The cost to live on and
in some cases farm state-owned land in Waiahole Valley won’t go up as much from historically very low rates under a new compromise with roughly 100 tenants in the rural community subsidized by Hawaii
taxpayers.
A state agency that owns much of the valley announced Tuesday that it will reduce the size of previously proposed rent increases, in some cases by more than half, and amend some agreements negotiated recently with tenants.
The Hawaii Housing Finance and Development Corp. in July informed its Waiahole Valley tenants that ground rent would increase by 560%, or nearly sevenfold, for the next 15 years after little to no increase over the past 25 years, sparking fear of evictions in the Windward Oahu community.
HHFDC has said that its original proposed rent hike would keep rents about 50% below market rates while cutting in half a $1.1 million annual deficit to maintain the valley’s potable water system, roads and other public infrastructure.
However, many tenants complained that they would not be able to afford such an increase and argued that HHFDC is obligated to preserve their community as
affordable housing in line with the state’s 1977 purchase of the agricultural land from a private owner who was pursuing urban
development and had jacked up rents for tenants and attempted evictions that led to protests and road
blockades.
The revised rent increases were driven in part from recent negotiations with a group of 10 small family farmers in the valley who made a deal with HHFDC for their rent to increase by a little less than half of what HHFDC had sought.
HHFDC has about 40 farm lot tenants, most or all of which have one or more houses on their lots.
There are also about 60 residential lots owned by HHFDC in the valley where a mix of fee-simple residences and Department of Hawaiian Home Lands homesteads also exist. HHFDC already had reached agreements with 27 of 91 lessees when it obtained approval from its board Thursday to revise some of those deals and reduce the amount of the planned rent increase for the farm and residential tenants in the valley.
“It has always been our goal that no lessee is displaced as a result of the rent renegotiation process,” Dean Minakami, the agency’s new interim executive director, said in a statement. “We are confident that this new approach will help
to ensure that there is no lessee displacement, and that the rural, agricultural nature of the valley will be preserved as originally
envisioned.”
Current farm lot rent is $100 a year per acre, plus $500 a year for a residence occupying up to 7,500 square feet of land. Under HHFDC’s initial offer, the annual rate would rise to $660 per acre plus $3,300 for a house on up to 7,500 square feet. Farm tenants also must pay 0.9% of their gross farm income as rent.
Monthly rent for a median-size 8-acre farm lot with a house is $108, and would rise to $713 through July 2038 under HHFDC’s initial offer.
The new rent would go up 100% for the farming area and 230% for the residential area as opposed to a general 560% hike.
Also under the new agreement, farm tenants must submit production reports to HHFDC. The agency also will have the ability to increase rent for farm tenants who are not substantially farming within a year.
For residential lots, current rent is $600 a year plus 35 cents per square foot for lot area beyond 7,500 square feet. HHFDC’s initial plan was to increase the annual base to $3,960 a year for a 7,500-square-foot lot.
The median-size residential lot is a half-acre, where monthly rent would rise to $745 from $119 through
July 2038 under HHFDC’s original offer.
HHFDC’s new plan for residential lot rent is not expected to change much for the smallest lots, but would offer more moderate reductions from the original proposal for larger lots. Individually negotiated rents also will take into account documented tenant income to keep rent affordable.
Tenants holding out against increases face approaching deadlines to reach deals on new terms, or an arbitrator or mediator could impose something
different.
Residential rents need to be settled before July 1, or the matter goes to arbitration. Farm lot rents need to be settled before Aug. 1, or the matter goes to mediation, followed by arbitration if a mediated agreement is not reached.
These deadlines were pushed back by three months by HHFDC in March to provide more time to find a better resolution.
Ground leases, which date to 1998, run through 2053 and include one additional rent adjustment period covering the final 15 years.
The arrangement also can be extended another 20 years to 2073 if most tenants agree.