Honolulu’s Land Use Ordinance paints a grand vision for development along the Honolulu rail line and offers a sweet deal to developers: pledge to build “creative, catalytic” projects within the rail corridor, and the city will waive zoning restrictions.

So far, “creative” and “catalytic” has mostly meant proposals for big hotels near the rail line’s planned eastern terminus.

The latest proposal is for a 400-foot-tall, 444-unit full-service hotel on Kapiolani Boulevard across from Ala Moana Center. The project will face its first hurdle Wednesday, when the Honolulu Department of Planning and Permitting holds a public hearing.

California-based developer Manaolana AREP is seeking a special permit allowing it to let it build at a density level of nearly three times the neighborhood’s limit and exceed the height limit by about 150 feet.

Cory Lum/Civil Beat

Randy Roth, a retired law professor and frequent rail critic, questions whether the rail line is really needed to spawn luxury tourist amenities near Ala Moana Center.

“They’re using rail as an excuse to build higher than they would be able to build, with less green space than they would be required to have,” Roth said. “It’s not at all within the spirit of the type of development that was used as a concept to sell rail.”

The special transit-oriented development permit Manaolana is seeking requires a trade-off between the city and developers.

The city waives major zoning requirements. In exchange, developers are supposed to build projects that promote “highly effective transit-enhanced neighborhoods, including diverse employment opportunities, an appropriate mix of housing types, support for multi-modal circulation, and well-designed publicly accessible and useable spaces.”

The ordinance specifically provides flexibility to projects that offer community benefits, like affordable housing, public open space or streetscape improvements.

Manaolana wants permission to build up to 400 feet in an area that has a 250-foot limit. The developer also wants the city to nearly triple the allowed density, which is measured by the amount of floor area the project can develop as a ratio of lot area.

Manaolana’s vision calls for two towers linked by a platform-like “iconic Sky Garden” some 350 feet above Ala Moana Boulevard. In addition to rooms, there would be resort amenities like a ballroom, spas, swimming pools, and restaurants. Manaolana also promises ground floor shops, a restaurant with outdoor dining and open space for public gatherings and recreation.

As for “diverse employment opportunities” the ordinance envisions, the project would provide mostly retail and hospitality jobs. The requirement of an “appropriate mix of housing types” apparently would be fulfilled by including six high-end residential penthouses along with 444 condo-hotel units.

The developers are proposing 68 affordable rental units in a separate structure above the Walgreen’s parking garage at the Ewa end of the development near the corner of Keeaumoku Street and Kapiolani Boulevard.

Manaolana AREP

But it’s not clear from the application who would develop the affordable rental units. Manaolana’s plan commits only air rights to build atop the Walgreen’s parking deck. That’s spurring opposition from affordable housing advocates, who have been closely watching projects that have applied for the special permits designed to encourage projects near rail stops.

Manaolana principal James Ratkovich, managing director of Salem Partners LLC of Santa Monica, Calif., did not return calls for comment or respond to questions sent to a company spokesman.

Kevin Carney, who leads the Hawaii chapter of the nonprofit developer EAH Housing, said he’s spent the past five months talking to Manaolana developers about building the 68 affordable rental units.

Carney said that he would seek federal, state and city funding to finance the units, which would likely be aimed at low-income seniors. The units would supposedly remain affordable for up to at least 60 years.

“We’re really excited about this project. Senior housing in that area is pretty much a perfect fit,” he said, noting that the units would have ocean views and be close to transit, and that there’s not much affordable housing along Kapiolani Boulevard.

Affordable Housing Details Vague

Many details still must be worked out, and Carney estimates it would take at least three or four months for EAH Housing to craft a formal agreement with Manaolana. It would take several more months to apply for funding, he said.

Wednesday’s public hearing is the first step for Manaolana.

After the meeting, the department must issue its recommendation to the City Council, said Curtis Lum, a department spokesman. The department can recommend the council reject the application, accept it, or recommend adoption with conditions, Lum said.

So far the only other special transit development permit granted for land near the Ala Moana Center rail terminal was for another hotel.

A proposal for a Manaolana condo-hotel across from the Hawaii Convention Center was approved last fall. That project had no affordable housing, but provided a $2.5 million payment to the city’s affordable housing fund. Meanwhile, a proposed 163-unit luxury condo project on Sheridan Street that had pledged 25 affordable rental units has stalled over concerns that the bulk of the condos were going to be sold to buyers from China.

Manaolana AREP

Despite Manaolana’s proposal to provide space to develop affordable housing units, some observers are worried about the proposal’s tentative language, which does not commit the developer to build the units.

“We’re just really concerned about how vague that is once again,” said Paola Rodelas, a spokeswoman for UNITE HERE Local 5, which represents hotel, food service and health care workers. Most of their members work in Waikiki but commute from Waipahu, Kalihi and Ewa.

The promise that rail would spur affordable housing development was a big reason why the union decided to support the controversial $10 billion project. So far, Rodelas said Local 5 has been disappointed by the emphasis on luxury development.

The already approved Manaolana project will include 109 residential units and 125 hotel units, but no affordable housing.

“The community was really, really upset about this,” Rodelas said.

Although there’s nothing new about the idea of requiring developers to provide housing at below-market rates in order to get zoning changes or other land entitlements, the issue has become central to discussions about transit-oriented development.

With taxpayers spending billions of dollars to develop the rail line, and city land-use laws being amended to ease development near the rail stops, affordable housing advocates say it is reasonable to require developers to set aside a certain percentage of affordable housing.

The argument takes on greater fervor when applied to the special permits like the one Manaolana is seeking, which sweeten the pot further for developers by removing zoning restrictions.

A bill currently before the City Council would require developers obtaining the special transit development permits to set aside 30 percent of their units as affordable housing.

“We’re in a housing crisis,” the bill’s sponsor, Councilman Brandon Elefante, said soon after he introduced the measure. “The demand for housing has just skyrocketed through the roof.”

If that bill were currently in effect, Manaolana would have to set aside about 150 units as affordable, rather than the 68 now proposed. But for now, the ordinance requires community benefits generally without prescribing a formula developers must follow.

The bill also would limit the ability of developers to build full-service hotels in areas that are not zoned for such projects, which is the case for the Heald College site.

Carney said the parties are sorting through questions such as whether Manaolana will subsidize the housing development and how much will it cost to build an affordable rental project 80 to 100 feet above ground on top of a parking garage.

“Right now we’re still in discussions,” Carney said. “We’re keeping our fingers crossed that we can continue to move forward.”