Elks and Outrigger settle rent case
Arbitration helps clubs come to rent terms
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A rent dispute between the Elks Lodge and Outrigger Canoe Club -- two popular member-based clubs in Waikiki -- has been settled by a three-member arbitration panel.
Terms of the new rent between the next-door neighbors were not disclosed because of a confidentiality agreement.
The Elks Lodge, the landowner, was seeking up to $1 million or more a year in rent from the canoe club for a 99-year lease that was to be renegotiated midway through the term.
The Outrigger Canoe Club had leased its 73,804-square-foot site at 2909 Kalakaua Ave. since 1956 from the Elks Club, which is at 2933 Kalakaua Ave. For the first 50 years, the annual rent was a mere $30,000, but that expired on Nov. 15. Ironically, the canoe club -- the tenant -- pulls in 10 times more revenue than the Elks Lodge, according to tax records.
Under original lease terms, the Elks were seeking an appraisal value set at about 5 percent of the market value of the time of renegotiation. Given that the canoe club property is assessed at $21.4 million, the translated rent would be at least $1 million a year.
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A beachfront rental dispute between two of Honolulu's most popular member-based clubs has been settled.
The Outrigger Canoe Club will pay a new rental rate to its landowner and next-door neighbor, the Elks Lodge, as established by a three-member arbitration team last week, according to its interpretation of the lease.
Potentially, the Elks Lodge was seeking up to $1 million or more a year in rent from its next-door neighbor for a 99-year lease that was to be renegotiated midway through the term.
2933 Kalakaua Ave.
Appraisal value: $17.7 million*
No. of members: 2,600
Initiation fee: $1,000 range
2909 Kalakaua Ave.
Appraisal value: $21.4 million*
No. of members: About 5,000
Initiation fee: $1,500 to $13,000
* from Honolulu County tax records
The Outrigger Canoe Club had leased its 73,804-square-foot site at 2909 Kalakaua Ave. since 1956 from the Elks Club, which is at 2933 Kalakaua Ave. For the first 50 years, the annual rent was a mere $30,000, but that expired on Nov. 15.
Under original lease terms, the Elks were seeking an appraisal value set at about 5 percent of the market value of the time of renegotiation, which would have translated into about $1 million a year.
But the canoe club argued that the appraisal should be based on the specific use of the site as a private club, rather than as a luxury condominium, for example.
But Circuit Judge Randal K. Lee dismissed that logic in November, saying the court found it inappropriate to impose a definition of a "club site" and that the amount of rent should be left up to a panel or arbitrators.
Side by side, the Benevolent and Protective Order of Elks Honolulu Lodge No. 616 -- or Elks Lodge -- is a study in contrasts.
The canoe club pulls in 10 times more revenue than the Elks Lodge, according to tax records.
In 2004 the canoe club brought in $7.6 million compared with the $729,529 raked in by the Elks Lodge. The canoe club, with nearly 5,000 members, also has twice the number of members of the Elks Lodge.
Initiation fees at the canoe club alone range from $1,500 to $13,000, depending on the age of the applicant, and are bound to go up, although a long waiting list indicates potential members are willing to pay the price.
At the Elks Lodge, initiation fees went up to the $1,000 range.
Under earlier agreed-upon terms, the new rent will be retroactive to Nov. 15, plus a certain percentage interest.
The details of the new lease terms could not be disclosed due to a confidentiality agreement. Attorneys from both parties declined to comment.
Rosemary Fazio of Ashford & Wriston served as the Elks' attorney. Kenneth Kupchak of Damon Key Leong Kupchak Hastert served as the Outrigger Canoe Club's attorney.