Private developer makes state’s Kewalo Basin harbor shipshape

A more than decade-old effort to improve substandard conditions at a state-owned harbor in Kakaako popular with tour boat operators is just about complete.

Howard Hughes Corp. is putting finishing touches on a $23 million overhaul of Kewalo Basin carried out under a lease with a state agency.

Among new features added to the marina: Wi-Fi, a fueling station, sewage pump-out facilities, security gates fronting most piers and security cameras. Piers were also rebuilt, lighting and electrical systems were upgraded and additional slips were created.

The work, which is scheduled to wrap up next month on one last pier, represents privatization of a public harbor that some tenants criticized in part because slip fees would be raised to pay for improvements.

Hughes Corp. has raised slip rates 41% over the last year, with tenants charged the higher rate after occupying a renovated slip at the harbor where there are 184 spaces for boats, up from 149 previously.

Reaction from tenants is mixed, with appreciation for upgrades and enhanced security but also disappointment over some things, including the size of the rate increase and the condition of bathrooms and trash service.

“Progress is good,” said Mike Straite, captain of the fishing charter boat The Wild Bunch.

Mike De Rego, owner of Maggie Joe Sport Fishing, said the work has improved the look of what used to be a run-down harbor.

“Aesthetically it looks way nicer,” he said. “That’s good.”

But De Rego, whose family has done business at Kewalo Basin since 1950, said the power supply to the front row where he operates wasn’t upgraded and that big cleats added to the rebuilt piers now prevent wheelchair access.

Because tenants haven’t benefited equally, he said, “I’m disappointed.”

As for the stiff slip rent increase, it has affected finances of businesses at the harbor but didn’t force out many longtime tenants as some had feared, harbor users said.

“You just have to make the adjustment,” said Warren Kahakua, first mate on the Sashimi II fishing charter boat.

The Hawaii Community Development Authority, a state agency that owns the harbor as part of its role regulating development in Kakaako, began devising plans to improve Kewalo Basin in 2005 to address years of neglect by the state Department of Transportation.

The harbor, which dates to the 1920s and was once the base of Hawaii’s aku boat fleet, had become so run down that in 2007 about one-third of the slips were condemned or unfit for use.

Initially, HCDA proposed spending $14 million to repair unusable slips and add restaurants, a convenience store, fuel station and other improvements financed by a 100% increase in slip rents while also imposing maintenance fees.

That plan drew condemnation from many harbor users who claimed they would be forced out of business. In response, HCDA pursued plan revisions.

As an interim measure after HCDA inherited management of Kewalo Basin from DOT in 2009, the agency hired California-based marina operator Almar Management to run the facility, and slip occupancy was raised to about 100% from 40% after taxpayer-funded pier repairs.

HCDA also helped increase occupancy by ending the harbor’s exclusive use by commercial boat operators and allowing pleasure boat owners to rent slips, although commercial fishing boats have the highest priority for most open slips, followed by charter or cruise boats. Pleasure boat owners also are not permitted to live aboard.

In 2011 Almar offered to carry out a revamped $22 million HCDA renovation plan that called for upgrades and adding 100 more slips by extending three piers and building two new ones.

HCDA in 2012 agreed to negotiate a detailed deal with Almar under a lease that the company anticipated would generate about $45 million in rent to the agency over 50 years. Two years of delays followed, and then Hughes Corp. made a rival bid.

Hughes Corp. contended that its proposal was better than Almar’s because it would use cash instead of financing, it could do the job in two years instead of five and it had more motivation to see the harbor flourish given that the harbor is makai of its master-planned Ward Village community slated for 16 residential towers and 1 million square feet of retail.

In 2014 HCDA granted Hughes Corp. a 35-year lease with a potential 10-year extension. The company paid a $550,000 one-time fee and has been paying $300,000 a year in lease rent, according to HCDA.

The company also retained Almar to manage the harbor, and projected two years ago that rents would rise 30%. Under HCDA rules, rents could have been as much as doubled.

Hughes Corp. did make significant changes to HCDA’s plan after doing its own engineering studies.

Most notably, the additional number of slips was cut to 35 from 100.

Part of that change was due to eliminating the two new planned piers because surfers and other ocean users objected to building a breakwater to diffuse ocean swells into the harbor. Also eliminated was the removal of one pier so that three others could be extended.

“The economics didn’t work out,” Cord Anderson, Hawaii development manager for Texas-based Hughes Corp., said about the pier extensions.

Instead, parallel parking along one pier was converted to perpendicular parking and resulted in a 35-slip gain.

Construction began in 2017. Work on one final pier is slated to be done next month, allowing for boat owners on a wait list to fill up the harbor that Harbormaster John Eveleth said has been about 96% full during construction as boats moved around to accommodate work.

Today the mix of boats at Kewalo Basin is roughly 60% commercial and 40% pleasure.

Robert Riekena, director of operations for cultural tour boat operator Kamoauli LLC, recently moved the company’s double-hull Polynesian catamaran, originally built in Tonga, from Waianae to Kewalo.

Riekena said he’d rather be in Waianae but that Kewalo is better protected from swells. And the new facilities are a bonus. “We have a brand-new dock, so it’s really, really nice,” he said.