Buying Rail Estate
As the mayoral race heats up and the future of the city’s proposed $5.3 billion, elevated rail line potentially hangs in the balance, it appears that the Honolulu Authority for Rapid Transit (HART) is running its own race: against time. With an initial allocation of $70 million for property acquisition, HART has begun buying up real estate it will need for a 20-mile-long, 40-foot-wide easement, as well as the acreage required for 21station stops along the proposed train’s high-flying route.
Although the plan is to build the heavy-rail line in segments beginning out west on the ‘Ewa Plain, records show HART is buying parcels on Dillingham Boulevard, Waimanu Street, and elsewhere in central Honolulu, making landowners sweet offers that have mostly been accepted.
WIth 16 parcels purchased outright at a cost of roughly $20 million, HART claims that it has not yet had to resort to taking by eminent domain. The city still needs to acquire an additional 22 “full take” properties, as well as 133 “partial acquisitions.” HART’s real estate acquisition manager, Jerry Iwata, explained: “Most of the partial land acquisitions involve only a sliver of property and would not lead to the displacement of residents or business owners.” One such sliver, for example, will come from property owned by Kamehameha Schools fronting Dillingham Boulevard between Waiakamilo Road and Kouhou Street.
Of course, it is the landowners whose properties fall under the “full take” category who will feel the full impact of HART acquisition. Florante Sebastian owns a commercial lot on the corner of Dillingham Boulevard and Mokauea Street in Kalihi, but not for much longer. He recently accepted an offer of $2.8 million cash for his roughly 15,000-square-foot property, the site of his own and two other businesses/lessees. Sebastian’s land is slated to become the Kalihi station platform, a structure that will subsume his parcel and another quarter-acre lot across the street. “I am really unhappy to lose this corner property,” Sebastiantold the Weekly. “It is future business lost. But there is nothing I can do.”
Sebastian says he was not allowed to see HART’s appraisal of the value of his property, but at a property tax assessed value of $2.27 million, it would seem that HART was in a generous mood. “It was a fair market price,” Sebastian admits. “Besides, why resist it? [I]f they end up condemning the property, well, you don’t know what you will get.”
In most cases thus far, HART has offered property owners cash that exceeds the city’s assessed value. In another example, the agency paid $287,000 for an approximately 9,500-square-foot plot assessed at $40,000, in the Banana Patch neighborhood of Pearl City. “Tax assessment is not a basis for determining an acquisition amount,” HART’s Iwata comments. “To determine the fair market value of properties, HART utilizes certified appraisers to prepare independent appraisal reports…”he explains.
Until recently, Banana Patch was a lush green remnant of old Hawaii sandwiched between Kamehameha and Farrington Highways near Sam’s Club. Home for generations to approximately a dozen families, the site is now mostly a trashed ruin, the once well-maintained dwellings awaiting demolition. The entire 20 acres is slated to be paved over for the Pearl Highlands station park-and-ride facility. HART has bought up most of the smaller parcels, but nearly half of Banana Patch is still owned by businessman Richard Lee, who has not, thus far, reached an agreement with HART.
Although HART has created a detailed map that shows the rail’s planned alignment and all adjoining and affected properties, it remains unclear exactly which parcels will actually be needed for the project. For example, HART’s map shows that a large parcel in Kalihi owned by First Hawaiian Bank is planned as the site of the Middle Street station platform. However, FHB spokesperson Susan Kam said the property is “not for sale.” Property now occupied by the Sports Authority store on Ward Avenue, held in trust by FHB for Victoria Ward, is the indicated site for the Kaka’ako station platform.
Gary Strain, who owns two properties on Dillingham Boulevard, says he is aware that his parcels are marked for acquisition by HART, but he has yet to hear from the City and is in no rush to sell. “If they [the City] want it, well, that’s okay. Delaying is good for me. We just went through a real estate slump, but since property taxes are up this year, that means [property] prices are going up too.”
Some property owners have been subjected to a bit of a rollercoaster ride. Benny Au, who owns property on little Kaa‘ahi Street near the terminus of Dillingham at King Street, where the elevated rail will cut over to Nimitz Highway, has been informed that HART no longer needs his parcel. Since other properties on Kaa‘ahi Street have been purchased by the City, Au’s business, will almost certainly now sit in the shadow of the 30-foot-high structure. Although much has been written about the financial and social benefits of transit-oriented development in the vicinity of the HART stations, it is difficult to see how close proximity to the steel-on-steel trains will improve property values for people like Benny Au.
Other business owners, who don’t own the property under their establishments, are left with the prospect of having to relocate their businesses without a cash payout. Andy Yamauchi, who owns the Chevron franchise on the corner of Lagoon Drive and Waiwai Loop near the airport, planned location of the Lagoon Drive station, is bracing for a move he still hopes he may not have to make.
While he is aware that Chevron is in negotiations with HART for the sale of the lot (HART releases no information about the acquisition process until they have secured the property in question), Yamauchi has made no arrangements to leave.
“I’m waiting to see who wins the mayor’s race,” he said.