Developer:
Kewalo Pointe
in jeopardy

He says state demands
and rising interest rates
threaten the project

By Peter Wagner
Star-Bulletin

The prospect of a brightly lit Ferris wheel spinning high above scores of shops and restaurants along the Kewalo waterfront is growing dim, says developer D.G. "Andy" Anderson.

"I'm just not comfortable that they want a project," said Anderson after a special meeting yesterday of the Hawaii Community Development Authority board of directors. "I don't think they understand business."

Anderson sought the meeting to answer questions about his proposed "Kewalo Pointe," a $138 million complex of entertainment-oriented shops and attractions on 10 acres along Ahui Street. He hoped to buy some time on a yet-to-be-done $40,000 market study.

The former state legislator and city managing director also asked that negotiations begin on a development contract, pending outcome of the market study. And he wanted some sign of support for his growing investment, currently about $250,000 and likely to reach $325,000 by year's end.

But the board, which yesterday went behind closed doors and would not comment on its deliberations, later notified Anderson he would be held to an Oct. 30 deadline to produce a market study for his project.

"It's a prime piece of property and we want to protect it," said Jan Yokota, executive director of the HCDA, the state agency that oversees Kakaako development.

The board's attorney, deputy Attorney General Cynthia Quinn, cited the state's procurement law in defending yesterday's closed session.

She said disclosing ongoing negotiations over state contracts could jeopardize the state's bargaining position if negotiations break down.

Anderson, who has a $38 million loan commitment from AMI Capital Inc. for the first phase of the project, said interest rates have climbed three-fourths of a percent since he began working on his proposal 15 months ago.

"Every delay we have on the table, whoever creates it, me or them, further aggravates the project and puts it into a period in which the interest rates may bomb us both out of the water," said Anderson. "We may be negotiating this to death."

Anderson said he has letters of intent from about 100 potential tenants for his project but can get no commitments until he gets a commitment from the state. He said he wants to avoid the lengthy state negotiations that kept Aloha Tower Marketplace from reaching "critical mass."

The HCDA is overseeing development of about 220 acres of state land makai of Ala Moana adjacent to Kewalo Basin. The state agency last month began exclusive negotiations with Anderson's company, Kewalo Project Development Ltd. but has signed no contracts.

Anderson yesterday said he could have the market study in six weeks, about two weeks after the Oct. 30 deadline. But Anderson said the board denied a two-week extension.

The former state legislator and city managing director also balked yesterday at a $70,000 "earnest money" requirement recently demanded by the HCDA to show his commitment to the project.

"This is the kind of last-minute, no-foundation, no basis "new demand and condition' that gives us concern," Anderson told the board.

He noted his company's growing expenditures, saying, "We think this investment can be defined as earnest and sincere by anyone's definition."

As for a Ferris wheel on the Honolulu waterfront, Anderson said one was recently built next to the Eiffel Tower in Paris and similar amusements are drawing huge crowds in Tokyo and other cities around the world. He said his Ferris wheel would attract tourists because of spectacular views.

"It's really a viewing tower, not the Ferris wheel you remember from when you were a kid," he said.