Appropriates general funds to assist with the community redevelopment of Chinatown building facades.

A BILL FOR AN ACT

SECTION 1. In recent years, public and private entities have invested substantial amounts in the Chinatown Special Historic District to upgrade infrastructure and to remedy the perception that this area is run-down and crime-prone. For example, the City and County of Honolulu has installed new lampposts and sidewalks and has instituted police foot patrols. The goal of these improvements was to make the area a desirable destination for residents and visitors.

In addition, numerous businesses have located in the area. On North Hotel Street, between Nuuanu and Smith Streets, six new businesses have opened during the past two years providing jobs and other benefits.

Despite these improvements, Chinatown still struggles with a negative reputation. A contributing factor is the many rundown buildings especially along North Hotel Street. The block between Nuuanu and Smith Streets remains an eyesore with several blighted, vacant structures. Even properties that have tenants need extensive exterior renovation.

In particular, three properties need the most work. Their owners cannot rehabilitate these structures because needed repairs are so extensive that rental income they could potentially earn would not cover renovation costs.

Renovation is further stifled by development regulations. Because these buildings are located in the Chinatown Special Historic District, owners are forced to rehabilitate existing structures rather than replace them. Furthermore, because the Chinatown Special Historic District has a height restriction of 40 feet, owners cannot build upward in order to generate the multiple rents needed to make redevelopment profitable.

Because of such obstacles, property owners of significantly deteriorated buildings hold them until real estate prices appreciate to the point that development is feasible. Even the possibility of Federal tax credits for renovation of historic area buildings does not provide enough incentive to rehabilitate these properties. Therefore, other public policy tools must be used to encourage renovation of properties. State "seed" money, channeled through local civic organizations, is one way to encourage renewal of run-down buildings.

This Act provides funds to the Honolulu Culture & Arts District Association to manage a project to renovate the facades of three privately owned properties on North Hotel Street between Nuuanu and Smith Streets. This project will further the momentum for change in Chinatown. Hotel Street is an "area on the edge"-–a place where revitalization is just starting to take hold. By funding this project, the State will link the Capitol District to Chinatown and make Hotel Street the corridor that links a continuous heritage area. The Chinatown/downtown area is one of the most visible indicators of community pride as well as of its economic and social health. The neighborhood can also be a valuable asset to the City and County of Honolulu in the effort to attract more residents, businesses, tourists, and others to the nearby Arts district.

The project will provide several benefits, including:

1. a vibrant cultural and evening destination;
2. increased economic activity;
3. higher property taxes;
4. job creation from new businesses; and
5. favorable conditions that will encourage nonparticipating property owners to renovate or invest in currently vacant or deteriorated buildings.

Participating property owners have committed to match State funding and to renovate the interiors of the buildings whose facades will be renovated by the project. Owners will provide spaces for apartments, retail shops, restaurants/clubs, and will obtain tenants for these within one year. The renovated properties will complement trendier businesses that recently opened in the area, as well as the galleries and theaters of the nearby Arts district, thereby further attracting affluent residents and visitors.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $556,730 or so much thereof as may be necessary for the fiscal year 2006-2007, for the support of the Hotel Street Facade Restoration Project managed by the Honolulu Culture & Arts District Association. The sum appropriated shall be utilized for cleaning and restoration of building exteriors, installation of exterior lighting, awnings and related equipment on building exteriors, project management, and architectural fees.

SECTION 3. The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 4. This Act shall take effect on July 1, 2006.