Talk Story 2

Tuesday, December 8, 2009 at Kahuku High School Cafeteria hosted by Defend Oahu Coalition!

This is the second in a series of Community Forums regarding the future of Turtle Bay, the purpose of which is to update the community about progress made since Governor Lingle announced her initiative to preserve the undeveloped portions of the property at Turtle Bay Resort.

• Despite overwhelming community opposition, the City’s Department of Planning and Permitting is reportedly very close to issuing final subdivision permits to the developer at Turtle Bay which will allow him to move ahead with the outdated plan for five additional hotels and one thousand more resort condominiums.

• The State Supreme Court is set to hear Oral Arguments (December 17th) regarding the Keep the North Shore Country case asking for a Supplemental Environmental Impact Statement.

• The resort property is formally changing owners this month, who are reportedly working on a new business model for the resort.

This is a crucial time to get updated about the current situation in the Country and a critical time to get involved. Efforts aimed at building on plans for preservation as well as sustainable land use enforcement at City and State levels (regarding the expansion plan being proposed at the resort) will also be addressed. Notable speakers invited to attend include: Governor Lingle, Representatives Abercrombie and Hirono, Mayor Hannemann, Turtle Bay Advisory Working Group Chair Bill Paty, Senator Clayton Hee, Councilmember Donovan Dela Cruz and Interim Developer for Kuilima Resort Company Stanford Carr.

Hawaii Supreme Court takes Turtle Bay case

The Hawaii Supreme Court has agreed to take up the issue of whether Kuilima Development should be required to do an updated environmental study for its planned expansion of Turtle Bay Resort.

The court announced Thursday that it will hear oral arguments in the case Nov. 19. The Supreme Court will review a 2-1 decision by the Hawaii Intermediate Court of Appeals that denied a request for an updated review of the project's impact on the environment.

The question is whether the project's 24-year-old environmental impact statement is still valid.

More at the Honolulu Advertiser

Kuilima Resort won't have to defend expansion plans

The Land Use Commission yesterday deferred action that would have forced Kuilima Resort to defend its right to operate under a 1986 zone change that allows for the expansion of the Turtle Bay Resort.

At issue is a 263-acre parcel that has a championship golf course. The master plan for the area calls for public parks, a stable and condominiums, none of which have been built.

More at the Honolulu Advertiser

Turtle Bay owner restructures debt, names Stanford Carr as top manager

The owner of the Turtle Bay Resort on the North Shore of Oahu has reached a settlement with its lenders and has named prominent Hawaii developer Stanford Carr as its new top manager.

More at Pacific Business News

Turtle Bay foes appeal EIS ruling

Opponents of expansion at Turtle Bay urged a state appellate court yesterday to require a new environmental study on a proposed massive development on Oahu's North Shore.

Keep the North Shore Country and the Sierra Club Hawaii Chapter appealed to the Hawaii Intermediate Court of Appeals in their lawsuit against Kuilima Resort Co., which has plans to develop up to 3,500 hotel and condominium units on one of Oahu's last remaining rural coasts.

More at the Honolulu Star Bulletin

Hundreds meet with Lingle on Turtle Bay

Gov. Linda Lingle last night told a crowd of more than 500 people that the proposed state purchase of Turtle Bay property is a chance "to plant our flag in the sand" against runaway development.

More at the Honolulu Advertiser

Lawsuit Likely to Determine Turtle Bay Purchase

A foreclosure lawsuit filed in state court last month by Credit Suisse seeks to take complete control of Turtle Bay Resort after owner Kuilima Resort Company defaulted on its loan of $275 million.

More reporting at KHON2 News

Developers have big plans for Hawaii town

Developers are proposing to build more than 700 new homes in Kahuku — without substantially increasing the population and traffic along the Windward Coast.
More at Honolulu Advertiser

City gives more time to plan Hawaii resort

The city has given Kuilima Resort Co. six more months to meet requirements that will set the stage for a major expansion at Turtle Bay Resort.

Read the whole story at the Honolulu Advertiser

L.A. Hedge Fund Facing Opposition on Hawaiian Plans

San Diego Business Journal

By SARAH FILUS - 7/23/2007
Los Angeles Business Journal Staff

Six years after gaining full ownership of Turtle Bay Resort in Hawaii, one of the only oceanfront getaways on Oahu's quiet North Shore, Oaktree Capital finds itself involved in a growing controversy over its plans to further develop the property.

The L.A.-based vulture hedge fund announced last year it planned to expand the 443-unit resort and was looking for either a financial partner or a buyer for the entire 880-acre site.

Hilton Hospitality Inc., Beny Alagem's Alagem Capital and Michael Dell's MSD Capital all were said to be interested in the site, but the announcement also caused a public outcry, protests and lawsuits that may have chilled any deal.

More recently, Starwood Hotels & Resorts Worldwide Inc., the owner of the Sheraton and Westin brands and a major developer of time shares, fell out of active negotiations for a purchase or partnership, though Hawaiian media reports indicate the company has not completely scuttled a deal.

"When all the press coverage and uproar sprang up from the local community about the expansion, that became one of the major reasons that investment firms who looked at it didn't want to pursue it," said Mike Hamasu, the consulting and research director for Colliers Monroe Friedlander Inc. in Honolulu. "There is an extreme sensitivity to development in Hawaii, especially along the North Shore."

Oaktree, through its subsidiary Kuilima Resort Co., wants to add about 3,500 hotel and condominium units to the property it acquired full control of in 2001. It has already spent $60 million to renovate the existing hotel and to add a condominium complex called Ocean Villa. In 1998, it had teamed with developer Bill Mills to gain an interest in the resort.

The resort, originally developed by Prudential Insurance Co. and Del Webb Corp., has expansion entitlements from the city of Honolulu that date back to 1986 but were never pursued. Since that time, though, opposition has grown to further construction of the largely undeveloped North Shore.

Keep the North Shore Country, a group opposed to the resort's planned expansion, sued for an environmental impact report. The group also alleges the development will disturb ancient Hawaiian burial grounds. The suit was thrown out once and last month it was appealed, with a decision still pending.

"(Honolulu) allowed the developer to expand as if nothing has changed since 1986," said Gil Riviere of Keep the North Shore Country. "Our position is that everything has changed. Even the impact of those 4,000 units is greater now and they should be studied."

New York-based real estate investment banking firm, Eastdil Secured LLC is helping to market the property.

Oaktree representatives declined to comment.

Fund closure
Turtle Bay is not Oaktree's first venture in Hawaii. During the 1990s recession, Oaktree purchased a number of high-end properties on Hawaii.

The North Shore controversy comes as Oaktree is looking to divest the resort and close the investment fund that owns the property. The OCM Real Estate Opportunity Fund was set to expire last year, according to a story by Pacific Business News.

However, Lloyd Greif, chief executive of L.A.-based investment banking firm, Greif & Co., said it is not unusual for companies to get fund extensions if they still have holdings they would like to sell off.

Typically, investment funds such as OCM Real Estate Opportunity Fund have 10-year life spans, he said. The money raised by institutional investors is usually spent acquiring assets during the first three to four years of the fund's life. From years four and on, the holdings are divested and money is distributed to the investors.

"Oaktree has very savvy investors. It makes perfect sense to sell," said Greif. "A few years ago, people were still trying to figure out what life was going to be like after 9/11. Now, there is a lot of money out there and people are spending it on themselves. They want to go to exotic places and Hawaii is an exotic place. I expect that Oaktree will come out smelling like a rose."

Defend Oahu Coalition comments on Kuilima Resort proposals

DOC member and long-time North Shore resident, Choon James said, "Oaktree keeps saying their massive development will provide needed jobs for North Shore residents. This is pure corporate spin because Turtle Bay has perennially been unable to fill all its existing job vacancies. Another five hotels and more gated condos and timeshares for the rich would require importing workers from elsewhere. This will inevitably trigger the "multiplier effect" on our communities. Where would these additional workers live? Could the hundreds of additional workers make the long daily commute from other parts of Oahu on our already-crowded narrow two-lane roads? Currently, most upper-level Turtle Bay Hotel management jobs are held by out-of-state personnel, including from England." James further noted, "This battle between David -- local residents -- against the Goliath of rich developers regularly plays out all over our islands. Locals do not want to see these islands turned into a playground for the rich. Our elder statesman, Governor George Ariyoshi eloquently warned that we must plan and not skip from one project to another. Otherwise, we will incrementally lose what we hold dear and precious about Hawai`i." James also echoed the need for Oaktree's local management to exercise needed corporate conscience and begin a meaningful dialog with the community. "If ever there was a time for an international corporation to talk story and for Hawaii's elected and appointed County and State officials and the large land-owning Hawai`i trusts to all come to the table to plan and protect what is left of Hawai`i, that time is now. Grassroots activism and growing frustration with our public officials caused by this latest round of run-a-way development escalate in the islands. If I were an elected official, I would take note of this growing public angst."

DOC member Mark Cunningham, a respected waterman and Kawela Bay resident said, "Many of our DOC members and supporters are veterans of previous battles to protect the North Shore from over-development: acquiring the Pupukea/Paumalu bluff, saving Waimea Valley, and defeating the Shark's Cove Mall development. But we're growing tired of having to continually fend off such unrealistic projects and are going to start demanding more accountability from our elected officials. People have property rights of course, but these large-scale development proposals that threaten the very identity of the North Shore should never be accepted and the community will continue to rally against them.

Members of the Defend Oahu Coalition have tried repeatedly without success to meet with Honolulu Mayor Mufi Hannemann and to get the Mayor's administration to require the developer to produce a supplemental environmental impact statement (EIS) for Turtle Bay's now 20+-year old permits. On May 19, 2006, the non-profit Keep The North Shore Country was joined by the Sierra Club, Hawai`i Chapter in a lawsuit asking that Kuilima Resort be required to perform a supplemental environmental impact statement. The lawsuit also seeks an injunction against further ground work or construction at the resort until a supplemental EIS is completed. This lawsuit was later consolidated with a similar suit brought by Unite Here Local 5, the hotel workers' union. When the Union settled their labor dispute with Oaktree, they agreed to drop their suit. On November 13, 2006, Judge Sabrina McKenna heard Motions for Summary Judgment and ruled in favor of Kuilima Resort Company. A Notice of Appeal was filed on January 8, 2007. Before the briefs were submitted, a technical error was noted in the court paperwork: the Union's case was still referenced as active, even though they had withdrawn. Additional paperwork was filed by the Union's attorney to clarify that they are no longer party to this lawsuit and when that was recorded, the clock began anew for filing an appeal. As of this date, the legal challenge is still very much alive and it would not be affected by any changes in ownership at Kuilima. DOC President Carol Philips said, "The standards have changed dramatically since the original EIS was conducted due to improved technology and measuring techniques. Considering the potential traffic impact alone, it's outrageous that the city would not want a supplemental EIS. Add to this the very real impact of the additional sewage and wastewater disposal on our ocean and reefs, the iwi issue, the lack of affordable housing and all the rest, it's disturbing that our elected and appointed officials don't use their power to require an updated EIS."

The Defend Oahu Coalition is not the only Oahu group fighting this latest round of rapacious over-development, seemingly being empowered by uncaring politicians and appointed officials. In fact, there are over a dozen small groups now organizing to grow the county-wide effort to prevent inappropriate over-development. Now meeting regularly, the as-yet-unnamed group is working to focus their common interests in order to more effectively challenge large corporate development interests and Oahu's elected and appointed officials who continue to sell out to them. During the second meeting of the group -- coincidentally also on Friday, July 13th -- in Honolulu, one native Hawaiian participant put it this way; "Why aren't our officials listening to us? Why are they ignoring the obvious and facilitating all of this inappropriate development to the detriment of our residents?" Carol Philips observed, "Now that's the real question."

Starwood decides not to join in Turtle Bay project

Starwood Hotels and Resorts has pulled out of negotiations to develop up to five new hotels and time shares at the Turtle Bay Resort on the North Shore of Oahu.

The decision not to participate in the project with resort owner Kuilima Resort Co. was made by Starwood executives on Tuesday, according to several people familiar with the negotiations.

More at Pacific Business News, Honolulu Advertiser, KHNL

"The good news here is we're talking about a $350 million valuation of the property, which could mean a much smaller development than originally planned," Eric Gill, secretary and treasurer of Unite Here Local 5, the union that represents workers at Turtle Bay said.

Honolulu Star Bulletin

Starwood courting resort on Oahu

Starwood Hotels & Resorts is negotiating to purchase or partner in the expansion of the Turtle Bay Resort, which could include up to five new hotels.

Oaktree Capital Management, owner of Kuilima Resort Co., which includes Turtle Bay Resort, is negotiating with Starwood, Kuilima spokesman Nathan Hokama said yesterday.

More at Honolulu Advertiser

Oahu can't support Turtle Bay expansion

By Bob Nakata

The proposed massive expansion of the Turtle Bay Resort by Oaktree Capital Management LLC, and its subsidiary, Kuilima Resort Co., threatens to turn O'ahu into one continuous urban center. The huge impact it will have on traffic will make it impossible to feel like you are in the "country" anywhere on O'ahu.

More at the Honolulu Advertiser

Is Turtle Bay’s Expansion Good for the North Shore?

Hawaii Business Magazine
Defend Oahu's Choon James counters Turtle Bay's Project Manager Ralph Makaiau on the merits of the proposed development.

Q: Is Turtle Bay’s Expansion Good for the North Shore?
RALPH MAKAIAU
project manager, Kuilima Resort Co.

A: Balanced, responsible development that takes into account the needs of the community was the intent of the Kahuku community that originally envisaged the Turtle Bay plan and has been embraced by Kuilima Resort Co. since its involvement in the project. Through lengthy collective effort and negotiations, the developer and community leaders each received what they wanted. The preservation of vast open spaces, easy access to beaches, shoreline setbacks that exceed the standard for developers to protect culturally sensitive areas, and height restrictions on new construction were among the stipulations in the Unilateral Agreement, a legally binding document that locked in the developer and community to keep their promises to each other. Creating another high-density Waikiki clearly was never part of the plan.
The agreement served as a model of collaboration for other developers. Now, once again, Kuilima has become a case study for Hawaii’s business community because of significant implications for all developers. Over the years, the Kahuku property has switched hands and the downswing of the local economy through the 1980s and ’90s halted development throughout the Islands. At a time when Hawaii’s economy is picking up and Kuilima is ready to move forward, new legislation and activist groups attempt to undermine the community’s entitlements. Unfortunately, as is often the case, a loud, vocal minority drowns out the silent majority in the community.
Despite Hawaii’s low unemployment rate, Koolauloa (Oahu’s Northeast Side) is in dire need of revitalization. We envision a vibrant, flourishing community without compromising the rural feel unique to the area. Kahuku Hospital faces financial challenges without support from businesses and the community to keep its doors open. A strong economic driver in the area is vitally necessary to prevent homelessness and other social ills. There is much more we can do for the community, and Kuilima has an important role to play in Koolauloa.

CHOON JAMES
Defend Oahu Coalition Boardmember

A: International investment groups like Oaktree Capital are exploiting Hawaii. Paradise is becoming a playground for the rich. These corporations profit millions of dollars at the expense of Hawaii’s people, culture and environment. Without protection, North Shore will become another ritzy resort a la Kaanapali, Maui. Local folks will eventually be priced out and pushed out. (The cheapest Turtle Bay Resort Ocean Villa condo is $1.5 million)
The Golden Rule – the one with the gold rules – buys top-gun consultants who quietly ramrod permitting processes and attorneys who insinuate lawsuits if they don’t get what they want, thereby paralyzing elected politicians from representing their constituents.
Five new hotels with an additional 3,500 units will inevitably trigger the “Multiplier Effect.” Oaktree dangles the carrot of 2,500 jobs. But, the present 487-unit hotel perennially has trouble filling employment vacancies. Needed imported labor will trigger more competition for housing, educational/social services, and aggravate already chronic traffic congestion. Oaktree touts 100 affordable homes. Twenty-five-hundred (imported) jobs and 100 homes? Do the math. What are the real community benefits?
When corporate investors reap their dividends and leave the Islands, all of Hawaii’s tax-payers will pay for the inevitable impacts – traffic woes, infrastructure improvement, rising property values, limited beach access, water/electricity resources, and an irretrievably vanished country lifestyle that kamaainas hold dear and precious.
Oaktree: We are your neighbors. We are hotel workers, unionists, kupunas, teachers, firemen, mothers, uncles, environmentalists, the everyman. You recycle certain hotel employees as your community support. But 76 percent of Hawaii residents are against building a new hotel.
Oaktree claims a new era of “openness.” Then why fight against updating the irrelevant 1985 Environmental Impact Statement for this resort expansion?
Oaktree: Live Aloha! No PR games, no smoke-and-mirror maneuverings. Let’s resurrect the defunct 1986 Unilateral Agreement’s Kuilima North Shore Strategy Planning Committee for a transparent public dialogue.