The more than 14,000 square foot property at 533 Ka’aahi Street in Iwilei was purchased from KWA LLC for $2.85 million, which the city considered fair market value.
The city began negotiations with the unidentified owner after his business, General Printing Corporation, fell on hard times and the warehouse was listed for sale. The building will eventually be demolished to make way for one of the rail system’s 21 transit stations.
“They were looking to sell the property so we figured it’s a good opportunity to go in and negotiate a sale,” said Wayne Yoshioka, director of the city’s Transportation Services Department.
Under a Record of Decision signed with the Federal Transit Administration in January, the city is allowed to move utilities and purchase properties that sit along the twenty mile elevated rail line.
In its most recent financial plan to the FTA made public last month, the city envisions spending $248 million to acquire 199 parcels of land. Of those, 40 are expected to be full property acquisitions while 159 others will be partial takeovers.
Properties impacted by the rail line include 20 residences, 67 businesses and one church. However some of the parcels the city needs to build the elevated system are only a few feet across.
“We’re talking about slivers of land,” said Yoshioka.
So far the city has purchased the one property in Iwilei while nine other purchase offers are at various staged of approval.
Under federal law the city must not only give fair market value for a property it acquires but also help relocate displaced businesses and homeowners.
“It’s a fair deal,” said Yoshioka. “I think that’s what the federal law strives for is to make sure that we make everybody whole as we move through this process.”
THE DIFFERENCE BETWEEN STAYING AND GOING
The difference between being forced out of your property by the rail system and staying put is often only a few dozen feet. That’s the case for the Institute of Human Services, a homeless shelter located inside a city owned building that sits directly across the street from the recently purchased warehouse in Iwilei.
“I do feel really badly that some of our neighbors here, who have been really great to us, will be having to move,” said IHS executive Director Connie Mitchell.
“We were actually wondering for a number of years whether it was going to affect us as well, but we have since signed a twenty-five year lease with the city.”
Yoshioka told Khon2 forced buyouts of property owners will likely play a minor role as the city goes about snapping up parcels of land.
“We use imminent domain only when we have to,” he said. “Most of the times we come to an agreeable agreement of sale.”
PERHAPS IT’S TIME TO SETTLE?
Honolulu real estate analyst Stephanie Sofos believes property owners whose businesses or homes must be demolished to make room for rail should consider settling with the city sooner rather than later.
She points to a weakening housing market on the mainland as evidence of an uncertain future.
“Nationally all of the advisors and analysts are saying that we are already in a second dip, we are in double dip recession for housing,” said Sofos.
“The last three years have been very, very rough and we know that there’s going to be still a lot of ramifications with new taxes coming in and people still are not getting jobs.”
Among the new taxes property owners should consider is a 3.8 percent surcharge that’s part of President Barack Obama’s healthcare reform law. The new tax comes into existence January 1 of 2012 in order to boost Medicare.
The federal tax applies to couples with an adjusted gross income of more than $250,000 and individuals who earn above $200,000.
The new tax will target capital gains earned from the sale of a primary residence that exceeds $500,000. Sofos says property owners who expect to be impacted by the city’s rail project should research the new tax carefully.
“If you have a property that’s not really making you money but it’s made a profit (and) you’ve gone up in appreciation over the years, now’s the time to sell.”
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See the original article at: KHON2 Local News
