>> coming up next on insights on pbs hawai'i. kakaako's building boom. [intro music] >> aloha and welcome to insights on pbs i'm daryl huff of
hawai'i news now. for almost four decades, kakaako revitalization plans have been in the works, the ultimate goal to transform the 450 acres of warehouses, repair
shops and small businesses into a live-work-play neighborhood featuring upscale apartment towers and work force housing. all the changed are expected to double the
population of kakaako in just 14 years. tonight we'll examine the plans for construction for this urban center. what is the resulting impact for area businesses as well as its
potential for the state's overall economic growth? will the boom in development bring a concrete jungle or an urban oasis, reducing traffic congestion while
increasing affordable housing? we always like to hear from viewers like you so share with us your comments about boom by calling 973-1000 if you're on oahu, or 800-238-4847 if you're on a neighbor island you can also watch
insights streamed live at pbshawaii.org just click on the title of tonight's show or find us on twitter at pbs john whale seven an urban planner whose
career extends nearly a half century there government and private practice. he's served since april 2015 as chair of the hawai'i community
development authority which has jurisdiction over land use and 4 development in the districts of kakaako, kalaleloa and haeia on the
island of what you. heron is a resident of what you and president of the community group, kakaako united. i almost called you president of kakaako.
the group came together in 2013 to ensure kakaako's conformitied to laws that promise middle class housing and a mixed use neighborhood with open space and
public facilities. steve scott is ceo and owner of scott 5 hawai'i, the first manufacturer of slippers or flip flops to be located in the united
states. they were located in kakaako since 1955. among steve's biggest concerns are property tax increases, lack of adequate infrastructure, and
the impact of rail construction on small businesses. he is also the vice chair of the hawai'i authority. christian o'connor was senior asset manager for
kamehameha schools 6 in the kakaako area and was instrumental in shaping its 15-year redevelopment master plan called "our kakaako" for its
nine blocks in the area. christian is now a managing member of center city llc, a honolulu-based company whose mission is to improve every day
living through creative investments and design-driven projects, mostly in under utilized or transitional urban neighborhoods. insights did reach out to developers
building in kakaako 7 but all declined our invitation to be a guest on our panel, although some developers had scheduling conflicts, others
declined to be on the show because they had concerns about how tonight's discussion might impact their future development plans. i don't have any idea how that might
happen. let me start with you, shannon, resident of the why should we care so much about kakaako? we know you guys have concerns but
8 why should the rest of us be concerned about it? >> i think it's the last open space in downtown honolulu, and it is more than 450 acres.
it's 600 acres, so it spans the makai side as well along the coastline, and if you look at some of the development, you'll see high water table, so it really is affecting
the community. and we live there, so it's very important to us that kakaako is built so it is a quality neighborhood, that it does have green open space and parks
9 and affordable housing, so that we can have mixed use, and there's a whole law that created a cba in the kakaako district was to be mixed use, mixed
density, mixed income community, a community where it was for all of us who live here. >> steve scott, as a businessman in the area, how do you feel that we should
be concerned about you're a small business. do you feel like you're going to be able to stick it out there? >> i think there is 10
some concerns, long-term concerns, for a lot of the small businesses down there in one of them is if you look at central kakaako, you find small shops, small
parcels. they're generally not large enough to develop, and if anyone in town needed a car repaired, they would probably go to central kakaako.
if anyone is looking for some small things in small warehouses, they have to go to and my biggest fear 11 is that the city will push, through
transit only development, will push a lot of those small businesses to disappear because they will not be able to survive, and i'm a small i own property there
on kona street, but it's a concern that eventually we're going to be forced to either move or develop. >> if you don't disappear, where would go if not
>> well, that's the one big problem. where are the people that actually go to 12 those businesses? where are they going to go? are they going to go
out to kalihi? there's no property available out there for a lot of these small lots, and i don't think you're going to find a lot of places in east honolulu for these
so where are they going to go? that's the biggest concern. i mean, if you take a look at where most of the people that live in honolulu, where do they go for
services, where do they go for car repairs, where do 13 they go for other things, it's central >> we're going to talk quite a bit more about that a
little bit later in our show. let me give christian o'connor a chance. as one of the people who is trying to build a vision for kakaako on a large
landowner's parcel, what did you see as the greatest opportunities there? was it -- i think a lot of people assume it was just to make money, but -- >> it was about
creating a tapestry and a community that 14 was focused on art and innovation and really trying to grow the entrepreneurial base was a lot of the
work that continues to be done in so there is some exciting opportunities where, you know, if we can work funds into the community where we get all these
benefits from land transactions and sales accounts and those moneys can flow in on some of those, not a lot of them but just a little bit can conform to the art
community and create 15that street experience that she would love and create art, unique art that's sourced here, developed here, built here, i think there's a lot
of great opportunity there. and then the amount of body heat and the amount of opportunity that small business owners will have to hopefully flourish
within the space, as long as the landowners try to honor small businesses and local businesses, is a great opportunity as well. so i think -- and
16 it's great because there's a lot of people that are moving into kakaako. 688 ala moana is a great example. they'll have businesses and
they'll be the creators, helpfully some of them, at least, that will start to create those businesses and be able to walk to work and do those things.
>> can we give john whale ann chance here. john, you have been in the kakaako planning and use since 1970 something, right? mid 1970's, yeah.
17 tell me a little bit about what happened back in the beginning for you. what did you think about kakaako back when it was a city and how has it
changed in the last 40 years? >> well, it's changed significantly, but back in the mid 1970's, it was owe kakaako was still under city
jurisdiction, and the city developed a special design district for i think there was also interest from particularly the two major landowners in 18
kakaako to do redevelopment, significant redevelopment in kakaako, and it's understandable why someone would look at that opportunity, because it has
occupied -- kakaako has occupied a special or central location in urban honolulu. it's kind of the bridge between downtown and ala moana and waikiki.
but the city, i think, resisted the idea of losing development in that area because it is so central to the 19 city. >> you know, it's
been 40 years, and right now there's a lot of residential going up there, but why did it take so long for it to suddenly burst under the seam? >> well, there were
a lot of infrastructure deficiencies in the early stages, so the acda had to invest quite a bit in improving the streets. even though there
are still areas remaining to be improved or functional, the conditions were even more challenging 40 20 years ago. so there have been a
lot of investments in infrastructure. s that part of it. and then there are also economic cycles. i mean, there are periods when there was a lot of
construction, and then it tapered down, and then it kind of reversed itself and you see, it tends to come in waves. i think what we're experiencing now has
been a lot of condominium construction, high end condominium construction, but there also have been 21 periods when a lot of affordable
housing has been built in kakaako, particularly in the early periods when the state financed a lot of the housing development there. >> let me ask christian o'connor.
when you folks, when bishop estate, was looking at redeveloping, why did it take -- i mean, this was within the last seven or eight years that you developed a
plan. why is it that that didn't happen 15, 20, 30 years ago? >> i don't think 22that's right. i think it is economic cycles, and i think we had a
much morrow bust plan previously, i think 16 towers, and i may be wrong about that, but it was a very aggressive plan, a lot more density than what was ended up
entitled. so i think that market cycles change, opportunities change. within an organization like that, needs change.
and things where they want to invest their time and energy change, so i 23 think all of those things really allow that great plan to come together and
start to be part of keawe street, and i think the time it took for it to be prepared and what you see today is a great program generally and i think it's even more
beneficial and more appropriate than the previous plan that they had embarked on. so it's timing, it's energy, its effort, and it's just -- you know, it just was
the right time over this last eight or nine years. >> steve scott, when 24 you look around you, what do you see coming? what does it look
like to you? i mean, you're a little businessman -- not a little businessman, but you're sitting there and all these plans are happening. do you feel
reassured at all by planning? >> i think the 800 pound gorilla in the room is rail. and we're going to be affected somewhat because rail is going to go right in
front of us, but if you take a look at the zoning where we're at right now, 25 we're zoned for a 35-story high density residential unit.
>> right where you are? >> right where we are. >> how did that happen?>> you'll have to ask the city. this is the transit point of development
overlay. and this is where i fear many businesses along the rail route will be dramatically affected, because they're going to be forced to either sell out or to
develop, just because the taxes will become such 26 that they're going to be forced to. and as a small business you just can't afford to do
that. >> i have a question. is anything happening on the state or city side to prevent losses to you guys as rail comes through your
corridor? >> there is one bill that is actually at the city council, to help us. one -- there's a couple bills. one is to actually lessen the tax bite,
at least for five years, that -- >> you're going to 27 forgive g.e.t. and n.r.t., right? >> heavy taxes. >> that's the big problem.
the city is looking for funds to build this rail, so they're not really that willing to give up to get rail done. i mean, when you take a look at what's happening in
waipahu and what's had a happening in the pearl area, and it's dramatically affecting the small business out there, and you can have all these programs where you ride and dine or
whatever they have out there, and it's just not working. 28 >> shannon moriwaki, when you see more towers rising around you, do you feel the government has
played a role in controlling what's going up? >> no. no, and in fact the last administration was paid to play kind of administration, so a
lot of the rules that were in place that should have been followed were not followed. affordable housing was not really affordable there. i think the current
board -- thank you, current board -- is looking at changing 29 those rules, which is 140% of area income is $120,000 per household, and that's like more
than three quarters of the population. >> let me ask this as a resident on that particular issue. let's talk a little bit about affordability
because i've gotten several viewer questions. did you -- when you bought there, what was your vision of the kind of neighbors you would have?
i mean, you're looking out at the ocean, right, and so 30 -- >> i think when you buy you're looking at the quality of life that you're
going to have around you, and you knew you were going to have buildings around you. but the intent was that it would be a community. it's not a
it is luxury, mostly luxury highrises, and if they're going for a million dollars, you're not going to have people who are -- a lot of it is offshore money too, and investors,
so if you go around kakaako at night, 31 these 40% of the -- at least 40% of the units are dark. >> that's my 8:00 rule. that's my 8:00 p.m.
go down there and look at the buildings like sharon says and you'll find at least 40, if not 50%, of the apartments, dark. 8:00 at night.
>> they're not occupied. >> i don't think so, and that's the problem, because if you want to build a community, you would have grocery stores. well, we have just
about a couple 32 months ago, we have a 7-eleven and that's our grocery store. until whole foods comes in, i don't know when.
>> affordability question should go to john whalen who's right in the middle of that issue. several questions, but are there misconceptions about this?
i mean, is some of what sharon is saying a misconception or truly at this stage are we looking at mostly high end buyers moving in there, mostly
investors, a lot of 33it offshore money? is all of that true? >> well, i think in the current economic cycle, certainly a lot of the new buildings going up are targeted to that
luxury market and i think that's what's alarming to people, to see so much of that happening at this time. but stepping back a little bit and looking at this
historically over the past 40 years, about 38% of the units that have been built in kakaako are for qualified income households. in other words, people that meet
34 those income -- they're not previously homeowners but are buying in for the first time, and also for renters. >> let me -- i'd
like to get this clarified, because you're talking about -- instead of talking about the snapshot of this current economic cycle, you're saying that back in the
years before this, there were projects that were specifically oriented and that's what you're talking about where that 38% comes from. right, and i think what the
35 current board is interested in doing is trying to reintroduce that cycle of affordable housing, particularly affordable rental
housing, that's really what's needed because kakaako is part of a larger picture in urban honolulu, and the root demand for housing at this point is for
housing. we really need to develop more of that in the urban core. >> chris, you wanted to -- >> i just thing when we're talking about 36housing in this
particular cycle, i think kamehameha schools is so far doing a pretty good job, stanford car, and previous to that, they built 205 units that were all affordable rentals
on long-term ground lease, and in addition to that you've got 680 ala moana and additional units that will be developed on the howard hughes side. so it may not be the
percentages that were there before, but a good way to understand is if you pull the demographic information on the neighborhoods right 37 now.
still looking at 2010, looking at 2015, i mean, the numbers are still lower than kaimuki, kahala, you know, mingle. much lower. you're in the 50 --
mililani. you're in the 50's. so that's a product of the amount of housing supply that's in that area, and it's showing it's a lower income that currently
exist. >> i want to say we have data that shows in the last administration, 38 4,838 units were built, and only 84 of those were in
that lower income level, 80% or less. so if you look at that, that's less than 2%. >> but that's after just a slight lag between -- so the luxury, some of the
higher end stuff, not luxury but the higher end stuff gets built and there's this two to three year gap where the affordable housing stuff will come on line and i
think what we'll see over the next three it five years is that additional affordable housing, 39 803 waimanu, which is a different -- i think it's frank's
project and some other ones will come on line as the luxury has halted its development over time, these products will follow suit so the building will continue.
just it will be in the right, that affordable mix. >> but developers are not going to go to 120% or even lower unless they are required to, right?
so they are building affordable at 140% and that didn't -- the current board is trying to fix that. 40 >> i think what you said is really important is that
140%, there's only so much of a population that qualifies, that fits that bill. so what happens is the developers have to then be in the 80%, 100%, 120%
because they have to sell the units and so that changes. >> the problem is, they can't necessarily afford to build at the current cost of land, cost of
property taxes, cost of construction. so they're hamstrung in some respects because they can't 41 afford to build the lower cost, so unless they have
help either with the cost of the land, the financing, higher densities, less parking, there are obstacles to building lower income housing. >> let me also --
john, i'll respond to that in a second. i want to get to a couple viewer questions because we've already got quite a number, which is a good sign.
one question is if many of the units are being bought by foreign investors part time, will they 42 have an incentive to be part of the community?
let me just first deal with this. are we seeing a lot of foreign investment? i know that a lot of these buildings, they're bought by people who are --
live-in liability companies, which could be a -- limited liability could be a foreign buyer shrouded in a local company. do we know how much foreign buying is
going on and does it tend to be underestimated based on the difficulty in 43 saying really where the money came from for that unit? >> i think you hit
on the question, the important question, because it is hard to fix exactly how much of this is offshore buying. >> it's opaque. >> it's opaque, yeah.
you'll also find some locals who will come in and buy and then flip it to investors, and they never intended to live there. >> just knowing from my past that the
buyers that i saw in land, their price points were lower. 44 they were more moderately priced for people that live they're doing a rental project as
well that's affordable rental, so i think there's two experiences out there, and i've got to say that a and b, from my understanding, was really focused on
local buyers and that's why we -- >> that's what it was all about. >> a and b, they developed waihonua and they were required to have a certain amount of
reserved housing. instead of putting 45 the reserved housing in their building, they said ok, we're going to build our reserved housing on the corner of piikoi
and kona street. they were allowed, the previous board allowed them to walk away from their responsibility to build the affordable housing and they turned the land
over, back to acda who in turn now has tried to enlist stanford carr to build it. should never have allowed a and b to walk away. their responsibility
was to build -- 46>> because i always thought stanford was willing to do that. he's great at it. >> he's great at it, but now there's a lag of about five years.
>> i think we're getting a little bit -- i don't mean to be critical, but stanford carr is a long-term housing developer in hawai'i and he recently turned his focus to
affordability, and i've spoken with him quite a bit. it's really complicated. you need really cheap land, very creative financing 47
and so on, so john whalen, what are you doing to be able to encourage guys like that to build these kind of housing? because this isn't something that acda can do single
handedly. really, the companion piece to this is tax credit financing, rental housing trust funds, other forms of financial assistance from the state
housing agency. >> and there hasn't been enough of that around before. >> there hasn't been enough of that the legislature did 48 appropriate some
accuracy to the rental housing trust fund, so that's helpful. and there are bills now at the legislature to increase the amount of tax credit
financing that's available as well as increase the housing trust fund. >> what about available free public land or -- what's in there? is there land that's
available for this? and how do you seat a priority between building housing, or say having a park? 49 >> yeah, that's right.
competing needs for a community. it's not just about it's also those other parts that make it a real so in some cases we're looking at the possibility now of a
public school and housing project, sharing a site, the former public high school site, as a matter of fact. but we're going to have to -- that's actually the last
piece of public land that's available for 50 any type of use, or new use. so we really have to be looking at either acquiring additional property, maybe
accepting land dedication in lieu of actually building the housing, -- >> which is what a and b did. >> but i think he is saying that comes with an obligation
on their end. >> what i've come across, looking outside of kakaako and looking inside kakaako as we look to answer more issues, right now we're on haole
street, which is very challenging of 51 itself, so what we think is great is when we look at the rental housing fund, what we notice is a lot of issues
associated with how long you have to hold on to those and what your disposition looks like and your aggregate strategy is. has there been any
conversation about making the funds more accessible and useable and creating more optionalty for the developer after they get done and do what they're supposed to do?
>> i know the state housing agency is 52 looking at changes to their procedures because they allow applications or requests for tax credit financing
only for certain periods of time. i think every six months. and now they're looking at accepting requests on a continuous basis. >> that's great.
>> now as far as the terms, the length of the term for affordability, for example, a lot of that is dependent on federal legislation. >> sharon, you've watched this pros
process. 53 do you think the fact that the state is a state to this border and a city to this border and oha to this border and so on and so on, do
you think that's made it better or worse for this whole process of making decisions and doing the right thing? >> i think it's worse. i think it's
difficult because i think for example, in terms of acda, it is a state agency in the city, and so the developers have had to have a free for all because if you went to the city,
you would have had 54 to go through the >> city council and >> yes, and then for example, affordable housing is 120%, not 140% like in the acda.
they could make their own definition. but the other thing is that there's a process and the community gets involved and you have representatives
you can go to and say hey, you know, they're getting a variance without going through a we have a great board now that 55understands that. i think john having
been at the city knows what the process is, so there's a lot more engagement, whereas when we were under acda, a state agency, you go to the city and they
say oh, that's not ours, go there. >> let me ask you another question, sharon, and you guys should all weigh in on this. this is a question from a viewer.
why are income levels for so high in hawai'i? general question, 56 but as you're saying, a lot of this is influenced by laws outside of
but are we respecting the fact that we're expected two income families to buy those properties? we're bouncing some numbers around. a family of four at
140% of the median income is $120,000. >> yes. >> and that's not a one income family of four, you know, so are we doing people >> i think, dayyl, that's what the
community has been going to acda in the 57 prior administration and got nowhere, is that this income level that they use as their definition of affordable was
not affordable. so you know, really very few people, and if you look at the income, median income for honolulu, most of that is less than. three quarters of
the population in honolulu makes 80% or lower than the area median income. >> do you folks feel generally as a panel -- maybe christian, i should ask you this question --
that these 58 rates could be lowered and still be affordable for people to develop? i mean, we would have loved to had our pricing lower on
haouli street as we start to do small lot development to revitalize urban land and our thing was we really wanted to hold it between the five and six if we would have been
allowed to do that but as we got there and the numbers came in and things hit us, we're in the sevens up to 8 and that's just the reality. and even then we are
59 doing everything we can to make it, you know, and to make it a project that is really not -- it's like an endeavor, a social -- just parceling it out,
you're not talking about a big margin you're penciling it out and making sure you pay back everybody what you said you're going to give them. and even then it's
very challenging. so i think what we've talked about, there needs to be -- we need to keep working on getting that nutritious subsidies and make 60
them work for us and start to do that and make sure that land and construction doesn't assume those subsidies. >> but part of it is the development for kakaako was that 20%
was reserved housing for affordable, which would be at that level, and they could go market and higher, which they've done, with the luxury apartments going for
a million or $100 million, is that it was a scale. but at least 20% within that building, it should have been, should have been there. 61
>> you're saying they fudged on all >> let me interrupt for a second to remind our viewers that tonight we're talking about we'd like to hear from you so so call,
e-mail or tweet your comments. call 973-1000. let's move on to another subject that is very important to our viewers. we've got several barbara in hilo, if
the population is likely to double in just 14 years, where 62is the infrastructure to handle all these people? anonymous. how are they going
it handle the additional sewage these buildings will cause? how many new toilets will flush into the old sewer system? are the developers going to pay for a
new system? and john whalen, what have we got going here? i get this question all the time and the city says everything is fine, but do they have enough cavity
and are there huge big infrastructure 63 issues that are looming? actually in kakaako, it's relative to some other areas in urban honolulu.
it does have capacity. the problem is that the area surrounding kakaako sometimes lax sufficient capacity in the sewer lines and the water lines, so you
hear of sewer, water lines failing, or rupturing, and there's a variety of reasons for that. and it depends a lot on the location, and there are pockets within kakaako that
lack sufficient 64 >> what about the sewer issues specifically simple is there enough? >> the sewer has been put in zones and a it was put
down in the 80's, so central kakaako didn't get a lot of these upgrades in because there was an assessment that hit the larger, kamehameha schools. so they absorbed the
infrastructure cost and continued to pay it to these day. but central kakaako, it was a politically untenable thing to try to do, to levy 65 taxes on small
businesses. you're just not going to get that. >> can you give me a sense of how much money we're talking about? >> hundreds of millions of dollars,
$200 million plus, went into sewer systems. >> initially. that's recently. >> so initially it was 16 towers, just in the kamehameha schools area.
so now the owners that were being created and everything was due to anemic lines that didn't have enough flow. 66 it actually causes
erosion. >> leads you to a the question of whether the infrastructure is sufficient. >> it is. >> and you get it when there's a heavy
rain as well because the water fable is so high. >> so steve, you've been a long time small landowner in when you hear the word infrastructure, what does that mean
to you in day to day dollars and cents, getting in and out kind of thing? >> well, we've been on a road for 60 67 years, and it hasn't changed one iota in
60 years. and actually it's very difficult to get the city to come out there and actually patch the potholes. but if you go into these potholes --
>> whose potholes are they? >> on our part of kona street it is the city's potholes, but it's hard to get them out there. the other problem is if you go into
central kakaako, the other issue is private roads. and that is the one hot button issue right now that i'll 68 tell you is going to come to a head very
shortly, and they have a quick case supposed to go to trial in october, and they're seeking some type of remedy before then, but until that issue is resolved, who's
going to be responsible for any of the infrastructure? and it's one thing that christian was earlier. kamehameha, they stepped up.
the assessments were the improvements were made. that's why they can 69 develop the lands they have down there, and howard hughes can do that,
because they have the infrastructure, they have the roads, the curbs, the gutters, the sidewalks. central kakaako, you take your life in your hands if you
walk there. after a heavy rain, cars are going to go by, you're going to get wet. but the big issue is who's going to be responsible for that?
and the problem is they try to do an iv 11 on queen street. >> what does that 70 mean? >> improvement district. and it is going to
be a huge assessment against those small landowners, and we were going to lose parking. we would lose all the parking, the street parking that they have right now.
right now that kakaako land company has all that parking it was claiming that parking on queen street and on other >> you know, john, it's been -- john whalen, as a planner
and a person who was a city official and 71 now you're an appointed volunteer, it's crazy to me that 40 years after we start this process it's still
the wild, wild west that he was just describing. is that a fair description of all these competing jurisdictions? right, for that pocket, the central
kakaako area, i think it's really been unresolved for all that time. >> do me a favor and describe for folks at home when we talk about central kakaako, what
district are we talking about? 72 >> we're talking about the area generally, say, between halekauwila up to kapiolani boulevard.
>> so there's that sort of long rectangle there. >> yeah, then what about that area where they've got all the small businesses covered with really nice
graffiti art? >> that's actually within kamehameha schools, and central >> actually we have an odd building. >> and that's really a great thing to talk about.
there has been a lot 73 of it great opportunity for many different types of people as we've gone through this process, and the only time you get to
see this, i think, it's a seminal moment in all of our lives and our community's life, is that the only time you get an opportunity to create this creative
expression in a community is when you're going through a transition, because it just doesn't afford itself. when you're done with the transition,
i don't want that on 74 my wall, right? >> very quickly finish with this ininfrastructure i think what you're saying is i thought the whole idea of
the state taking this over was to bring some sort of semblance of order. >> right. >> and it doesn't sound like that's happened. i mean, what has
been the failure? >> well, this is where the state really has to interface with the city, because there are proposals for the state or acda specifically to take
75 over all the private whether that's actually going to happen or not, but right now there's litigation under way, so it's mostly private owners
versus private owners. but in the meantime, the problem with acda taking over the streets and trying to develop them is they have to be developed or
improved to a certain standard. acda is not going to be around forever. it shouldn't be around forever. it's actually part of the city and 76
county of honolulu, so it's important that those private streets eventually become part of the city street network. >> do you expect that at some point the state is going
to step away from that district? >> oh, i think so, >> when might that happen? >> not that i'm hopeful or anything. i'm just curious. >> well, i don't
know. but i think it's time for us to look at a transition. >> that happens. what about taxpayers? 77 are taxpayers going
to have to be in for infusing this area with money, people who don't live there, in order to bring it up to speed? >> we still pay city taxes, you know.
we're not separate. the only thing that's separate is the zoning. so all the all being paid through our property tax. >> will there be
enough people in kakaako through this process to generate enough tax revenue so it's not subsidizing the 78 there's going to be a time -- after so
many discussions regarding the private roads, i don't think there's going to be a time soon because of the money that is required, and the city doesn't want it
unless they can somehow improve it to their standards, or the state is not going to get involved unless they can somehow control it. the acda doesn't
have the money to purchase the roads or improve them. i think it's very 79 ambitious to acquire the small landowners to pay for the roads.
>> i disagree, though, and this is why. you've got to think about all the gross sales value of these condos is in the billions of dollars and as they trade
there's a transfer tax, and there's a transfer tax on land when it gets picked up to be developed, and there's a transfer tax and then there's the construction and the
get. so when you look at the pyramid of taxation, it's the 80 same streets and the streets in central kakaako that you're talking about,
smaller lots are typically 5,000 square feet that can't be developed, unless they're consolidated. so how you go in there and consolidate four or
five of those, actually to build a highrise, you're going to need -- basically you're going to kick out all those businesses, and this is what i was
i don't think the city is ready to 81 kick out all those businesses and have them go elsewhere so that everyone in town has no place to go to get the cars
repaired, whatever they're going to do. and that is a big >> but what if we come up with some kind of unique zoning that allows the industrial use to be in the base of
the podium and these lots get traded in, and then that guy goes up and builds at the base, and you retain some of that? >> that was always the idea, but it didn't prove out to
82 be that way, right? because nobody wants to have an auto shop underneath their condo. >> well, if it's affordable. >> i do think there
are ways out of this conundrum, though, because the streets don't have to be -- street improvements don't have to be financed through the usual improvement district approach
where they're subsidized by frontage owners. there are other means to finance all of that. the other part of this is that there could be a solution,
83 is complete streets. the idea of complete streets, so that the streets don't have to be designed to a standard that the city presently accepts, that they
have more flexible design standards, and the model that i always have looked at is granville island in vancouver because it is an amazing place. it's an old
industrial area that has been transformed into a mix of light industrial uses -- my impression of that area, though, is that no one can afford to buy there. there's tons of
84 chinese and asian money there right >> in the city of vancouver, right? >> yeah. well, that's really part of the dilemma of being an
attractive place. all the things you need. but actually, granville island itself really works. i mean, it has -- there's a cement plant there and
there's a boat repair place, and it's all mixed in with small artisan shops and repair shops, a public market. 85 the rail looks just
like our rail is going to look. >> bad topic. >> as a resident there when you talk about this mix, how important is it to you that people like scott are able to
retain their small businesses? >> i want him to be i think that makes a you know, and what john is talking about at granville is we could have the repair shops and the
stores and the markets and a little cafe and all of that integrated. that's a community. 86 >> street experiences. again, you're right.
that's knowing -- the man that actually built this company, you get your slippers from, i know his son and their family. >> everyone talks. everyone talks and
green spaces that we can walk and breathe. make it a really liveable place. we'd love it. >> explore that a little bit. i want to do five
minutes on rail and let me go with scott first -- i mean, steve. i knew that was 87 going to happen. what do fear about the impact of rail?
it's often talked about as being a huge opportunity, transit development around rail stations but as a small business person, what's your great fear?
fear that as i said earlier, those in waipahu and out in pearl city are facing, is that it is going to bring a lot of change that is not necessarily going to be good for
in the short-term obviously construction is a 88 huge issue. we're looking at probably not being able to use the front of our
building for however long it takes them to go past us. >> what do you do? >> well, that's what we're trying to figure out with harp. that's why we're
negotiating with them. but it's going to bring some changes that i don't think are going to be good for the area. there's a lot that is being said about
this t.o.d. overlay, and if you take a look at what they 89 expect, is that that overlay is going to be within a half mile of a rail station.
you have three rail stations, actually four if you start at aloha tower. you have four from there to ala moana. and three of them are two blocks apart.
that's just ridiculous. what are your concerns about rail? theoretically everybody's values go up. you have access to this great
transportation system. 90 >> well, again what steve says, you know, these rail stations, it's not like a bus station, you know.
it's a rail station. it is supposed to be long distances, which you spike out with buses or trolleys or whatever. about rail is that part of the problem
is that the community has not been involved. we have this tailgate overlay that steve talks about. that was created by the previous
administration, with 91 no input from the >> let me just get the definition. so they put a rail station there, then they put a circle around it, right.
then they change the rules about what can happen in there, and -- but at the same time christian has been talking a little bit about the opportunities that people don't have to
have so many parking stalls. >> it's huge. arlington, virginia, is one of the best examples of transit oriented development and growth over the period with these
92 overlays. ? i'm not faulting that -- >> and you're located -- it's the best place to be. >> it's an
opportunity, but the problem is that if, again, a community is to prosper by it and you have development, whether it's affordable housing or other shops, or commercial
development or a light industrial development, that all should help to grow a community. but the community is not involved, and we're the first hit, 93
we're like the direct hit, and nobody asked. i think that's the nobody asked the >> there was a huge process, one that was more intense -- it was not.
>> let's move on i said five minutes on transit, so that was five minutes on transit. a lot of questions about the quality of life. you mention the
elementary school. to you, sharon moriwaki, that they 94 might actually put a school in there? what are the things that are actually looking for
residents that are not making this a walkable place? >> as i talked about it before, a community is all the amenities. it's having a store, a grocery store.
it's having schools. it's having parks. it's having free open spaces, and it's having even services like maybe some kind of, not a hospital but at least some kind of
>> like an urgent care? 95 >> urgent care or something like that. >> a medical office building. >> that's developing.
but if you don't have that, what kind of community do you so i think it is important to have all of that. >> john, with acda, when the free market wants to build
condos right now, it seems like, and you know, who's going to build a medical office building or a grocery store? whole foods is the only one that i've heard about so far,
you know, that's not 96exactly the clientele that -- >> going in with 7-eleven. >> can you reassure the community that they're going to have all these
amenities of a walkable nice area with -- there's one park in the middle of it and that's it, >> i think these things do fill in. i mean, i think the grocery stores will
emerge because there's a market i mean, the more people that are in there, the supermarkets will go in, and i've friday 97 for seven years.
i swear to you, every -- tried for seven years. i swear to you, we tried with safeway. they did their analysis, and there's not enough density.
bottom line. so there's density in six months or so there will be plenty of density. >> but will there be land? >> absolutely. >> for the grocery
store? there's a great spot on cook that's a perfect spot for a 98grocery store. >> and it's been set aside already? >> no, it's not a question of setting
aside, but the development plans for the two major landowners are not completely set, so that there is an opportunity as they come in to try to encourage the
inclusion of certain types of uses in another use that certainly the area needs is child care centers. they need to be located in the mauka area primarily
because that's where the population will 99 be. >> sorry. did you say child care centers? >> the other thing they need down there
is elderly care homes. if you take a look at what is out there, kahala nui, arcadia, and there is nothing in >> it's a land price thing because the nw
group is the best in the business at creating great assisted living facilities and they have this perfect product. they just did another one, i think
100 off the water off kapiolani. and you know what, it's just -- the land pricings. so that affects every development. >> so particular to
make it work. >> the acda should be able to make it so that someone can come in and build. they need a care home. >> originally this was talked about, i
remember there was so much more emphasis on the planning part. we can do this, we can make them do this, we can do this. then over time it
101seems like it evolved to well, this has to be a free market driven we always knew it was free market, but it doesn't seem right now that i'm hearing yes, you'll
have that, yes, you'll have that. what i'm hearing is eventually you will when the market develops it. is that fair? >> we do have to find people to
invest in it, but whatever those needs there are certain ones that we can provide incentives for, like for 102 example, i just mentioned child
care. calculations, that's an incentive for a developer to include a child care center in the building for facilities credit or >> or facilities credits or some
other way. so that's something that we could certainly look at. you saw all of this, and i didn't get to see it because i didn't understand right then.
didn't we overplan for 20 years and got nothing, then we started to back off a little bit and 103 went to form based code, then we saw it flourish in maybe a
particular way that we didn't want it to flourish, but it's flourishing. >> what's form base code? >> that's probably another code. >> it's loose and
prescriptive makes it way more difficult for the developers, because developers are like artists in a way. a lot of them -- >> it's a lot of negotiation for us
to figure it out and figure out where the market is today, and i think a great thing you brought up 104 was medical office. medical office is the only office
product that works in this town right office is tough. and so you're right, and maybe when the cycle crests because it seems to be cresting in luxury segment, then
maybe then the land prices start to sit and we can make those transactions work. so a developer is looking for that opportunity where they can create a
return, invest the capital, produce something good. 105 >> a lot of talk about just the developers think building, but you know, basically you
look at a lot of building that's around in kakaako, and they're vacant. people needing uses, then looking at buildings in more creative ways to how can this be used for
child care, how can it be used as a school, and it doesn't have to be the usual traditional way of oh, there's a building, it's got to be rest
essential, you know. >> let me ask a 106quick -- residential, you quick question about where we are in these cycles because we didn't get -- we got a caller very
early in the show and i've been waiting to ask this can the panel comment on the building that basically got cancelled because sales weren't that
good? john whalen, do you think that we're backing off of this super heated period? that's a 70's 107 reference, so -- mean for kakaako if
the real estate isn't so hot? >> it's happened before. it's happened before, and each time there are some adjustments made. sometimes acda will
sell. there was a period when -- and the reason why we don't have as much as we potentially could have is that for a period, acda actually suspended
the reserved or requirement in order to allow certain 108 developments to go ahead. >> what's the under payment? why are they making
that decision? >> it's jobs. we're keeping the engine of $200 million in investment going. union jobs are there, so the hawaiian dredging,
nordic plc, those are huge earners in our society. so keeping towers going up is very important to us generally. >> steve, you look a little bit jaundiced
at what he was saying there. >> inch there is a 109 definite cycle, and -- i think there is a definite cycle, and obviously in any business there is a
cycle and especially in housing. and most developers want to hit it right, so they get in early, they're able to sell at the price that they want to sell it, and they
can move on. if you're at the end of the cycle, all of a sudden you're building for 200,000 square foot but you can only sell it as $150 a square foot, and that's what
happened to vida. they just ran out of people to buy the 110 units. >> one last question we have time for, john whalen. in how many years do
you think we'll be done talking about kakaako and we'll just look at it and say oh, that's done? >> well, i hope it's before i die. >> thank you all. >> it is a long
time. >> to talk about next week's show, next week we'll examine housing prices in hawai'i. in january the median price of a single family home
on what you reached an all time high of $733,500. 111 prices are spiking on maui and kauai too, leaving many home buyers wondering if they'll
soon be priced out of buying a home. is hawai'i in another real estate bubble? that's next time on i'm darrell huff. a hui ho.
