Turtle Bay has heard nothing of deal
Gov. Lingle proposed buying the resort in her State of the State talk
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After publicly pledging nearly two weeks ago that the state would attempt to buy Oahu's Turtle Bay Resort, Gov. Linda Lingle has yet to discuss the proposal with the owners of the North Shore property.
Kuilima Resort Co., the local entity that has owned the 859-acre resort since 1988, was taken by surprise when the governor announced the proposal in her Jan. 22 state-of-the-state address, and has not heard from Lingle or her administration since, said Nathan Hokama, Kuilima spokesman.
Russell Pang, chief of media relations for the Office of the Governor, said, "We're still working things out trying to talk to the community and pull together the working group that the governor discussed before going to the developer."
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STAR-BULLETIN / OCTOBER 2002
Gov. Linda Lingle has pledged that the state would attempt to purchase Oahu's Turtle Bay Resort. Her plan is not to operate the 859-acre resort, but she says the resort portion would be sold to finance a land deal.
Nearly two weeks after Gov. Linda Lingle's pledge that the state would attempt to purchase Oahu's Turtle Bay Resort, the governor's office has had no direct discussions with the owners of the North Shore property.
Kuilima Resort Co., the local entity that has owned the 859-acre resort since 1988, was blindsided when the governor announced the proposal on Jan. 22 in her State of the State address and has not heard from Lingle or her administration since, said Nathan Hokama, Kuilima spokesman.
Russell Pang, chief of media relations for the Office of the Governor, said: "We're still working things out, trying to talk to the community and pull together the working group that the governor discussed before going to the developer."
Representatives of Los Angeles private equity firm Oaktree Capital Management LP, which owns Kuilima, didn't return a call for comment. A representative of Credit Suisse, the lender that filed in December a $283 million foreclosure lawsuit against Kuilima, declined comment.
The governor, in her weekly radio address on Friday, said she was "encouraged by the level of discussion and offers of support this idea has generated" and clarified that she isn't proposing the state operate the hotel or go into the resort business, but that the resort portion could be sold to help finance the land deal, which she earlier estimated at less than $500 million.
"It seems like their approach is mostly public relations-oriented," said Lingle's predecessor, former Hawaii Gov. Ben Cayetano. "If they're that serious about this stuff, they would sit down and talk to the developer to kind of find out what's involved. The whole thing really is not feasible."
While the state doesn't handle zoning, it could pass laws that would limit development on the North Shore and achieve the same goals without the potential financial burden on taxpayers, he said.
"There's a lot of community sentiment out there to keep it country, in fairness to them she cannot give them false hope," Cayetano said. "I don't know who dreamt this up, but it seems to be devoid of any substance in terms of details and how it would impact other state priorities."
Crocker Liu, a Hawaii native who is now the McCord real estate and finance chairman at Arizona State University's WP Carey School of Business, echoed that sentiment, citing other alternatives to achieve the same end such as working with the city to change building codes to ensure a low-density development that would preserve the area's rural character.
"If they cannot even replace June Jones' carpet, where are they going to find the money to buy this place?" Liu said. "I don't know necessarily whether it's a good investment, given the amount of money needed to purchase the land. I don't think that they've done the necessary due diligence that is required."
Depending on the price the state would pay for the property, it could be an attractive bailout option for the financially troubled resort developer, Liu said.
"To develop a property ... in Hawaii is very time consuming, and so I would suspect that from Oaktree's perspective off-loading the property means that they don't have to fund the negative cash flow," he said.
Lingle has reached out to groups such as Unite Here Local 5, which represents nearly 300 workers at Turtle Bay, for support, though she has yet to reveal details of the plan.
"She's expressed goals that align with ours -- we want to keep the country rural and secure and ensure the continued success of current resort," said Eric Gill, Local 5 secretary-treasurer. "The public's money should be used to drive public interest and not be used as a bailout for investment groups who basically gambled wrong and got cut short."
Local real estate experts who asked not to be named were critical of Lingle's idea, saying the proposal might be a red herring and a political play by the governor to gain community support, particularly from environmentalists, to recover from the controversy surrounding the Hawaii Superferry.
"I think it's partly saving face," said Bob Nakata, co-chairman of the Defend Oahu Coalition. "It was sprung so suddenly I think both sides are trying to figure out what to do. Fundamentally they don't have a working group together yet so they don't have firm proposals to actually make to the developer. It may be a while before anybody moves."