Outrigger reaches deals
with Lewers landowners

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By Tim Ruel
truel@starbulletin.com

Using differing forms of compensation, Outrigger Enterprises Inc. has reached principle agreements with five landowners that will allow the company to advance with its $300 million Lewers Street redevelopment in Waikiki.

Outrigger had been seeking to force the landowners to give up their interest, using the city condemnation process, but has avoided that route by striking deals with each owner. In the past month, Outrigger reached agreements with the remaining two landowners, the Clarice Garrison Trust and sisters Jacquelline Johnson and Bronwen Welch, said Eric Masutomi, director of planning for Outrigger Enterprises.

"I can say that none of the agreements are the same. They all involve different forms of compensation, if you will," said Masutomi, who manages the massive Waikiki Beach Walk project.

Some of the agreements call for Outrigger to exchange property with the landowners, which could be property of similar value that Outrigger already owns or is willing to buy, Masutomi said. He declined to comment on specifics of the arrangements, which are confidential.

Outrigger announced the redevelopment in July 2001, saying it would demolish six low- and mid-rise hotels and build a single 890-room tower as well as a complex of restaurants, shops and entertainment.

The five properties that Outrigger had been seeking to buy from the owners represent about 10 percent of the eight-acre project. Outrigger had worked out purchase prices with other property owners over the previous six years. The five remaining owners did not want to sell.

Earlier this year, the Honolulu City Council voted 6-3 in favor of using its powers of eminent domain to condemn four of the parcels. Opponents said the condemnation threat would give Outrigger an unfair advantage over the landowners.

The next step is an Aug. 30 public hearing over city permitting. The project is three to four months behind the original schedule for securing necessary entitlements, Masutomi said, noting that the setback hasn't affected the ultimate development schedule.

The firm hopes to break ground on the first phase -- building the retail and entertainment complex -- in April 2004, with completion scheduled for September 2005, Masutomi said. The second phase entails building the new tower and renovating three other hotels and would be completed by 2010.

The firm hopes to get necessary approvals by the end of the year. Once that's accomplished, Outrigger can line up financing, Masutomi said. The firm has held preliminary discussions with lots of lenders, including many local sources, but the sheer size of the project suggests that it would have to be financed in part by mainland sources, Masutomi said.