State pulls the plug on Waikiki Landing project

The state is finally pulling its lease with Honey Bee USA Inc., the developer of the planned Waikiki Landing at the Ala Wai Small Boat Harbor, for nonpayment of more than $500,000 in back rent and a $1 million performance bond.

The DLNR Division of Boating and Ocean Recreation (DOBOR) confirmed today that would terminate its lease with Honey Bee effective November 15.

“DOBOR believes it has been extremely patient and accommodating to Honey Bee, but the prudent course of action is to terminate the lease.  We can then begin the process of seeking a new development proposal for this prime Waikiki property,” said Ed Underwood, DOBOR administrator.

This latest action from DOBOR follows guidelines established by the Board of Land and Natural Resources, who voted at their Sept. 25 meeting to terminate the lease in November if the developer failed to secure viable financing. That meeting marked the third time that the division’s staff had come before the land board with a recommendation to cut ties with the developer, whose unfunded project is behind schedule.

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 combined with restaurants, entertainment venues, wedding chapels and space for the U.S. National Kayak Team. In 2014, the state issued Honey Bee a 65-year lease.

The state’s expectation was that the project would be completed by this December. However, Division of Boating and Ocean Recreation staff say that the company has turned in five different loan proposals since 2014, but that none have materialized.

Honey Bee could not be reached for comment today. Consultant Dale Rak told the Star-Advertiser last month that the company’s latest funder Utah-based ICON Commercial Lending Inc. had hit a snag with the project’s financing timetable because it was to be funded along with a pool of other projects and the volume was triggering delays. Rak said he was convinced that the project still was viable.

“The money is in a Hong Kong bank. ICON has had challenges getting it released to a mainland bank,” Rak said. “However, I believe the money will come through.”

DLNR spokesman Dan Dennison said the state would now move forward on exploring other options for the site.

“They will try to find someone else to come in and develop the property. The whole process starts from scratch,” Dennison said. “They will have to develop a new request for proposals, which will take some time.”

In the interim, DLNR spokeswoman Deborah Ward said DOBOR will take over the management of the area that was under lease, including issuing temporary mooring permits for vessels moored there, also permits for commercial operations using the haul-out to load and unload passengers.