State of Hawaii

State agency seeks
property taxes for
Kakaako plan

By Russ Lynch

Gearing up for development of the Kakaako waterfront, a state agency is looking at a method of financing new to Hawaii -- pumping rising property tax returns from the property into the development agency rather than to city coffers.

The Hawaii Community Development Authority also is pondering how to get large numbers of pedestrians across Ala Moana from a proposed housing area on the mauka side to retail, recreation and business operations planned for the makai side of one of Honolulu's busiest streets.

Outlining a business plan for the 180-acre makai part of the Kakaako development district, which would include technology and research businesses, retail complexes, entertainment, parks, waterfront activities and 300-400 residential units, an authority official said he doesn't believe pedestrian overpasses work and going underground would be too expensive and risky.

Teney Takahashi, the authority's planning and development director, said ways have to be found to slow traffic on Ala Moana and make it "less adventurous" for people to cross. One way would be to widen the road and build a tree-lined medial trip with a walkway along it, so pedestrians can make it half way across and take a break before the next leg.

Takahashi said there is urgency in moving ahead with at least the retail phase of development on the Kakaako waterfront property. Takahashi said work will soon begin on the $300 million University of Hawaii Health and Wellness Center, which will attract faculty, support staff, students and research-technology businesses to the area.

They are all customers, he said, and if HCDA doesn't develop retailing to supply them, other retailers nearby certainly will.

One way to get going is tax increment financing, Takahashi said.

The novel measure would set a base property tax rate for the entire 180 acres, to be paid to the City and County of Honolulu.

As the project develops and real estate values rise, taxes would increase. Instead of going into the property tax pot, the increased tax revenue would go to the HCDA.

Takahashi acknowledged that arranging such a financial structure in Honolulu will not be easy because in Hawaii, property tax belongs to the counties and Kakaako is a state project.

In mainland areas where this financing is being used, the development authority and the tax collector are in the same administration.

"Somebody's ox is getting gored and in this case it's going to be the city because they're not going to get that increase" in tax revenues as development grows, Takahashi said.

What they would get, without city expense, is a new commercial district providing jobs, income and much-needed recreation for Oahu residents, he said.

The plan would require approval from the city. Ann Kobayashi, head of the City Council's budget committee, could not be reached yesterday.

Mayor Jeremy Harris' spokeswoman, Carol Costa, declined comment.

Takahashi said the HCDA will have to spend more than $130 million in 10 years to finish the infrastructre, which it hopes to offset by the share of property taxes.

The plan favored by the subcommittee calls for mid-rise, moderately priced residences. A 13-acre parcel at the ewa entrance to Kewalo Basin would house an ocean research center and facilities for research and technology.

Retail and entertainment facilities would line the Kewalo Basin waterfront and mixed-use structures would be built throughout the makai property, with lots of park space, an amphitheater and relaxation areas, to make the whole location "a gathering place," Takahashi said.

State of Hawaii

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