 45days notice for cancellation after the initial 120 days expires (after October 4, 2018, plus 45 days, so presumably up through 11/19)

                                                          iii.      Option 3: extend for another year from the current one year lease.  Market rent will increase by 3% from the previous year’s rent.  Affordable unit rents will increase to the amount allowed under the City and County’s affordable housing guidelines.  The rents range from $1,527 for a 2 room, 2 bath units around 775 sf to $2567 for 3 room/2 bath 1100 sf unit.

4. Note that we will preserve all of the affordable units that is required under our zoning.

5. All existing affordable tenants, except those who have non-payment of rent, have been reached out and we have provided them options to extend their leases and to re-qualify for a unit within the project.