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Crazy Shirts:
City’s offer for
Aiea land falls short

The company says it needs
more than $8.2 million for
the former sugar mill site

By Tim Ruel
Star-Bulletin

Crazy Shirts Hawaii Inc. says it faces a loan default and possibly bankruptcy if the City Council stands by its preliminary approval to buy the former site of the Aiea Sugar Mill for less than half of the company's initial investment.

The Council voted unanimously yesterday to support the city's plan to pay Crazy Shirts $8.2 million for the 19.4-acre property, where the city wants to build the Aiea Town Center.

Chief Executive William Almon said the T-shirt company spent $19 million in 1994 to buy the property from Alexander & Baldwin Inc. and another $3 million to raze the sugar mill.

Crazy Shirts founder Rick Ralston had wanted to build an industrial warehouse and preserve the property's historic value, but plans changed when Ralston found it would cost another $38 million to remove chemicals from the ground.

The company now faces $2.4 million annual interest payments for the property.

"It's become a money pit," real estate agent and retail analyst Stephany Sofos said in an interview.

Crazy Shirts took out a $5.1 million loan to help pay development costs. It also began selling parcels of the land to private businesses this year for $31 per square foot.

But in January, city officials picked the Crazy Shirts property to house Aiea's new community center, part of a long-term plan for urban development.

The announcement immediately scared off potential buyers, said Joel Criz, a Realtor hired by Crazy Shirts to sell the property. More than 10 parcels of property's 14 buyable parcels remain in escrow.

Crazy Shirts wants the city to buy the land, Almon said.

However, the city's offer of $8.2 million falls about $1 million short of what Crazy Shirts needs to service its $5.1 million loan, Criz told the City Council.

Almon told the Council that the debt on the property represents about two-thirds of the company's total debt. "I am not exaggerating to say this could have very serious consequences for our company and our over 600 employees," Almon told the Council.

Before the meeting, he told the Star-Bulletin that default and even bankruptcy were possibilities if the company cannot recoup more of its losses on the property.

Sofos noted that Crazy Shirts already has suffered financially from Hawaii's sagging economy and increased international competition. Along with selling its properties, the retail chain has closed roughly 20 stores nationwide recently, leaving it with about 40 stores. The last thing the company needs is to take another hit, Sofos said.

Before the council approved the measure yesterday, Councilman Mufi Hannemann told Criz the city's offer was not set in stone, and that Criz should make his case to Mayor Jeremy Harris for more money.

The bill to buy the land will now go to committee, then back to the council for a final vote, which could take place sometime in July.