Sunday, March 10, 2002

Rainbow Pier Development spokesman Wayne Vieira shows a model of a new downtown waterfront.

Can a ferry float?

A private firm and the state
both work on an idea that
has yet to hold water

By Russ Lynch

he idea of an interisland ferry system has been tossed about since well before the jet age. By the early 1950s, a Star-Bulletin reporter wrote about a new ferry idea and labeled the proposal "a new twist on an old angle."

Now there is another new twist, a group of investors seeking to tie an interisland system of passenger and car ferries to a hotel-office high-rise complex on 15 acres that is mainly a parking lot at Piers 5 and 6 of Honolulu harbor, the area that includes the Navatek cruise boat's dock -- between the Coast Guard station and Aloha Tower Marketplace.

The developers say it would include buildings as high as 300 feet, lower than some office buildings in the area.

Seaflite Inc's first hydrofoil interisland passenger ferry, Kamehameha, traversed Honolulu harbor in May 1975. By 1978, the business was dead and its three vessels were sold to a Hong Kong operator.

Wayne Vieira, whose experience includes dinner cruise operations and a successful fast-food business, is a principal of development firm Rainbow Pier Development LLC and the spokesman for the group. He said the group, headed by Nevada investor William E. "Matt" Dillon, believes the real estate development and the ferry business each would be profitable in its own right.

However, it would not be possible to get the financing for one without the other, since investors want to see the whole thing as a package, he said.

"They are independent profit centers, but they need to be together to get the financing," Vieira said.

The developers want to build an office tower at the mauka end, with 10 floors of office space, topped by four floors of luxury condominium units. At the makai end, there would be an 11-floor, 242-room hotel on top of six floors of parking and the ferry terminal, bus and taxi operations.

There would be a pool deck, with a waterfall/pool structure looking out to a water view, Vieira said. Possibilities include a restaurant, a brew pub, spa and fitness facilities and a jogging track.

The developers plan to hide the parking structure behind "harbor village" complexes on both sides of the property consisting of about 60 luxury townhouses.

Rainbow Pier Development has been working on the idea for about three years and last year got state approval for a $45 million revenue bond, to be guaranteed by the state and paid back from ferry revenues. The revenues would come largely from an interisland system of hydrofoils or other fast craft for passengers and perhaps hovercraft for cars and other vehicles, but also could include a local ferry system, linking West Oahu and the Pearl Harbor area with downtown Honolulu and perhaps Waikiki.

Any new commuter ferry service will operate in the shadow of the state's failed WikWiki Ferry, which never made money during its brief time transporting commuters from Iroquois Point to Aloha Tower.

The partners also have given the state copies of letters from a Maryland financial company, Intercontinental Commerce Group, which says it is ready to provide $100 million-plus in financing.

There are many bridges for the group to cross, not least of which will be negative reaction to a proposal top put buildings on a key part of the Honolulu waterfront.

They will also have to convince investors and the public that, for the first time, a ferry system would work.

There have been many ideas and proposals, with such notables as former Transportation Department head E. Alvey Wright, a retired admiral who knows about sea transportation, and then-state Sen. John Hulten pushing for years for state subsidies for interisland ferries.

None has worked. In January 1966 a steamship called Hualalai was set in motion with pomp and celebrations, to haul passengers and cargo three times a week between Honolulu and the Kona side of the Big Island. It didn't last the year.

The most exciting action was the 1975 introduction of Seaflite Inc.'s jetfoil system, ships powered by Boeing turbines that could virtually fly between the islands. They were a new idea but plagued by mechanical breakdowns. It wasn't a happy scene when a vessel that was supposed to skip across the waves ended up lolling for hours deep in the swells of the Molokai Channel while nauseous passengers waited for mechanics to arrive and replace broken gears.

In less than three years, Seaflite also was dead without ever having made money.

The Rainbow Pier group says it has not made final decisions on exactly what equipment it wants to use. Vieira said it is important to recognize the technological advances that have been made since Seaflite's failure more than 20 years ago.

Meanwhile, the state Department of Transportation says it is proceeding with its own project, using federal funds to help finance the construction of an interisland terminal at Pier 19 and perhaps local coastal service out of the same spot Rainbow wants, Piers 5 and 6. The state has no ferry operator but says there are businesses that are interested.

Jadine Urasaki, deputy director of the state Department of Transportation, said the department is proceeding with a $4.3 million interisland ferry terminal at Pier 19, using part of a $25 million grant to be shared between Hawaii and Alaska.

"We're looking at interisland for Pier 19 and ... looking at Piers 5 and 6 for an intra-island," Oahu coastal, operation, she said.

Since Rainbow Pier Development needs at least DOT and Aloha Tower Development Corp. approvals for its plans, there clearly are conflicts.

The Rainbow Pier group says it will have to undergo severe financial scrutiny to be able to use the state revenue bond but believes it can weather that.

Its ferries will also have to be able to weather interisland waters better than any of the predecessors, all of which failed, Vieira said.

The latest satellite weather systems and satellite-linked global positioning system navigation on the ferries will enable them to dodge bad weather, he said.

Peter Maher, Rainbow Pier Development president, told an informational public hearing of the Aloha Tower Development Corp. that in the initial Honolulu-Lahaina phase, ferries could be diverted south of Lanai or north of Molokai instead of running between Lanai and Molokai if the weather dictates, or take a number of other route variations.

The key, Maher told the hearing, is that a trip from downtown Honolulu to Lahaina would take one hour and 40 minutes. His group says that given today's traffic and airport security and parking problems, that is comparable to interisland airline travel time.

"It will be a beautiful ride, direct from downtown Honolulu to Lahaina, versus getting yourself to the airport, standing in line for security and so on," Vieira said. "We're offering an alternative."

And it will be cheaper than airline travel, he said. His group projects a fare of $39 each way with children under 8 traveling free.

There are modern vessels of various types available and fleet choices have not been made, he said.

Maui is the first destination with Kona "down the road" in the planning, he said.

Commenting on the WikiWiki Ferry test runs and other state-sponsored ferry trials for local commuters, Vieira said they "all have been incredible money losers" and all ceased operating.

His group wants to work with the state to see if some commuter plan can be worked out, he said.

While the ferries might be the people's dream, the downtown harbor real estate looks like a developer's dream.

The Rainbow Pier group says the buildings will be far from an eyesore. They'll be placed so that the view from the land will show the narrowest aspects of the buildings, Vieira said.

One aspect used in seeking permission from the Aloha Tower agency, which controls the property, is that the developers say they will have 1,500 parking stalls, only about half of which will be needed for the hotel-office-ferry complex. The rest could be used by the bankrupt Aloha Tower Marketplace, which blames much of its financial woes on a lack of parking, the developers say.

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