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StarBulletin.com

Aloha Tower agency made right call rejecting deal


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POSTED: Wednesday, September 23, 2009

While the arbitrator's ruling in the Hughes Development arbitration case resulted in a partial decision against the Aloha Tower Development Corp., the news article did not accurately report key findings by the arbitrator regarding the essence of this case (”;Tower of trouble,”; Star-Bulletin, Sept. 14).

Did Hughes have the ability to develop a successful project on our downtown waterfront?

In point of fact, the arbitrator ruled that:

» If the manner of determining rent was based upon the common method of the return on the fee interest, it is highly probable that Hughes would not have proceeded with the project as it would not have been commercially viable;

» The evidence did not show that Hughes could have secured adequate financing;

» Hughes did not prove that there was any market for the product.

Successful development of the Aloha Tower project area has been challenging. The ATDC board worked hard to achieve what was hoped to be a successful development plan; however, it could not in the best interest of the state agree to the Hughes offer.

The news article quotes Hughes as faulting the agency for a lack of real estate expertise and an unwillingness to hire outside consultants. This is simply not true.

To evaluate the Hughes proposal, ATDC retained a team of highly respected Hawaii consultants to assist with negotiations and provide advice to its board on decisions about the project.

The development team included the law firm of Imanaka, Kudo & Fujimoto for the preparation of the project agreements; Lesher, Chee and Stadlbauer, real estate appraisers; John Child & Co., real estate appraisers; and GMR, a real estate development and operating consulting firm.

The team assisted ATDC and advised on deal points, but could not help ATDC make headway with negotiations, given the finding that Hughes' ability to undertake the project was unlikely.

The arbitrator found that ATDC did not breach its obligation of good faith and fair dealing, in that its substantive positions taken during negotiations were not unreasonable. ATDC consistently showed a willingness to accept reasonable terms when it felt it was in the best interest of the state and it was legally possible to do so.

The Aloha Tower Marketplace is a beautiful property and the gateway to Honolulu Harbor from the downtown urban core. It is very well maintained and, like many retail centers, it aggressively promotes its businesses and offers exciting events to attract customers.

To suggest that the area is run down, or that its success during a period when the state is experiencing an unprecedented economic recession is the result of the failure of ATDC to finalize a development deal with Hughes, is an injustice to the Marketplace's owners, the management and its tenants.

Despite challenging times, the Marketplace continues to work hard at providing a desirable destination, and the ATDC continues to work in close collaboration with the management to move forward in a positive way.

Sidney A. Quintal is chairman of the Aloha Tower Development Corp.