Honolulu Weekly

Kahuku, Oahu’s northernmost reach, used to feel like the end of the world. The sound of the name evokes the dark nights of the Country, black ridges stretched beneath starry skies, the white rush of waves. Nearly 30 years ago, despite community opposition, the Turtle Bay Resort interrupted all that wind-filled space with the hotel that straddles black-lava Kuilima Point. Condos, villas and cabanas were added along the two golf courses and sections of beach in the historic district, or moku, of Ko’olauloa.

Over 22 years ago, in 1986, the then-owners were granted approval to add five more hotels–three along the shoreline to the west, and two to the east–and 1,000 more condo units. These, however, were never built. There’s still just the one hotel rising above the ironwoods and palms that form a deep green fringe along the resort’s five miles of shore. And it still feels like Country, especially when the trees lash in the wind and children swim and run in the rain.

The unbearable prospect of six hotels

The community got used to the single hotel. ‘We fought the hotel, we worked hard on the shoreline setback and beach access, but once it went in, we supported what was there,’ says Creighton Mattoon, a founding member with his wife Cathy, of Keep the Country COUNTRY, a group that has worked on creation of state parks at Malaekahana and Sacred Falls, and continues to defend public access at Turtle Bay. ‘Cathy worked at the golf course for 21 years,’ Mattoon says. The resort has ‘been generous to community groups and local charities,’ says Mark Cunningham, a retired lifeguard and member of the Defend Oahu Coalition.

But two and a half years ago, the revival of long-dormant expansion plans for the additional hotels and condos awakened passionate opposition. A grassroots Ko’olauloa-North Shore Alliance has been formed; its 25 member groups (and growing) include Defend Oahu Coalition, Keep the Country COUNTRY, Keep the North Shore Country, three North Shore community associations, private non-profits such as Trust for Public Land and Surfrider Foundation. ‘We’re trying to keep the entire Ko’olauloa rural,’ Mattoon says.

‘The community doesn’t want five more hotels. It wants more open space,’ says Gil Riviere of Keep the North Shore Country. Cunningham lists the problems with the proposed expansion. Kahuku resident Margaret Primacio of Defend Oahu Coalition says that, by her estimate, ‘at least seventy-five percent’ of the town’s 1500-odd residents oppose the additional hotels and condos. But while ‘the grassroots people are against it [the additions], the Kahuku Community Association is in favor of it–their board of directors voted to endorse the expansion. It’s the only community association in the North Shore that doesn’t oppose it,’ Primacio adds with a laugh. While some hotel employees support the expansion, she says, others are against it ‘because they live in the community and know the traffic, the competition for housing.’

The quality of life that individual taxpayers, ‘not developers,’ want is at issue here, Cunningham says. ‘I’m not against hotels per se. I’m against this precious jewel getting urbanized.’ Historically, he says, the city and county designated the entire North Shore as rural ‘and supposed to stay that way, which is why Kamehameha Highway is still only two lanes.’

Already, Cunningham points out in a walk along neighboring Kawela Bay, where the artist Wyland owns a large beach house, only one-third of the twenty-seven homes are occupied by full-time residents. The rest are vacation rentals and second homes, and empty much of the time, he says. Common sense would dictate they compete with the resort, although no one has numbers, and the hotel’s occupancy rates appear to be a closely guarded secret.

Some Turtle Bay employees are leery of the expansion because they see it as driving guests away. ‘When you develop just for development’s sake, you do so to the detriment not only of the community but of the guests you’re trying to attract, those trying to get away from Waikiki,’ says Tim Vandeveer, who has led Turtle Bay horseback tours for five years and was named Kuilima’s Employee of the Year in 2004.

‘Like the majority of workers who interact with guests, I’m adamantly opposed to the expansion plan,’ Vandeveer says. ‘The guests I meet are coming to see the beauty of the North Shore, of nature. If that goes away, people will stop coming here.’ And that’s not just off-island visitors. ‘This is where we [the locals] go to get away. I take my kids out there,’ says Ted Liu, director of the state department of business and economic development and tourism.

In a bedroom community that already suffers long commutes, two-lane Kamehameha Highway couldn’t support the traffic produced by such an expansion, Alliance members say. Water and sewers may also be inadequate. Increased shoreline development may negatively impact the endangered monk seals and turtles who, along with surfers, swimmers and fishermen, ply the clean offshore waters and rest on the sand. From a cultural standpoint, Native Hawaiians are concerned about the iwi kupuna, bones of ancestors, buried in the sand dunes; an archaeological study last year recommended a 750-foot shoreline building setback to protect the bones.

Governor Lingle announces intention to acquire and preserve

In her January State of the State address, Governor Linda Lingle excited both camps with her declaration of intent to acquire and protect, as part of ‘the real Hawaii,’ Turtle Bay’s 1300 or so acres (850 makai and more than 400 mauka.) In a recent op-ed the Governor wrote, ‘there isÖa time and place to preserve our natural environment and our heritage. The Turtle Bay property on the North Shore is the place and now is the time.’

‘I just felt the biggest load taken off my shoulders,’ says Mark Cunningham of the Governor’s announcement. As this article went to press, Alliance members were looking forward to a community meeting, or ‘talk story,’ with the Governor, to be held at her request in Kahuku High School Cafeteria on Tuesday evening, March 4.

What’s the property really worth?

Governor Lingle’s interest in a state acquisition of Turtle Bay dates back a year and a half, Liu says, to a mortgage foreclosure lawsuit filed by Credit Suisse against owner Kuilima Resort Company, a subsidiary of Oaktree Capital, a Los Angeles private equity firm.

When it comes to valuation, mainstream press reports to date have focused on the approximately $400 million that was borrowed on the property. The owners have claimed a value of at least $400 million for the property as is, and up to $1 billion in development entitlements. ‘But how much a property has been leveraged for isn’t necessarily what it’s worth on the market now,’ Riviere says. And the $1 billion appraisal seems highly inflated and speculative, to say the least, as it’s based on development permits granted in the booming eighties, while we’re now in the midst of declining real estate and capital markets following the subprime mortgage debacle. ‘There’s also the uncertainty, from an investor standpoint, of community opposition to more development,’ Riviere says.

In 1999, records at the bureau of conveyances show, Kuilima paid about $53 million for the 1300 acres at Turtle Bay. Over the course of the last nine years, the owners may have, by the most generous estimates, put in up to $100 million in improvements. Kuilima has also built and sold some high-end condos along the shore. The hotel itself, occupying 55 acres and including 42 oceanfront cabanas, had a tax assessed value of $108.9 million in 2007.

‘Say they’ve spent $150 million on the property, and we know they borrowed $400 million. That means there’s up to $250 million unaccounted for,’ Riviere says. The foreclosure documents note that there was a distribution to beneficial owners (investors) of an undisclosed amount. Whatever happened to the$250 million, it’s not being paid to the creditors.

Credit Suisse is seeking upwards of $280 million in late principle and interest payments. In 2005, the property was encumbered by a first mortgage of $278 million and a second mortgage for $100 million. According to the foreclosure files, the first mortgage has a market value of 55 cents on the dollar, and the second mortgage is valued at a mere 22 cents on the dollar.

Meanwhile,some of Turtle Bay’s owners and managers have protested that the Governor’s announcement has provoked a climate of economic uncertainty for the resort. Bob Boyle, vice president and general manager of Turtle Bay Resort, wrote in a March 4 Advertiser op-ed piece that the possibility of state acquisition has already hurt business. ‘A major U.S.-based wholesaler removed us from its Web site, representing a potential loss of $500,000 this year in room revenue alone,’ Boyle wrote.

What Boyle didn’t address is the uncertainty that may be raised, from the travel industry’s point of view, from Kuilima’s being subject to foreclosure proceedings.

Asked about the property’s market valuation, Ted Liu declined to comment on specific sums, citing the need to preserve good faith in negotiations with the owners. ‘We’re taking a very serious, professional, businesslike approach because this is important to the future, not only of residents of the North Shore, but to all of us as we seek a more balanced approach to economic development, taking into account conservation lands and open space,’ he said. ‘We prefer not to negotiate the details of the deal in the media.’

Forging ahead

Despite its troubled economic straits and various uncertainties, Kuilima says it plans to press on with the expansion. In November 2005, it asked the city department of planning and permits to approve an amended subdivision plan. ‘This was the city’s opportunity to ask for a supplementary environmental impact statement (EIS), as the original one was over 20 years old,’ Riviere says.

When the city didn’t ask for a supplemental EIS, Keep the North Shore Country and the Sierra Club filed suit. For a time, their action was consolidated with that of Local 5 of the hotelworkers union, which had been in a three-year labor dispute with Oaktree. Oaktree then settled with the union, which dropped its suit. The remaining plaintiffs were turned down in November 2006 by circuit court judge Sabrina McKenna, and now the case is before the intermediate court of appeals.

Thus far, tentative subdivision approval has been granted by the City department of planning and permitting. The approval, which expires March 29, imposes various conditions that the owner must meet, from making sure that the water wells and waste treatment facilities are up to standard to ensuring that the state department of transportation has no objection.

In addition, a citizen planning advisory committee is seeking to amend the Ko’olauloa Sustainable Community Plan by removing a section of the document that includes the expansion of the Turtle Bay Resort–a section ‘that was slipped in during a time when there was no activity and no one was paying attention,’ according to one Alliance member who asked not to be named.

A Green Precedent: Pu-pu-kea Paumalu-

Some North Shore morning skies are the color of the inside of an abalone shell. Across the blue bays, the Wai’anaes are the color of purple poi. Make you hungry. Floating offshore at ‘Ehukai, between Pupukea and Pipeline, you look inland at an unbroken sweep of undeveloped green ridges and cliffs. There’s not a building looming, no rootops breaking the ridgeline, no windows glaring down on you. You’re swimming or surfing in transparent waters that deepen to turquoise when you dive and open your eyes, and at low tide there’s scarcely any salt to burn them. It’s that clean. It wouldn’t be if a planned development sat on that ridge, which almost happened after Japan’s Obayashi Corporation bought 1,129 acres in the hills and along a slice of shore–a mile-long curtain of green– and announced plans to develop luxury residences, golf courses and an equestrian center.

That was in the 1980s, and in the intervening years, activists such as Blake McElheny of the North Shore Community Land Trust and Jack and Kim Johnson of the Kokua Foundation, working with the Trust for Public Land, raised private and public support for a public acquisition of the property. Public monies were provided by the U.S. Army (which has a program to conserve open space around its training grounds), the National Oceanic and Atmospheric Administration’s Coastal and Estuarine Land Conservation Program, the City and County of Honolulu and the state. The transfer of the lands to city and state was celebrated in December of last year.

‘Pupukea Paumalu is a good model for what can happen at Turtle Bay,’ Hong says, emphasizing the cooperative nature of all the projects TPL has worked on here, including the transfer of nearby Waimea Valley to the Office of Hawaiian Affairs. ‘It’s everybody in one canoe paddling frantically to get where we want to go.’ Hong notes that an economic downturn in Japan in the 1990s, along with ‘a very committed community’ that discouraged other buyers, also helped lead to Obayashi’s change in strategy.

Given the current economic downturn and community opposition facing more building at Turtle Bay, topped by the momentum provided when the Governor got on board, it’s not much of a stretch to imagine its plan undergoing similar positive change.

Kahuku’s kuleana

The next step, all parties seem to agree, is to map out the specifics of how natural and cultural resource preservation and economic sustainability can coexist for the benefit of the community, the island, the state, visitors and business.

‘In our vision statement, we support not expanding the existing footprint, but making what exists as economically viable as possible in an environmentally friendly way,’ says Hong.

‘Could they operate the hotel at a profit? It seems to be doing well, and the community wants it to continue,’ Riviere says, adding that, in addition to resort jobs, there might be opportunities to develop tech businesses. And many in the community would welcome more acreage devoted to agriculture (the Turtle Bay hotel proudly serves Kahuku-grown vegetables). ‘I think, in addition to making the resort viable, there are some creative things we can do: diversified agriculture, wind energy–Kahuku is famous for its strong winds, and now we have the technology to really harness them and provide affordable energy to the community; and creative industries–digital media and film,’ Liu says. ‘People shouldn’t have to drive an hour and a half each way to work.’

According to spokesperson Russell Pang, ‘The Governor wants to hear what the community’s vision is, including their ideas on how to purchase the property, as well as how to preserve and manage it going forward.’ Her March 4 community meeting in Kahuku is a healthy step towards turning Turtle Bay into a public preserve with a viable resort, on the existing footprint, as its economic hub.

Next on the wish list, ‘we want the Mayor to get on board the way he did with Waimea,’ Riviere says. Cunningham warns, ‘If the City grants the final subdivision approval, the owners will argue a taking and that now it’s worth a billion.’

But many community members, like the Governor, view state acquisition as a giving rather than a taking. ‘It’s about wanting to save some natural resources for future generations,’ Primacio says. Vandeveer sees Turtle Bay as a tipping point. ‘When people hear bout all the changes being proposed for the Country–expansions at Malaekahana and Laie hotel, gentlemen farmer ranchettes on the Dillingham property–they’re all the more eager to preserve its character at Turtle Bay.’

Besides, it’ll never be Waikiki, so why try? ‘It’s on the Windward side–there’s rain, barrier reef, wind. We always jokingly refer to it as the last resort,’ Cunningham says. With the kind of initiative this community is showing, maybe it will stay that way.