Larry Ellison plans 30-year, $340 million project for Lanai

The billionaire who owns nearly all of Lanai is moving forward with another piece of a broad plan to diversify the economy on the island where luxury tourism reigns.

Larry Ellison, the Oracle Corp. founder who bought nearly 98% of Hawaii’s sixth-largest island in 2012, is seeking approvals to establish a 200-acre industrial park through his firm Pulama Lana‘i.

Pulama recently informed the state Land Use Commission that it intends to ask the agency to reclassify 200 acres next to Lanai Airport from agricultural to urban use for its proposed Miki Basin Industrial Park.

The envisioned $340 million project, which Pulama expects to develop incrementally over 30 years, represents what appears to be the first move to significantly expand the urban footprint on Lanai under a long-term Pulama vision.

A core piece of this vision calls for adding 546 acres to triple the size of Lanai City to accommodate more housing, a university campus, film studios and a tennis academy in the island’s center, where residents and businesses are concentrated.

Other pieces of the vision include expanding the airport and adding 105 acres of primarily residential development mauka of the Manele resort area along the island’s southern shore.

Under Pulama’s conceptual plan, the island’s population of a little over 3,000 in recent years could grow to about 6,000 by 2030 if the company realizes its vision to expand and diversify the Lanai economy, which has depended on one industry — first pineapple farming on about 15,000 acres and then tourism anchored by two luxury hotels — for nearly a century.

Ellison, who is chairman and chief technology officer of software maker Oracle and is ranked by Forbes as the world’s seventh-richest person with a net worth of $64 billion, has said he wants to make Lanai a more sustainable community.

Since he bought the island from Castle &Cooke Inc.’s billionaire owner David Murdock for a reported $300 million, Ellison’s first huge investment was a $75 million renovation of the former Manele Bay Hotel, which reopened as the Four Seasons Resort Lanai in 2016 with nightly rates starting at $950.

Through Pulama, Ellison also is spending roughly $75 million to convert the other luxury hotel on the island, the Lodge at Koele in Lanai City, into a wellness retreat also managed by Four Seasons. It’s slated to open later this year.

Community improvement projects by Pulama have included restoring historic buildings, environmental remediation and reopening the community pool.

Ellison also has been working for the past two years on establishing a hydroponic farm that would use an automated, computer-­driven greenhouse system to grow exceptionally nutritious produce that can be sold in local markets for less than imports.

Details of the industrial park plan were laid out in a draft environmental assessment Pulama submitted to the LUC for reference last month.

In the report, Pulama said there isn’t any space for more industrial businesses at the two existing industrial areas on Lanai near the airport and at Kaumalapau Harbor.

“Based on expected economic and population growth over the next 30 years, there will be a need for industrial-zoned lands on the island of Lanai as there is none available at the present time,” the report said.

The report also said the proposed industrial park would allow existing industrial facilities that are “inappropriately” scattered in Lanai City to move to a more appropriate location.

Pulama estimated that building the park would generate 28 jobs a year on average over 30 years and that businesses in a fully developed park would employ 360 people.

Developing the park would involve Pulama constructing infrastructure and either selling or leasing lots to users or developers. Pulama estimated that all lots could be sold for $105 million.

Permitting the industrial park, which would require a zoning change from Maui County, isn’t expected to be controversial because the project’s concept was incorporated into a 2016 update of the Lanai Community Plan approved by the Maui County Council after much public input and hearings by the Lanai Planning Commission.

The Lanai Community Plan helps guide land use and other policies for the island, and many elements of Pulama’s vision were proposed for inclusion in the document.

One controversial project desired by Pulama that got cut from the community plan was a bungalow-style hotel with 100 rooms, two beach parks and a rural subdivision with up to 50 homes on Lanai’s eastern shore.

Another piece of Pulama’s plan, a desalination plant to produce potable water, stalled a few years ago over how long such a facility should be permitted.

Fresh water on Lanai is a critical issue because the island’s underground aquifer is relatively small and could be drained by a lot of new demand.

The planned industrial park initially would draw water from the available supply, but its projected average daily need for 1.3 million gallons at full build-out would push the limits of what’s available, according to Pulama’s filing with the LUC.

Pulama stated that Lanai’s sustainable water yield is 6 million gallons daily, of which 3 million gallons is from a leeward aquifer where average use has been about 1.6 million gallons daily over the last year.

“Initial development of the Miki Basin Industrial Park can be accommodated with the existing (leeward system),” the filing said. “However, an additional new water source or sources will have to be developed to support full build-out of the project.”

Pulama noted in its report that recycling wastewater for irrigation could be an operation served by the industrial park. Other potential uses of industrial space mentioned include warehouses, fleet base yards, food distribution, auto repair, construction services, manufacturing and storage.