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Perhaps you’ve seen those sleek and ubiquitous commericals airing during local TV newscasts lately? The ads trumpet Waikiki’s future while showing marvelous architectural drawings, then vaguely asking for your support.

What those ads are about: plans are afoot to demolish an eight-story hotel on the beach at Waikiki and replace it with a 26-story condo/hotel tower. This summer, the project’s sponsors are asking the Honolulu City Council to grant four different exemptions to the law regarding building height, density and shoreline setback.

The stakes are high. The beach tower is a relatively small but important part of hotel owner Kyo-ya’s $700 million redevelopment plan for its Princess Kaiulani and Moana Surfrider properties in the heart of Waikiki. Located at the spot where Kalakaua Ave.’s canyon of high-rises opens up to Kuhio Beach Park, the redevelopment site has been dubbed “Ka Piko Waikiki” by Kyo-ya, the longtime hotel owner and leaseholder of several former royal properties owned by Kamehameha Schools. Since 2004, Kyo-ya has been controlled by New York-based Cerberus Capital Management, one of the world’s largest private investment firms.

The Diamond Head Tower, as it’s called, would be squeezed into the last private lot along the beach, the narrow lot adjacent to Kuhio Beach Park currently occupied by the 52-year-old, 141-room Diamond Head wing of the Moana Surfrider Hotel. The lot is so narrow, in fact, that Kyo-ya is asking for a variance to the state’s 40-foot waterfront setback law in order to accommodate a beachfront pool. About 40 private residences would occupy the higher floors in the tower, stacked atop 185 hotel rooms that reportedly might be marketed and managed as a W Hotel.

There’s only one catch: The tower is a direct challenge to well-established city law.

WWWSDD?

Honolulu severely limits beachfront towers within what is known as the Waikiki Special District (WSD), created by the Honolulu City Council in 1976. The WSD’s strict rules, modified several times, were an almost visceral reaction by the city to the behemoths that sprouted on Waikiki beach in the late 1960s: the Rainbow Tower at the Hilton Hawaiian Village (1968) and the Sheraton Waikiki (1971). WSD rules imposed limits on the height, density, setback and shoreline encroachment for all new construction in the district.

According to veteran planners familiar with the WSD, the rules were also an esthetic and sentimental matter, concocted to protect the scale–and the pride of place–of the historic Moana and the Royal Hawaiian hotels, both of which were and are owned by Kyo-ya.

“The most critical area for the tourist industry and the district is Waikiki Beach,” wrote the city’s director of Land Utilization, George Moriguchi, in a 1976 report to the Council recommending passage of Bill 144 to create the WSD. In order to “enhance the beach and to provide for a landscaped setting at the District’s prime public space,” Moriguchi’s staff devised a minimum 100-foot setback from the high-water mark for any future beachfront construction. And to prevent any more overwhelming towers, the DLU staff came up with a shoreline height setback “envelope” determined by an imaginary line that begins at ground level at that new 100-foot shoreline setback boundary and then extends mauka at an upward 45 degree slope. The geometry enforces a one-to-one ratio between setback distance and height for any new beachfront building and creates a remarkably low-profile allowable building envelope.

This is known as the “shoreline height setback.” Of course, even in 1976, most buildings along the beach already exceeded the shoreline height setback and were thus “grandfathered” under the law. The purpose of the restrictions was to prevent further beach crowding–and gradually to repair Waikiki Beach’s low-rise character when (and if) wholesale redevelopments might occur.

Halekulani (1981) is the only new hotel built on the beach since the new rules went into effect, and it shows. The hotel’s enduring reputation as the best resort in Waikiki surely has to do with the generous open spaces along its seawall and the stepped-back design of the building itself–both of which were mandated by the WSD.

Hardships?

Kyo-ya’s application for variances to WSD law claims “hardship.” Executive Vice President of Kyo-ya Greg Dickhens called it “a unique set of circumstances.” The company argues that if the law were strictly applied, the company would be deprived of the use of its land, which, in this case, is the narrowest plot on the beach. In fact, under the law, a new building could be built on the lot, but it would have to be 17 percent smaller than the existing eight-story tower. According to one planning veteran, the usual standard for granting a variance under a “hardship” claim is that no use for the land can be found otherwise. In Kyo-Ya’s case, he points out, there’s already a 141-room hotel on it.

The other interesting argument Kyo-ya makes is that it is not proposing redevelopment (i.e., demolition) of the historic Moana (or “Banyan Wing”) next door. Opened in 1901, the Moana is the only Waikiki hotel listed on the National and State Register of Historic Places. “Kyo-ya has foregone considerable financial gain by choosing not to redevelop the Banyan Wing,” the company points out in its Final Environmental Impact Statement (FEIS) for the project. “If Kyo-ya chose to redevelop this portion of the complex, it could develop a 304,260-square-foot hotel or residential tower that meets all LUO [Land Use Ordinance], WSD, and PDR [Planned Development Resort] requirements.” The “choice” Kyo-ya has regarding the survival of the original Moana Hotel building is surely limited, at least by the public uproar that would meet any plan to demolish it.

Kyo-ya also argues that, because its situation is unique, its applications for variances do not challenge the underlying zoning laws. But is that true? There are several other aging beachfront properties within the WSD that, over the next few years, could be considered candidates for redevelopment on a much larger scale–the 16-floor Outrigger Hotel between the Royal Hawaiian and the Moana, the 10-floor Outrigger Reef Hotel next door to the Halekulani, the 15-floor Waikiki Shores condo, the 14-floor Hale Koa Hotel in Fort DeRussy, and the 15-floor Alii Tower at the Hilton Hawaiian Village. Two Kyo-ya properties could be added to this list: the 23-floor Tower (or Ewa) Wing of the Moana Surfrider, and the 17-floor Tower Wing of the Royal Hawaiian Hotel. Could owners of these properties claim hardship and line up to ask the city for variances?

“If I were them, I’d try to get a variance too,” says Outrigger Hotels CEO David Carey when asked about Kyo-ya’s application and the precedent it might set. “It’s an equity issue vis-à-vis other beachfront properties.” In a July 2009 letter to the Department of Planning and Permitting, Carey expressed “strong support” for Kyo-ya’s plans for the Princess Kaiulani redevelopment but said nothing about the Diamond Head Tower proposal and its necessary variances from the city. “If a variance is granted to the property owner, the same thing should be granted to all. You have to wonder about the equity.”

A need for “product.”

Revitalization of the resort district at Waikiki has been under way for several years now. Former Honolulu Mayor Jeremy Harris kicked things off with new landscaping and sidewalk improvements along Kalakaua and Kuhio avenues in the late 1990s. Since then, Outrigger Hotels’ Beach Walk redevelopment along Lewers Street and the renovation of the adjacent Royal Hawaiian complex, jointly executed by Kyo-ya and Kamehameha Schools, have transformed much of the key ground space in the urban center of Waikiki, at a combined cost of close to three quarters of a billion dollars.

Kyo-ya’s redevelopment plans for the Princess Kaiulani and Moana Surfrider hotels have been widely hailed by Waikiki stakeholders as the logical next step in the rejuvenation of the district, as a necessary upgrade for the Waikiki “product.” The plans call for demolition of the two smaller, 11-story hotel towers on the 4-acre Princess Kaiulani property, as well as the lobby, pool area, and retail shops along Kalakaua Avenue. A single 34-story, condo-hotel and residential tower, the Pikake Tower, will rise in their place from a two-story retail podium, which is set back from the property line along Kalakaua Avenue. The 28-story, 666-room ‘Ainahau wing of the hotel, circa 1970, will be renovated as a freestanding and full-service hotel.

The community debate about the Kyo-ya project has so far focused on the fact that, according to the project’s Final Environmental Impact Statement (FEIS), the number of hotel rooms at the site will actually decrease by about 150, despite an overall jump in floor area from 780,000 to 1,067,000 square feet. The new square footage will be given over to making the hotel rooms bigger and accommodating about 100 private residences and about 200 “condo-hotel” suites. But these numbers are fudged and cannot be firm. The FEIS cautions, “The precise mix of units could be modified based on demand at the time of construction.”

The mixing of public and private accommodation is a relatively new trend in Waikiki, where city planners have long sought to keep residential development mauka of Kuhio Avenue, while devoting the makai areas to hotels and retail. The notion of a major player in the hotel business like Kyo-ya reducing its long-term investment in hotel operations in favor of the short-term benefit of high-end real-estate liquidation would seem to raise serious questions about the future of Waikiki’s hospitality industry — and the jobs that go with it.

A hearing

At a June 1 public hearing in McCoy Pavilion at Ala Moana Park, the city’s Department of Planning and Permitting (DPP) heard testimony pro and con Kyo-ya’s project. The department was reviewing Kyo-ya’s application for four concurrent permits that would exempt the development from existing density, height, open-space and shoreline setback laws.

Kyo-ya’s project architect Robert Iopa kicked off the hearing with a PowerPoint presentation outlining the project and stressing its benefits, including increased pedestrian open space at the bustling corner of Kalakaua and Kaiulani avenues, removal of passenger loading zones from the street to an interior elevated motor court, and enhanced mauka-makai view corridors. He noted that the motor court will feature a palm-lined drive commemorating the driveway at the long-gone Waikiki estate Ainahau, where the real Princess Kaiulani once lived. The distinctive concrete arches atop the suave, glassy Diamond Head Tower were designed, he explained, to pay homage to surfing culture, specifically the racks of surfboards next door at Kuhio Beach Park. Several times he mentioned Kyo-ya’s plans to donate 100 new racks to add to the 600 surf racks managed by the city in the park.

About half the turnout of 200 at the hearing was made up of red-shirted Unite Here Local 5 hotel workers wearing silk-screened slogans: “Jobs Yes, Condos No”… “No Job Guarantees? No Condos!” and “Hope for Housekeepers.”

“We want hotel rooms that people can return to, not condos where a new owner just comes in and lives there and doesn’t need the services of a bellman, or housekeepers, or maintenance guys,” Godfrey Maeshiro, a bellman at the Princess Kaiulani for 44 years, told DPP officials. “We want the redevelopment, but we want assurances that we can come back to the jobs we love.”

Local 5 worker Darrell Asato, a seven-year employee of the Princess Kaiulani, called the project a “gigantic endeavor” that will be “one of the most important events in the lives of over 800 workers.”

However, he said, his union “has serious concerns regarding the nature of this project. We feel this project might be headed in the wrong direction, contrary to the best interests of the workers. If the intent is to revitalize both the Princess Kaiulani and Moana Surfrider into even more appealing hotels in Waikiki, then we are all for it. However, we have concerns that the focus of the project is to create more condominiums or more condo-hotels, thereby diminishing the allure of Waikiki as an internationally known tourist destination.

“Members of the DPP, Cerberus might not truly understand what’s in the best interest of the workers of Hawaii,” Asato said, referring to Kyo-ya’s parent company. “They are based in New York. We live in Hawaii, have lived in Hawaii for generations and will continue to live in Hawaii for generations to come. We, the workers of the PK and Moana, should have a voice in how our future is to be determined. Thank you.”

A third of the crowd consisted of serious-looking men wearing crisp aloha shirts. One by one, they got up and supported the $700 million project, urging DPP to recommend approval of the permit applications. They came from the Waikiki Improvement Association, the Hawaii Hotel and Lodging Association, the Waikiki Neighborhood Board, the Diamond Head/Kapahulu/St. Louis Neighborhood Board, ABC Stores, the Hawaii Carpenters Union, the Pacific Resource Partnership union of contractors and carpenters.

“Waikiki needs new product,” said Kyle Chock, executive director of Pacific Resource, “not 50-year-old dilapidated product.” He noted that 60 percent of his union is currently unemployed.

Marleen Akau, representing the Waikiki Improvement Association, got up to lend her organization’s support to Kyo-ya. “This project will replace small, aging hotel rooms with a variety of product,” she said. “By enhancing the visitor arrival and overall guest experience at these two properties, we believe the visitors will be more likely to return to Waikiki.”

David Lewin, general manager of the Hyatt Regency Waikiki, introduced himself. His hotel’s two 350-foot towers are just Diamond Head of the Princess Kaiulani property–and directly mauka of the Diamond Head Tower site. The impact of that tower on the Hyatt’s inventory of pricey “ocean view” rooms is a given.

Lewin was brief: “First off,” he began, “I want to support the PK project. While we will probably be one of the three most impacted neighbors, we think it’s a great redevelopment and an excellent addition to Waikiki. At the same time, I’m opposed to the Diamond Head Tower development, largely because of the height restrictions that will be exceeded and — selfishly — because of the impact it will have on our property. Thank you and have a great day.”

A diminutive Lucy Gay introduced herself as a member of the Concerned Elders of Waianae. In a sharp and knowing voice, she reviewed several questions and observations she had about Kyo-ya’s project:

What was going to happen to the demolition waste from the three knocked-down towers, especially with the maxed-out Waimanalo Landfill in her neighborhood? Had anyone thought about asbestos mitigation measures during demolition? She complained about the Diamond Head Tower infinity-edge pool impinging on the public beach: “I don’t’ get it,” she said. “The beach is right there and you need a pool on public land?!

“What I think I’m experiencing,” Gay reflected after noting the millionaire apartments in the sky, high above Kuhio Beach, high atop the proposed Diamond Head Tower (“Trump kind of stuff,” she called it), “is a push toward third-world status … toward a new society for us here in Hawai’i.”

And what’s all this talk about 100 surf racks, she wanted to know. “Why 100? Why not 200? Why not 50? How did they get that number?”

Lastly, she reminded the room, now roused from its stupor and amused by her feistiness, “Cerberus… Wasn’t he that guy who guarded the gates of Hades?”

Where it stands.

On June 29, the DPP transmitted to the City Council its recommendation supporting Kyo-ya’s applications for a Shoreline Management Area Use Permit and a Shoreline Setback Variance. The Zoning Committee is scheduled to hold a special meeting/public hearing July 6 at 9am on Resolution 10-185 granting the permit and variance. The current deadline for City Council action on the applications is August 28, 2010. The two additional permits required under the Waikiki Special District ordinance are still under consideration by the DPP.

Meanwhile, during a particularly high tide on an early June afternoon, Waikiki’s gentle waves lapped at the makai-Diamond Head foundation of the old Moana and slipped over the retaining wall in front of the Diamond Head wing.

Three weeks later it was announced that the state will spend $2.5 million on a beach replenishment project for Waikiki beginning in January that will widen the beach between the Royal and the Kuhio Beach crib wall by 37 feet. Kyo-ya will bear $500,000 of the cost; taxpayers will pay the rest.