HCDA, now tasked with redoing Aloha Stadium, reassesses Kakaako

Even in a state with land values as high as they are in Hawaii, property is not developed to its highest and best use without some tending. Sometimes, it can take a serious nudge to make it happen at all — and then another push-and-pull to figure out when the job is finished.

The Hawaii Community Development Authority (HCDA) is in that second, uncomfortable phase right now, with state officials wrangling over how the agency can take on the new project of Aloha Stadium redevelopment without dropping its first development district: Kakaako.

Much but not all of the transformation of that last stretch of Honolulu’s waterfront has taken place, to the point where some figure the state’s work is done. Those in charge of HCDA counter that several difficult issues remain unresolved, and a “sunset plan” is now in the works to explain to state lawmakers just what’s left to do there.

Back before the authority existed, Kakaako — widely seen as unrealized potential — became a kind of political battlefield between the city and state governments.

“The Legislature finds that many urban areas of the state are substantially underdeveloped or blighted, and are or are potentially in need of urban renewal,” was how lawmakers put it in the bill that became Act 153 in 1976.

“A new and comprehensive authority for community development must be created to join the strengths of private enterprise, public development and regulation into a new form capable of long-range planning and implementation of improved community development.”

And with that, the Hawaii Community Development Authority was created, taking charge of Kakaako as its first development district.

When in 1998 Barbers Point Naval Air Station was decommissioned, much of it transferred to state ownership — and redevelopment of the renamed Kalaeloa became a second focal point at HCDA.

And in something of a departure, HCDA in 2009 entered into a long-term lease with the nonprofit Kako‘o Oiwi to restore the Heeia wetlands into a working agricultural and cultural zone, the agency’s third district.

Finally, in the 2019 legislative session, lawmakers decided to put the redevelopment of a district including Aloha Stadium on HCDA’s plate, too.

And now legislators would like to know whether, or when, HCDA’s work in Kakaako can be declared complete. Finding the finish line is proving to be controversial, just as it was in beginning the state’s Kakaako project.

The state’s push to take custody of that district’s redevelopment was an element in the longstanding political rivalry between Gov. George Ariyoshi and the late Mayor Frank Fasi.

Joined by Republican members of the Legislature, Fasi opposed the state taking temporary custody of a section of Honolulu. But Ariyoshi got HCDA on the books and eventually, the work of overhauling Kakaako infrastructure for development got underway.

So it’s a bit ironic that by the end of the 2019 session, lawmakers had passed Senate Bill 1530, which would begin the process of transferring the Kakaako district back to the city. Advocates of the bill have said taking Kakaako off HCDA’s plate was necessary to enable the addition of the Aloha Stadium district, authorized by House Bill 1586.

A key supporter of SB 1530, state Sen. Donovan Dela Cruz, said his intent was that the agency’s sought-after change in financing would be keyed to its completing a plan for the transfer. SB 1530 would put the authority on state general funds if HCDA develops a “comprehensive transition plan.”

HCDA’s staff has been paid through the Hawaii Community Development Revolving Fund, said John Whalen, HCDA chairman. That fund is replenished through lease revenue from state land.

But there is somewhat less revenue potential now in the district. For example, he said, when a state settlement with the Office of Hawaiian Affairs transferred some state property to OHA, its revenue stream was lost to HCDA.

Dela Cruz said he thought the authority should focus less on Kakaako than other projects, if it needed to tap a more sustainable source.

“HCDA has asked for a couple of years to get general funds,” he said. “Because they’ve been in Kakaako so long, and now that general funds would pay for them, they really need to serve all of Hawaii and not just one improvement area.”

Not everyone supported SB 1530, least of all the House speaker, Rep. Scott Saiki, who represents Kakaako. Saiki said he made his feelings known to Gov. David Ige, who vetoed the measure at the end.

Officially the reason was there was not enough time to complete the plan and assure funding for the staff. But Saiki had other reasons.

“I strongly oppose it,” he said. “The city has not demonstrated that it would do a better job (on Kakaako) … $250 million on infrastructure has been spent by the state. It should not be handed over to the city. If it is, the city should reimburse the state.

“It is collecting property taxes, but it hasn’t made any investment in Kakaako,” Saiki added. “It’s been negligent in maintenance of the roads. It’s dragged its feet on the transfer of the waterfront park.”

That last reference is to a long-planned transfer of the Kakaako Waterfront Park and other smaller parks and properties to the city, Whalen said. The board approved the transfer in May 2018, but only recently did the city give HCDA a “punchlist” of fixes to be made before the transfer could be completed.

Mostly this included repairs and the need to change out certain equipment to be more easily maintained through the city’s supply chain, he said.

But if even this relatively small transfer is so complicated, Whalen said, the difficulty of a wholesale handoff of Kakaako would be much more so.

He added that it was a “misnomer” to prescribe future Kakaako action as a transfer to the city, because some key elements would involve state agencies instead. All of that would be spelled out in the report, just mandated by the Legislature, to be prepared for HCDA by the state Office of Planning and a contractor to be named.

For example: Some of the affordable-housing elements in the district would need to be managed by the Hawaii Housing Finance and Development Corp., Whalen said; HHFDC dispenses the state allotment of low-interest financing to developers for building housing affordable at set income levels.

There also is the matter of the OHA property in Kakaako Makai and the completion of the Howard Hughes Corp. master plan for the area — not to mention the possible properties sale that the Texas-based Hughes company is exploring.

“There are a lot of questions to be answered, and these are not transitions that will be necessarily easy to make or can be done expeditiously,” Whalen said. “There are a lot of steps along the way, as we found with this parks transfer.”

Aedward Los Banos, HCDA executive director, said that once the authority moves toward taking on the Aloha Stadium redevelopment district in the next year or so, it will represent a change in direction.

Owing to former Navy control in Kalaeloa, there the state has had to allow for federal actions before moving ahead to allow development, but at the stadium, the state controls all the land, Los Banos said.

As for Kakaako, it’s meant untangling a complex web of government with private owners, large and small. Still on his own to-do list, Los Banos noted the unsettled disposition of the decommissioned Hawaiian Electric Co. Honolulu Power Plant near Aloha Tower. There’s also the unfinished plans for widening Queen Street as a district east-west corridor.

How much of all that the Legislature wants to see sewn up is the basic question, Los Banos said.

“Getting some guidance from the Lege would be helpful, as in, ‘Is it done, or not?’” he said.