Raising Cane

Rob Perez

UH may buy
regent’s land on Maui
for astronomy site

The way the proposed land deal came together, the University of Hawaii was all but asking for trouble.

It's no surprise, then, that UH administrators are now fending off allegations of insider dealing and a conflict of interest.

What did they expect?

This smells like a classic insider transaction, although UH appears to be getting a good deal in the process.

Still, you have to wonder how it all came about and whether UH is careful enough in trying to avoid such controversies.

This one started like this: The folks at the university's Institute for Astronomy wanted to acquire land for the construction of a much-needed Maui office and laboratory facility on the slopes of Haleakala.

Expanding their existing facility -- an 80-year-old Waiakoa farmhouse crowded with lab equipment and offices -- was not a good solution because the owner of the adjacent property wasn't interested in selling. So institute officials spent several years looking unsuccessfully for a suitable new site. Parcels they initially thought held promise ended up lacking water or other infrastructure hookups or didn't have the proper zoning.

Then, in 2001, Maui developer Everett Dowling, also vice chairman of the UH Board of Regents, came to the rescue.

At a regents meeting in which institute officials spoke of their desire for a new Maui facility, Dowling mentioned that he had commercial property in Kula that was available, according to Larry Sakima, who at the time was the institute's assistant director.

"We had no idea Dowling had that site," Sakima said, "but it so happened that the property had all the zoning and water and infrastructure requirements. ... It was the perfect location."

The location may be ideal, but the circumstances surrounding the deal weren't.

Realizing the potential for conflict problems, Dowling -- to his credit -- sought and received an opinion last year from the Hawaii State Ethics Commission. The agency determined that no ethics breach would occur as long as Dowling did not participate in any discussions or decisions involving the project, either as a regent or as a developer. But the ethics opinion did not appear to address the critical question of whether the potential deal was unfairly steered to Dowling from the start.

It did not question a process by which the university came up with criteria, then determined that Dowling's was the only property that fit the requirements.

It also didn't address how a deal that was supposed to be just a land sale somehow became a broader proposal in which Dowling's company, Kulamalu Science (formed specifically for the deal), also would oversee the project's design and construction.

Why weren't other developers invited to submit proposals? Did UH sufficiently explore other options?

"That's exactly my concern," said Ted Hong, a UH regent recently appointed to the board by Gov. Linda Lingle. "Based on everything I've seen, I think the university administration has overstated the need to put that project on regent Dowling's property."

Real estate brokers on Maui, however, say UH would have few or no alternatives to the Dowling site if time is of the essence. They say other sites are available, but the properties typically would need approvals, which could take years, for a zone change or water development rights.

The brokers also say UH would be getting a good deal on the land price, which Dowling's company has offered at a 4.5 percent discount off the $1.8 million appraised value.

Time also is of the essence if UH wants to remain in the running for a solar observatory project that could bring up to $100 million to the local economy, institute officials say. Maui is one of six sites internationally being considered, and a modern facility with room to expand will be key to attracting the project, said Rolf Kudritzki, the institute's director. Two finalists will be picked later this year, he said.

Kudritzki conceded that questions about a conflict of interest in the Dowling deal were valid, but he believes the university sufficiently addressed those concerns by relying on the ethics opinion, which meant Dowling has not been involved in discussions since the initial overture.

Dowling declined comment, citing the ethics ruling.

Regents Hong and Kitty Lagareta, another Lingle appointee, raised questions about the potential transaction at a recent regents meeting.

As a result, a motion to authorize the administration to negotiate a deal with Kulamalu Science was changed to cover only the land acquisition. It did not include the construction portion of the project.

Instead, the regents instructed the administration to check with other developers to see if they might be interested in overseeing construction. If they are and the price appears to be in the same ballpark as Dowling's, the university will consider using another developer, eliminating the appearance of a conflict on that portion of the deal.

The construction portion represents more than $5 million of the estimated $7.5 million cost of acquiring the land and developing the facility.

The board should be commended for taking the extra steps to deal with the potential conflict issue.

Too bad similar care wasn't shown from the start.

Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at:


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