Aloha Tower project talks at impasse
Texas developer Kenneth Hughes of Hughes Development LP believes that he has been very patient -- given that it's been five years since he responded to a request to develop Honolulu's waterfront. But his patience has worn out.
So in July, he wrote the state Aloha Tower Development Corp. saying that $10.5 million was his best and final offer for the 65-year ground lease, which was unanimously rejected by the board earlier this week.
Based on the board's appraisal, the rate for the ground lease would be somewhere closer to $58 million for Piers 5 and 6 at Honolulu Harbor.
Sandy Pfund, ATDC's chief executive, said that is not the final counteroffer, which has yet to be made, but it was close.
"We want to continue to negotiate the project, and we would very much like to move forward, but we need to make sure what's offered for this very valuable waterfront property is a fair value to the state," said Pfund.
Hughes said he wouldn't be able to get a lender to back the higher amount.
Hughes' vision, as it stands now, is to develop a mixed-use waterfront project featuring a 130-foot high tower for up to 300 high-end fractional-ownership residential units as well as regular condos, with a parking garage plus 80,000 square feet of retail and restaurant space.
ATDC, which oversees redevelopment of state property surrounding Aloha Tower, approved the first phase of the $300 million project in July 2006. Hughes originally expected to start construction in 2005. He said the delays have cost at least another $40 million.
Hughes said he had offered as much as $25 million for the land lease, depending on the project's performance -- a condition that Pfund said was too risky for the state.
"The only way to resolve this is to submit it to an arbitrator," said Hughes.
Pfund said it wouldn't be appropriate to go to arbitration when there is no actual contract in place.