Ala Wai harbor fiasco offers lessons

Once touted as a model for public-private partnerships, the Ala Wai Small Boat Harbor development has become a case study on failed policy that has resulted in the developer filing for bankruptcy and the state unable to cancel the lease.

Boaters — and the state — have waited six long years with nothing to show for it, and must wait now even longer for Honey Bee USA Inc. to emerge from bankruptcy protection.

It wasn’t supposed to be this way.

The project was conceived with much hype under Gov. Linda Lingle’s administration and was supposed to provide boaters and taxpayers with needed services without draining state coffers — a reasonable approach during an economic downturn.

In 2009, the state picked Honey Bee to lease and improve two harbor parcels.

But good ideas must be backed up with good execution. Somehow that just never materialized. It took several years just to come up with a 65-year lease that commenced Jan. 1, 2014.

There were numerous starts and stops, including community pushback on Honey Bee’s first $9.7 million proposal, the more than doubling in cost of its revised plan and losing its major financier in July 2014.

From the start, there appeared to be no shared vision of what Ala Wai Small Boat Harbor would become. Honey Bee presented ambitious plans that included building two wedding chapels, commercial space and replacing an existing fuel dock, convenience store and boat repair business — all for $9.7 million. For boaters and residents, it was a little too ambitious.

Honey Bee came back with several mixed-use concepts before settling on a $35 million plan that 44,153 of leasable space and included a 17,000-square-foot boat repair dock.

The disconnect in the public-private partnership continued, and yet deadlines were extended, unwisely, over and over again.

After losing its Kyoto- based financier Hideaki Shimakara, Honey Bee proposed five new funding sources that never came to fruition. After giving the company not one, not two, but three reprieves since March, the state finally decided to move on, thinking it could finally seek out a new development partner.

Instead, Honey Bee filed for Chapter 11 bankruptcy reorganization on Nov. 13.

“A timely bankruptcy filing — which this appears to be — gives Honey Bee additional time to perform its obligations under the lease,” said Department of Land and Natural Resources spokeswoman Deborah Ward, noting if Honey Bee is able to meet those obligations as allowed under bankruptcy law, then the lease will not be terminated.

The move came two days before the state DLNR’s Division of Boating and Ocean Recreation was to cancel its lease with Honey Bee for nonpayment of more than $500,000 in back rent and a $1 million performance bond.

Clearly the state stuck its neck out for far too long, and now the saga is stuck in a holding pattern.

While the state and the public wait, the boaters still lack access to a fuel dock and a boat-repair facility — the previous ones were torn down to make way for the new development — and that’s simply unacceptable.

Waikiki Neighborhood Board member Bill Lofquist rightly described the situation as a “debacle” and a source of frustration.

Boater Bruce Lenkeit said the Honey Bee fiasco is “another example of the state not knowing what the hell it’s doing.” Lenkeit said the failed development has caused unnecessary hardship for boaters, which is ironic since the development was supposed to help, not hurt, boaters.

Moving forward, any future plans for the boat harbor must reflect a more closely aligned vision among the state, the developer and the boaters who lease space in the harbor, with improved facilities serving boaters and income-generating ventures for the developer. Planned uses should have broad appeal for locals as well as visitors, which would exclude tourist-oriented wedding chapels.

Furthermore, in entering exclusive agreements with developers, the state should set strict deadlines and thresholds — and ensure they are met.

The missteps made in the public-private partnership have ultimately left a mess of the Ala Wai Small Boat Harbor. It could take months, if not years, for Honey Bee’s bankruptcy issues to be resolved, and even in the best-case scenario, it will be years before marked improvements are made at the boat harbor, the gateway to Waikiki.

The state should have bailed from the sinking ship long ago.