Unfinished Condo Heads for Auction

by Andrew Gomes, Honolulu Advertiser
Foreclosure proceeds after tentative deal for Moana Vista falls apart
A deal to sell the partially built Moana Vista condominium tower makai of McKinley High School has fallen through, and the property is headed for a foreclosure auction scheduled for Sept. 25.
The slated auction is the latest twist for the troubled Kakaçako project, which has been stalled since financing problems halted construction in November after about 40 percent of the building had been completed.
Developer KC Rainbow II LLC had a tentative deal to sell the project to an affiliate of San Diego based development firm OliverMcMillan, but the sale fell through recently and there appears to be no prospects for avoiding foreclosure. “It’s just going to go to the highest bidder,” said Allen Leong, project operations director for KCRainbow.
The foreclosure was initiated in April by general contractor Hawaiian Dredging Construction Co., which hasn’t been paid for $29.5 million of work on Moana Vista.
Other subcontractors are owed substantially less money.
Bill Wilson, Hawaiian Dredging’s president, said it was unfortunate the foreclosure
had to proceed, and said KCRainbow worked hard to find a way to restart the project with new financing, a sale and other efforts that didn’t work out.
“This is not what anybody wants,” he said.
Leong said about $65 million has been invested in the project, most of it from KC Rainbow, which is led by Fred Chan, a high-tech entrepreneur and University of Hawaii graduate who successfully developed the nearby twin-tower project Moana Pacific.
Hawaiian Dredging estimates it will take close to $100 million plus the $29.5 million it is owed to complete the 46-story tower with 492 units.
Moana Vista has been in the works for more than three years, and initially appeared lined up to capitalize on the then-hot housing market. At a May 2006 sales lottery, 466 people competed to buy 192 units reserved for owner-occupants at prices roughly from $425,000 to $850,000. Investors reserved nearly all remaining units available for purchase.
But since then, buyers canceled many of their nonbinding reservations as weakness spread through the local real estate industry, financial markets and the economy.
At around the time construction stopped on Moana Vista late last year, KC Rainbow
slashed unit prices about 20 percent, but that didn’t produce enough new reservations needed for a lender to fund a $100 million construction loan.
Leong said all remaining reservations, about 175 units, will be canceled and full refunds of customer deposits will be made.
The auction is scheduled for noon outside the state Circuit Court building in Honolulu, and is being held by court-appointed commissioner Sanford Murata. More information on the sale is at moanavista.com.
Under a state agreement, the condominium would require reserving 124 units for
residents earning no more than 140 percent of Honolulu’s median income.
Author Contact Info: Andrew Gomes, Honolulu Advertiser