The Board of Land and Natural Resources gave Honey Bee USA Inc., developer of the planned Waikiki Landing at the Ala Wai Small Boat Harbor, until Wednesday to pay about $350,000 in back rent to the state.
The state Department of Land and Natural Resources’ Division of Boating and Ocean Recreation recommended Friday that the state terminate its lease with Honey Bee for nonpayment of the rent and a $1 million performance bond.
"In the beginning, things were working well, but the developer had trouble with financing and started to fall behind in his rent last October," said Ed Underwood, the Division of Boating and Ocean Recreation’s administrator. "The developer was going to roll the $1 million performance bond into their construction financing, but they got behind. Now we are recommending termination of the lease."
However, the board decided to defer action for 60 days with the understanding that the principals would bring their lease rent current by Wednesday and would present an acceptable financing partner at the board’s next meeting. The board also ordered Honey Bee to keep its rent current, pay its performance bond and cure any other defects in the next 90 days.
"I personally feel that Honey Bee has come to the plate now and they strongly believe that they can cure all the issues that they have," said BLNR board member Jimmy Gomes. "They seem to have come to us with a plan of moving forward."
The state entered into an agreement with Honolulu attorney Keith Kiuchi, Honey Bee’s principal, in 2009 to build a boat repair facility and fuel dock with restaurants, entertainment venues, wedding chapels and space for the U.S. National Kayak Team.
The Division of Boating and Ocean Recreation issued Honey Bee a 65-year lease, which began Jan. 1, 2014, for an annual minimum base rent of $821,652 per year, with periodic rent increases through the first 30 years.
Kiuchi, who fell behind on the project’s responsibilities after Kyoto-based Hideaki Shimakura ended his role as the development’s primary funder, told the board Friday he secured $420,000 to cure the back rent and a strong equity partner from the mainland who is ready to make about a $28 million investment.
"They have given us a letter of intent to enter the project. It’s a large mainland company with a large portfolio of properties, but they don’t want to be discussed until the end of their due diligence on May 5," Kiuchi said, adding that he would come back to the board in June to reveal the partner.
New construction hasn’t started on the three-building development, which includes 44,153 square feet of leaseable space and a 17,000-square-foot boat repair dock with parking.
New city zoning and state legislation paved the way for the planned complex, which was designed to serve as a hub for boating and ocean activities. Since 2010, Honey Bee has paid the state more than $1.1 million in rent and development fees. The company also cleared the property, removed contaminated soil, razed a building, secured various land-use entitlements and approvals, and obtained city permits. As a result of the preparations, a longtime fuel dock was shuttered, and a boat repair facility was razed.
"They’ll get it done, or we’ll move on to someone else," Underwood said.
Keith Chun, who works with Underwood, said he thinks there will be plenty of interest from other investors if the state ends its lease with Honey Bee.
"Obviously, the economy has improved, and the value of the property has increased," Chun said. "But that said, for us to go out for another request for proposals would take time. To put it out to a wide range of uses, we’d need public input and we’d have to vet it."
