Hawaii Pacific University has resolved a dispute with a development partner over ownership of Aloha Tower Marketplace, allowing a planned $34 million makeover on the retail complex to move forward this summer.
The resolution, announced Monday by the university, will give HPU full ownership and control of the marketplace fronting Honolulu Harbor.
A plan to add student housing and other HPU amenities along with new retailers and restaurants to the 165,000-square-foot retail center had been in limbo after the conflict emerged about five months ago.
Real estate developer Ed Bushor of Hawaii Lifestyle Retail Properties LLC initiated the redevelopment plan and bought the marketplace for $14 million with HPU as a partner and 80 percent owner in December 2011.
But in October, HPU executed a contract provision to buy Bushor’s minority interest in the marketplace for $5 million, and removed Bushor as project manager in November.
Bushor objected to the moves, and in January his attorney Michael Green alleged that Hawaii’s largest private university fraudulently seized control of the retail center.
Under the resolution, Bushor and HPU will proceed with the buyout. Terms were not disclosed.
Bushor said in a written statement that he is honored to assist with the effort that will expand the university. "I believe this will further HPU’s ambitious program of development and place it on the map worldwide," he said. "This is a win-win for all — HPU, its students, Bushor and Hawaii."
HPU President Geoffrey Bannister expressed optimism for the marketplace’s future. "This project holds great potential, not only for Hawaii Pacific University, but also for downtown Honolulu and for everyone who believes that Aloha Tower Marketplace can be the downtown jewel that so many have hoped it would become," Bannister said in a statement.
The redevelopment plan calls for creating 320 student dorm lofts on the center’s second story. A retail focus would be maintained on the ground floor, which is anchored by Gordon Biersch Brewery Restaurant and Hooters, though some HPU facilities, including classroom space and the university’s business school, would be added.
Todd Simmons, an HPU spokesman, said it’s possible that new retail tenants could open later this year.
Converting retail space on the second floor to student housing is expected to start this summer and be ready for occupancy in fall 2014, he said.
Other changes include converting building space at Pier 10 into a sports and entertainment complex with a spectator capacity of 1,000 to 2,000 indoors and potentially 4,000 using an outside promenade. The facility would feature a basketball court for the university and also serve as a venue for concerts, performing arts and other community events.
At Pier 7 the former Hawaii Maritime Center would be converted to an HPU faculty club and alumni center.
Expanded parking around the marketplace, including Piers 5 and 6, is also part of the plan.
The mixed-use conversion plan was hatched by Bushor as a way to improve utilization of the marketplace, which opened with great expectations in 1994 but has been in bankruptcy twice. Last year about 70 percent of the center’s space was vacant.
Part of the idea is that students and faculty will help increase business for commercial tenants.
Scott Hayashi, a 20-year Hawaii real estate industry veteran, is heading up the redevelopment plan for HPU. Hayashi is a former asset manager for Koko Marina Center and Royal Hawaiian Center, and was chief operating officer of the local commercial real estate firm now known as Colliers International.
HPU previously said it needed control of the redevelopment project to take advantage of tax-free bond financing.
The university plans to sell $76 million in special-purpose revenue bonds, floated by the state, to finance the marketplace work and improvements to its Hawaii Loa campus in Kaneohe, school property elsewhere downtown and its Oceanic Institute affiliate.
Such bond financing, which is projected to save HPU about $60 million in debt payment costs over 30 years, wasn’t possible for the nonprofit university if Bushor remained as a for-profit partner.
The bond sale is scheduled to begin next month.
