Don’t bank on it
The role of the banks in the massive and unpopular expansion plan at Turtle Bay Resort has been particularly interesting. After purchasing the distressed property for pennies on the dollar, mainland vulture-fund Oaktree Capital took out approximately $400 million in speculatory loans, which they tried to repay by reviving a 20-year-old plan to build five more hotels and 1,000 resort-condominiums on the pristine coastline surrounding the existing hotel.
After a combination of poor planning and the worldwide economic downturn left Oaktree unable to repay, Gov. Linda Lingle announced a plan for the state to facilitate a purchase of the resort in order to preserve the undeveloped rural land.
The banks (who now controlled the fate of the property) had other ideas. Local developer Stanford Carr was appointed to head up the project and two offers by the state to help take this albatross off of the banks’ books were subsequently turned down.
Since Carr has taken over, the mode of operation has been lobbying elected officials currying favor from residents and continuing to argue against further review of the untimely expansion project. His masters at the banks have since become beneficiaries of billions of dollars in taxpayer bailouts which they are now ironically using to pay themselves obscene bonuses, prevent federal regulatory reform and harm our quality of life.
In December, just days before the Hawaii Supreme Court was to hear arguments in a case involving the requirement of a supplemental environmental impact statement (the last was filed in 1986) by the developer at Turtle Bay Resort, First Hawaiian Bank (not one of the banks that lent to Oaktree Capital) filed a surprising 11-page brief in opposition to a supplemental EIS and in support of the decades-old expansion proposal.
Shocked residents wondered why a “community bank,” one without a proverbial dog in the fight, would oppose further review of such a controversial development. Citing vague “concerns” about how an adverse decision would have negative impacts on Hawaii’s construction industry and banks, the FHB brief quotes an “old Wall Street maxim” about lenders hating uncertainty.
We the people hate uncertainty too. We hate being uncertain about the safety of our retirement money, we hate being uncertain about how our bailouts are being spent and we hate being uncertain about the sanity of decisions made in corporate board rooms. This project has left our community uncertain about the future of its quality of life. Who will pay for the infrastructure required for five more hotels and 1,000 additional condominiums? Who will pay the higher property taxes with a new Waikiki moving in next door? Who will explain to our grandchildren why so many of our island’s plant and animal species have gone extinct trying to survive on parking lots?
It’s time to stop supporting those entities whose interests run counter to the public good. If your bank is one of them, maybe it’s time to move your money.