UH Campus deal in doubt
POSTED: Friday, September 26, 2008
Plans to build a permanent campus for the University of Hawaii at West Oahu in Kapolei took an important step forward this week, but potentially also two steps backward because of the nation's credit crisis.
UH-West Oahu and the city reached a compromise earlier this week over land for a park-and-ride lot and the location of a transit station. A hearing on the zoning change for the project is now scheduled for Tuesday.
But Hunt Building Corp., the company that promised to buy 298 acres of state land around the campus for $100.1 million, is facing financial problems on the mainland, raising questions about its ability to complete the purchase here.
UH-West Oahu plans to use the $100.1 million from the sale of the land to pay for roads, sewer, water and electrical infrastructure and the construction of the first five buildings of the new campus near the Kapolei Golf Course.
If the sale falls through, Chancellor Gene Awakuni said the university has a backup plan to sell about 50 acres of prime commercial land on the North-South Road and issue special purpose revenue bonds to at least complete the infrastructure and a couple of buildings of the new campus.
"As the market rebounds, we might sell or lease some additional land," Awakuni said.
Steve Colon, president of Hawaii Renaissance Builders LLC, the local affiliate of Hunt, issued a statement through a spokeswoman saying that the company is "working with UH-West Oahu regarding various issues regarding the project."
Colon declined to answer questions about his company's finances and referred any comment to Awakuni.
"I have no clue as to what is going on within Hunt," Awakuni said. However, he noted that many mainland developers are struggling with housing sales and the tightening credit markets.
Awakuni said Hunt told him the company is looking for another partner or another developer to try to complete the purchase of the Kapolei land.
Hunt announced this week it is pulling out of a $133 million housing project in El Paso, Texas. The deal to buy the land was supposed to close today. But Hunt, according to the El Paso Times, cited "increasingly dramatic changes in the national and local credit and housing markets" for its inability to get bank financing for the project.
"I think everyone is struggling," Awakuni said. "I am not surprised."
In Kapolei, Hunt plans to build up to 2,631 single-family and multifamily housing units, plus a retail and commercial complex, on the 298 acres.
Hunt signed an agreement to purchase the land last August, but the deal is not scheduled to close until 30 days after the City Council rezones the land for residential and commercial development.
Four years ago, when UH began looking at a public-private partnership to build the campus at little or no cost to taxpayers, the housing and credit markets were far different from today.
In just the last year, prices for existing single-family homes in the Ewa Plain have dropped 9.6 percent to $470,000 from $520,000, according to the Honolulu Board of Realtors.
The board does not keep statistics on new home sales.
But Awakuni said he is confident that commercial property, especially property along the North-South Road, is still viable.
Awakuni said the university's consultants have assured him that about 50 acres that will be rezoned for commercial and retail development can be sold in today's market for about $40 million to $45 million.
"We're very confident about the value of the land once it's zoned," Awakuni said. "An akamai developer will see what our consultant sees."
In addition, the Legislature gave UH-West Oahu about $35 million for infrastructure development, and the university hopes to issue about $20 million in revenue bonds. So if Hunt is unable to complete the deal, there should be enough money for a scaled-down campus, Awakuni said.
In addition to land it plans to sell, UH-West Oahu will keep about 136 acres around the campus to develop or lease for housing and other retail and commercial development.
The money from its lands will help pay for the maintenance and operation of the new campus.
Awakuni said UH-West Oahu and the city reached a compromise over part of those lands. The city wanted to take up to 10 acres for a park-and-ride lot for the new transit system, which would have changed the entrance to the campus and reduced income for the university.
But instead, UH-West Oahu will help the city get five acres from the state Department of Land and Natural Resources and the city will get five acres from another developer, Awakuni said.
The new transit station will be located across the street from the campus, but the city will build a pedestrian overpass to take transit riders from the train station to the campus.