Plans to purchase the ritzy 25-story Alii Place office building to provide office space for state workers won support from a key state Senate committee Monday, with lawmakers suggesting the purchase will save the state tens of millions of dollars in the years ahead.
The state is in discussions with building owners Bristol Alii Holdings LLC of San Francisco to buy Alii Place for about $90 million. Lawmakers said that option would be far cheaper than an alternate proposal to pay $270 million to plan and construct a state office building in the Liliha Civic Center area.
Meanwhile the state has instructed a contractor to finally begin work to restore and reopen the long-vacant state-owned Kamamalu Building at South King and Richards streets downtown. That building has sat vacant since 2003, when the Department of Commerce and Consumer Affairs moved out.
The state removed hazardous materials from the Kamamalu Building in 2006, and has now awarded a $25 million contract to Ralph S. Inouye Co. to renovate the nine-story structure. Work is scheduled for completion in late 2016, and will make an additional 60,000 square feet of downtown office space available for workers from the state Human Services and Health departments.
The state now rents more than 420,000 square feet of office space downtown for $10.15 million a year. The state Department of Accounting and General Services occupies much of that rental space along with the Department of Human Services and Department of Budget and Finance.
That has prompted members of the state House to press ahead with a plan to buy the 20-year-old Alii Place, which they say could quickly reduce the state’s rental costs by 60 percent by moving state workers from leased space to offices owned by the state.
"It’s the perfect building, perfect location, and it saves the state $180 million in construction costs," said Rep. Mark Hashem (D, Hahaione Valley-Aina Haina-Kahala). "It’s a no-brainer."
Hashem introduced the bill with House Finance Committee Chairwoman Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) and Rep. Kyle Yamashita (D, Spreckelsville-Upcountry Maui).
Hashem contends the purchase would allow the state to occupy a large portion of Alii Place immediately, but building an entirely new facility for state workers in Liliha would take years and might be subject to cost overruns. Alii Place also has parking, an important benefit downtown.
Lawmakers say 114,663 square feet, or about a third of the space, in Alii Place is vacant and could be quickly used to house state agencies and offices that now rent space in private buildings.
Alii Place is promoted as a "prestigious corporate environment" and features a lobby decorated in marble, a water fountain and carefully maintained grounds.
Supporters of the purchase say Alii Place is one of the highest-quality Class A office buildings in the downtown area and is adjacent to the state Capitol complex. It is designed to be energy efficient, and its operating expenses are among the lowest of any Class A downtown Honolulu building, supporters say.
The Senate Ways and Means Committee on Monday approved an amended version of House Bill 1366 to authorize the state Department of Land and Natural Resources to pursue the purchase. The bill now goes to the full Senate.
One key player that has concerns about the purchase is the Department of Accounting and General Services. Audrey Hidano, deputy director of DAGS, said the department doesn’t have the staff to maintain Alii Place if the state goes through with the purchase.
"Bottom line is if you do acquire the building, we just don’t have the manpower" to maintain it, Hidano said. Lawmakers replied they expect the state would need to contract out the maintenance of the building.
