From the August 9, 2002 print edition
Kakaako mix a hot topic
Ben DiPietro

Plans unveiled this week for Kakaako call for a mix of commercial, retail and residential development to be built around the new University of Hawaii medical center.

But questions remain about what the proper mix should be and whether people should be allowed to live on the makai side, which many in the community want reserved only for public uses.

The last time Kakaako residents were asked, they voiced enthusiastic support for retail and commercial development but were solidly opposed to residential units being built on land makai of Ala Moana Boulevard.

Those community concerns aren't deterring the Hawaii Community Development Authority from preparing to vote on a development plan that includes a mix of retail, commercial and residential for its lands along the Honolulu waterfront.

An HCDA subcommittee recommended approval of the estimated $130 million development project on 180 acres of land makai of Ala Moana Boulevard to the HCDA board. The plan includes residential development of between 300 and 400 units.

"They're going to have a scrap on their hands," said Bev Harbin, executive director, Kakaako Improvement Association.

A series of "Eye on Makai" community meetings in late 1999 showed strong consensus among residents, unions, developers and environmentalists that the makai-side oceanfront area be kept for residents and public uses, Harbin said.

"When you start mixing public uses like parks with a medical school and biotech research, which could be a 24-hour industry, and start coupling that with residential people, you'll have a collision," Harbin said. "The consensus was public access first, visitors and businesses second."

A final draft of the plan is expected in September and the board should be prepared to vote on the project in October, said Jan Yokota, executive director of HCDA, which owns more than 160 acres of the land.

Another reason to visit Hawaii

HCDA's plans center around an architectural "signature icon" along the lines of the Opera House in Sydney, Australia, with an ocean science center or technology museum suggested as possible ideas.

"We want to create a sense of place, a place of employment, and a key to our success is having architectural components," said Christine Camp of Avalon Development and a member of the HCDA board as well as the subcommittee that devised the plan.

"We are creating another reason for people to visit Hawaii."

Other components include a pedestrian mall for the Fisherman's Wharf area similar to River Walk in San Antonio, Texas, or Seattle's Pike Place Market, said Teney Takahashi, HCDA director of planning and development.

Along with a residential component, there's park space, commercial and retail space and parking for between 2,000 and 2,500 vehicles that would be hidden behind residential and retail development.
"Any plan without residential doesn't have a soul," said Takahashi, who said development rules must be changed to allow for such zoning.

Harbin says there's plenty of room on the mauka side of Ala Moana for residential development and that people who buy units can just walk across the street to enjoy the makai-side retail and park areas.

A separate study of Kakaako done for Kamehameha Schools and Victoria Ward Ltd. suggested a residential component is needed for Kakaako Makai, Yokota said. Residential development would require zoning changes, she said.

"We will have to have public hearings," Yokota said.

Medical school a development key

A retail-residential mix by itself would not be enough to make the project financially viable, but the construction of a new medical school serves as the catalyst not just for the waterfront project, but for development throughout Kakaako, Takahashi said.

"If [the medical school] were not here, this plan would be worthless and there would be no impetus to move ahead," Takahashi said. "Retail on its own is not enough to do it."

HCDA should move slowly with its development plans and wait until the medical school is built, said Andrew Friedlander, CEO, Colliers Monroe Friedlander.

The value of the surrounding land will escalate and more appropriate uses may be found depending on how much space is needed to accommodate future growth of biotech companies, Friedlander said.

"It would be an enormous mistake to move ahead with anything until the medical school has a chance to get going," Friedlander said. "The land surrounding the medical school in Kakaako Makai will become a lot more valuable as years go on and other uses will become apparent."

Additional retail and residential spaces are not needed at this time, he said.

"There's no demand right now for residential and retail; we really have an oversupply at this time," Friedlander said.

He also says there's no need to build an icon-like structure to give the area an identity, as the medical center will suffice.

"One of the greatest medical schools in the world located in Kakaako Makai should be our icon," Friedlander said. "I don't agree with an ocean science center. Everyone is building aquariums."

Roadblocks to development

Several obstacles need to be overcome, including changing zoning rules, making it easier to cross Ala Moana Boulevard, whether to use tax-increment financing and completing environmental cleanup of sites, including three former incinerator sites.

Cleanup costs are included in the overall cost, and Takahashi said there shouldn't be any surprises since extensive environmental surveys of the area were made and officials have a good idea of what work is needed. The state Legislature has provided about $30 million in funding, but a battle could be brewing between the city and the state over tax-increment financing, which would allow HCDA to keep any tax revenues above an established base amount.

Most every other development agency uses this type of financing, Takahashi said, with the most successful example in San Jose, which collects up to $1 billion a year.

The problem is HCDA is a state agency and the city likely will be reluctant to give up tax revenue. "The city's ox gets gored in this case," he said. "It's going to be an uphill issue … but we should throw it on the table."

The plan is similar to one prepared for Kamehameha Schools and Victoria Ward for development of their areas of Kakaako.

How to get across Ala Moana Boulevard remains an unsolved obstacle. Brian Minaai, state transportation director, suggested his department would consider overpasses, a change from past policies.

Others said such an idea could work if the walkway contains retail stores. Another alternative is shuttle buses, but that can be very expensive, said Takahashi.

The board also must decide whether to name a single developer or multiple developers for the waterfront project. Takahashi recommended a single developer.

"This project requires a lot of coordination and it would be easier to work with one developer," he said. "It also would be more comfortable for the developer."

Reach Ben DiPietro at 955-8039 or bdipietro@bizjournals.com

Pacific Business News (Honolulu) - August 12, 2002
http://pacific.bizjournals.com/pacific/stories/2002/08/12/story4.html

© 2002 American City Business Journals Inc.