Waikiki sale about more than money

Kamehameha Schools has made a strategic decision to sell off one of its most valuable assets, the buildings of the Royal Hawaiian Shopping Center, a move with the potential to power an expansion of its primary mission to educate Hawaiian children.

Ensuring that this outcome is achieved — and that the property itself retains its historical essence — must remain the goal of Kamehameha leaders.

To their credit, executives of the educational trust have gone on record saying that this is the intent of the sale. Some control over the site should be possible because Kamehameha will retain ownership of the 6.3-acre site while negotiating a 60-year lease agreement with the buyer of the center.

Executives said the sale would "capture" the center’s current value, which has been enhanced since a major renovation undertaken in 2005. Additionally, Kamehameha can use proceeds to diversify its portfolio, reducing investment risk.

That makes good business sense. But the concern of the Native Hawaiian beneficiaries, and the community at large, is that good stewardship is often difficult, especially in a tourism profit center such as Waikiki.

The shopping center occupies a three-block stretch of Kalakaua Avenue, with about 322,000 square feet of leasable commercial area, adjacent to the Royal Hawaiian Hotel, an iconic structure now owned by Kyo-ya Hotels & Resorts. The land was famous as a coconut grove, Helumoa, a gathering place for the Hawaiian chiefs and an ancestral home of the schools’ founder, Bernice Pauahi Bishop.

Because of its historic importance, part of the property was kept as a place for cultural events. Keeping that legacy alive is the intent of the trust, Dee Jay Mailer, Kamehameha Schools’ chief executive officer, told the Star-Advertiser’s editorial board Tuesday.

But Waikiki is more broadly a special design district, and in 2011 the Honolulu City Council passed an ordinance allowing more flexibility in the redevelopment of the entire area. The shopping center sits in the midst of what’s now called the resort mixed use precinct. Many different uses are allowed in that area, including hotels.

The shopping center, a more vibrant retail property in recent years, provides a relatively low-rise oasis in the midst of encroaching hotel towers. Keeping that breathing room in crowded Waikiki is critical to residents and the long-term interests of Hawaii’s principal resort district.

Kamehameha Schools in 2015 will reach the end of its current strategic plan, which makes this an opportune time for change. Trust officials have begun the plans for its next long-term blueprint, which would set the path for the organization through 2040.

Officials said the proceeds from the sale of the shopping center buildings would be folded into the trust endowment, which in the 2011-2012 fiscal year totaled $9.2 billion. The endowment has generated revenue that has supported $350 million in annual educational expenditures in recent years; Mailer said the plan is to serve more Native Hawaiian families through expanded educational outreach and innovation, and to further the trust’s other goals, including conservation and agriculture.

In addition to the primary mission supporting the education of Native Hawaiian children, Kamehameha has made a significant contribution to overall educational improvements in the areas where the most Hawaiians live. This has been a benefit to public schools that serve students of all ethnicities, especially in the 17 charter schools Kamehameha has helped finance.

Mailer told the Star-Advertiser that if the prospective buyers don’t support the intent of the sale, including the preservation of the site’s historic legacy, Kamehameha could withdraw the offer.

A transaction that strengthens this outreach would be a promising end result and deserves support, especially with such a commitment made publicly. It’s the public — Kamehameha’s beneficiaries and beyond — that needs to hold the trust to that promise.