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Monday, July 28, 2014         

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If they build it, will developers come?

While economic growth potential exists at the future sites of rail stations, few projects are taking advantage of it

By Gene Park

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Many hope Tuesday's groundbreaking for Honolulu's long-debated $5.5 billion rail system will mark the beginning of the end to notorious Oahu traffic woes, but just as critical is the hope that millions of dollars in "transit-oriented development" will spring up around rail stations along the route.

From most indications, interest in development so far has been minimal.

While city officials have touted the prospects of development, no formal announcements have been made about future projects. A spokeswoman for the city told the Star-Advertiser last week that permitting and planning officials were not ready to be interviewed on the subject.

Time, however, is of the essence when it comes to building economic hubs around the planned 21 stations along the rail route, said local economist Paul Brewbaker.

"The worst thing that could happen is for the train to be built, and we take another 10 years for someone to build around it," he said. "The day the train starts running, the park and ride should be open, the auto-body shop should be open, the affordable rental medium-density condos ... it has to be there."

Open grassy areas, park and ride stations, multi-family housing, Kapakahi Stream restoration, mini parks and retail plazas are all part of the city's vision for transit-oriented development, or TOD, along the rail route. Federal funding programs can be used for capital projects that support such development.

"(The rail project is) not about transportation per se," said Brewbaker, principal of TZ Economics and chairman of the state Council on Revenues. "It's about housing, it's about development."

Rail critic Panos Prevedouros, a civil engineering professor at the University of Hawaii, said he does not understand why rail construction would begin in East Kapolei, the site of Tuesday's groundbreaking and the least-developed area along the route.

"We're starting the rail with two stations at big agricultural lands," Prevedouros said. "We're facing major uncertainty there. Why would we even start at that point? TODs in my personal opinion are a misguided planner's pipe dream."

Adding to the uncertainty so far are stalled plans by major developer D.R. Horton-Schuler Homes to build the proposed 11,750-home Hoopili project near two stations.

The developer has sought to reclassify the land in the area from agricultural to urban use. But in 2009, the state Land Use Commission ruled the company did not comply with state law requiring that development be substantially completed within a decade. Hoopili was slated to be built over 20 years, and the decision put an indefinite hold on the project.

Last week, Mike Jones, president of D.R. Horton's Schuler division, said the company's interest in the project has not waned.

"We're going to resume action with the Land Use Commission," Jones said. "We haven't set a definite date on when we're going to recommence that rezoning effort."

Jones said the developer was working with the state in its petition, but last year's elections put things in a holding pattern.

"After the elections, we're just having to go back and meet with the state, and discuss some issues with them," Jones said.

Community action group Friends of Makakilo challenged D.R. Horton's petition years ago and will do so again, said group founder Michael Kioni Dudley.

"Our feeling is that if the rail succeeds in going through the property, it's going to be much, much easier for them to say, 'Well the rail is there, why can't we build houses,'" Dudley said. "They call it transit-oriented development, but we call it developer-oriented transit."

One housing project, completed 14 months ago, is waiting to reap the benefits of its proximity to a station.

The Hawaiian Island Homes project was built on state-owned land near the proposed Mokuola Street station. Out of 330 units, the developer has sold all but 90. Many of them were bought up by owner-occupants, and there are only three investor buyers.

"So far, mass transit has not had a real impact," said Peter Savio, the project's president. "I think it's going to have a huge impact on the people in the building when they want to resell, but just when it's complete, not now."

Savio said his company's project was planned before the rail transit route was in place, and that he expects more investors to buy up units as construction begins.

"I think people need to realize the benefits of being near a mass-transit station, and how that converts into having an actual value," Savio said. "As an investor, I would buy into this project because mass transit is so close, you won't need the car as much."

In Oregon, property values near transit stations rose up to 20 percent, according to Oregon Metro.

Mililani resident Saxon Nishioka has stake in three parcels of land near the planned station near Farrington Highway and Mokuola Street. He said he has heard little in the way of developer interest, save for negotiations that the city recently started with a nearby landowner for a pedestrian walkway.

"It's a big question mark in my mind," Nishioka said. "Right now we're in the wait-and-see mode."

Negotiating with property owners is one of two actions the city was authorized to perform after the Federal Transit Administration issued its record of decision last month. The record of decision ended the environmental review, a process stalled last year by former Gov. Linda Lingle's desire to conduct a financial analysis of the project. The other action was the relocation of utilities, the reason for Tuesday's groundbreaking.

Since September, Kiewit Pacific Co., which was awarded a $483 million contract to build the first 6.5 miles of the route, has performed shaft testing and soil sampling along the route.

Crews have drilled holes up to 125 feet deep and 8 feet wide to determine the depth of the columns for the elevated system.

"It's not construction, but it's going to help us design the actual column," said Scott Ishikawa, spokesman for the city's Rapid Transit Division.

Prevedouros, who ran a failed campaign against Mayor Peter Carlisle, said Honolulu development will occur without rail.

"Textbook examples: Waikiki has grown, Ala Moana Center doubled in size. All of this happened in the complete absence of rail," Prevedouros said. "You really don't need a $5.5 billion rail system for TODs. You can do it right next to an express bus route, assuming that you have express bus lanes."

But Brewbaker said history has shown that development has occurred depending on a community's method of transportation.

"Now you can't get to Waikiki from the freeway," Brewbaker said. "But what was life like a century ago? Most people lived in walking distance from the mill, the cannery, the school and from work. ... Part of the change involves the change in transportation technology itself."

He said developers will likely wait until the system becomes more of a reality. Until then, regulatory processes in place will stall development, such as what happened with D.R. Horton's Hoopili project, he said.

"The problem with congestion is that you never know how long it's going to take," Brewbaker said. "We're moving into a completely different world from this point forward. Speed matters, and overcoming congestion in order to create conglomerate economic activity is something we need to do to advance Honolulu into that future."






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