Albert K. Kanahele, Director of Planning and Property Development for Hawaii Reserves, Inc., explained the nature of HRI's business and outlined some of the company's future plans in Laie during the School of Business' entrepreneurship lecture on February 16 in the Ballroom.
"Hawaii Reserves is a wholly owned subsidiary of Deseret Management Corporation, the for-profit arm of The Church of Jesus Christ of Latter-day Saints. Historically, the Church has had a presence in Laie since the mid-1800s, and our primary focus is to manage that land," Kanahele said.
"Laie went through several phases of community development over the years, starting with the discovery of underground water resources over 100 years ago by missionaries. Water became a key element in the development of a successful agrarian economy," he said, noting that successive waves of development followed.
"Hawaii Reserves, which was formed in 1993, is the successor organization to all of those. HRI has a unique role of both engaging in for-profit activities while simultaneously providing services typically handled by a municipal government. For example, we own and operate Laie Water Company and Laie Treatment Works."
"In addition to the utilities, we take care of the parks, the roads, the streams, and other common areas of the community," Kanahele said, pointing out that unlike a municipal government, HRI does not have any taxing authority. "Therefore, the costs of maintaining Laie must be absorbed by HRI, and ultimately the Church," he added.
"The recently completed Hale Laa Blvd. is an example of some of the work in which we engage. It's the result of several years of collective effort by company employees, professionals and contractors."
Kanahele — who is responsible for managing, coordinating and facilitating HRI property development — broke the process into steps. "We start with concept development. Another step is site planning, where we decide how we would layout a project. There's also an architectural design phase, an engineering phase and entitlements — the process by which we obtain governmental approvals for the projects. This is a difficult phase because we have very little control over what the government does."
"For example, before you can do a development close to the ocean, you have to get a shoreline management permit. That is a long and arduous process. Another phase of development is budget, where we have to convince the developers why a project is feasible; and the final process is construction."
Kanahele pointed out the current Laie Master plan came as a "result of two years of intense activities and efforts" by HRI staff, engineers, consultants and representatives from BYU-Hawaii, PCC and the community. "The plan was ultimately adopted by the City in 2000 and integrated into their island-wide master plan. It's basically a tool to guide us for the next 20 years," he said, adding among other features the plan calls for expanding Laie Shopping Center, replacing Laie Inn with an enlarged hotel, and adding affordable housing in the community.
Kanahele said the new 220-unit all-suites, limited service, moderate priced, Polynesian-themed hotel will be built in two-phases on the site of the current Laie Inn and the vacant lot on the corner of Naniloa Loop and Kamehameha Highway. "All of the current uses on the property will have to be removed [including Laie McDonald's, Laie Inn and Chevron]. To serve the hotel guests and community, a 12,000 square-foot restaurant and banquet facility will be built on the site."
"We are also constructing a 5,000 square foot retail and visitor center facility, where we hope to sell a line of products with the Hukilau brand. Our purpose is to bring local products into a retail environment where we can showcase them and provide a home base for members of our community. It will also be a place where visitors can learn more about Laie."
"We believe this particular development will be of tremendous benefit to the university, the PCC and community, because it will provide jobs," Kanahele said, adding it will also probably include a hotel training internship program for BYU-Hawaii hospitality industry majors.
Asked when the hotel would be built, Kanahele answered that HRI is currently "going through the entitlement processes" that include a comprehensive environmental assessment. "There are many requirements that have to be met, which can take up to a year-and-a-half to complete. Our best guess, and don't hold me to this, is we might break ground in late 2006 or early 2007."
Asked if HRI has the "skill sets to support such a hotel," Kanahele replied HRI will lease out the hotel management and restaurant operations. "The hotel management firm will bring in its own training program with them."
Asked how much the project will cost and where the money is coming from, Kanahele explained final costs "are a moving target" because of timing issues; but he estimated the project would cost more than $20 million, and that these funds would ultimately come from the Church.
"For example, Laie Shopping Center is owned by Property Reserves Inc., which is a nonprofit arm of the Church that holds all of the land in Laie in trust. HRI derives some of its income from management fees for overseeing these properties."
Referring to the housing portion of the Laie master plan, Kanahele said HRI intends "to develop some of the 700 acres of land we recently purchased in Malaekahana into affordable housing."
"Affordable housing in Hawaii is a very difficult term to define. It usually refers to housing priced within the income range of working people, but under that definition almost nobody in Hawaii could afford housing," Kanahele said.
However, he explained HRI is investigating a leasehold model that could help. "The high price of homes in Hawaii is because the price of land is escalating at an incredible rate. If you take out the land factor as a mitigating element in the escalation of housing prices by creating a leasehold interest that's capitalized over 30 years, then you can fix the price of the development at a relatively low price," Kanahele said.
He stressed this portion of the plan "is a long, difficult process."