Thursday, November 11, 1999

Developer protests
Kewalo rejection

D.G. 'Andy' Anderson defends
his $138 million project after
a panel questions its feasibility

By Peter Wagner


Barely in control of his anger, developer D.G. "Andy" Anderson accused the Hawaii Community Development Authority of railroading his $138 million "Kewalo Pointe" project for political reasons.

"This is the worst I've ever seen," he said yesterday, waiving a subcommittee report recommending against the project. "This is sheer nonsense."

The report, discussed behind closed doors at yesterday's meeting of the authority board, says Anderson overstated revenue projections and underestimated costs of the 10-acre project, planned for the Kewalo Basin waterfront. "There is a substantial risk that the project will not be economically feasible," it says.

But if the subcommittee's recommendation was a blow to Anderson, he managed to buy more time before a final vote by the full board. The vote, earlier scheduled for tomorrow, was postponed until Dec. 1 after Anderson's impassioned plea to make another presentation to the board.

It's been 16 months since Anderson proposed building a complex of retail shops, restaurants, and attractions including a carousel and Ferris Wheel on the state-owned Kakaako land. Consulting firm KPMG LLP recently estimated the project would create nearly 2,600 jobs and generate $16.6 million a year in tax revenues by the year 2006.

"I come before you with a project that creates 2,600 jobs and you're not interested," Anderson told the board after hearing the subcommittee's recommendation. "Isn't that good in our economy?"

The HCDA subcommittee, which included Bradley Mossman, Michael Kawaharada and Patrick Kubota, advised the board to end discussions with Anderson's company, Kewalo Project Development Ltd. Among its findings:

Bullet The project's estimated costs are low compared with recently completed projects.
Bullet The cost of cleaning up contaminated soil at the site was not addressed.
Bullet Parking would be inadequate.
Bullet Estimates of annual sales were high compared with other projects in Honolulu.
Bullet Financing plans were poorly documented.

Anderson, who recently submitted a marketing study by KPMG, called the subcommittee's findings "arbitrary" and unfounded.

"Our project is solid," he told the board. "It's absolutely sound. Even if you shoot me down, this deserves an answer."

Waving the committee's report before the board, Anderson called it a "political document" and hinted at a legal challenge saying yesterday's closed-door session was a violation of the the state's sunshine law.

Honolulu attorney Richard Clifton, arguing in Anderson's behalf, objected to yesterday's executive session before the board withdrew to discuss the recommendations in private. He said the board's actions were "voidable" because there was no justification to meet behind closed doors.

Lori Ann Lum, HCDA's chairwoman, on the advice of state attorneys cited an exception to the state's sunshine law allowing private meetings to "to negotiate the acquisition of public property."

Jan Yokota, HCDA's executive director, took exception to Anderson's charges saying the committee was well qualified to question his figures. "Costs were underestimated and revenues over-estimated," she said. "This is a marginal project at best."

Yokota denied any political motivation to kill the project, saying the state has an obligation to carefully guide development of the waterfront property. "It's a prime site," she said.

Honolulu retail expert Stephany Sofos, who helped prepare Anderson's market study, said she was mystified by the panel's findings. "When I put this report together, I was very conservative, so I can't see how your staff can say we're over on our reach," she said.

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