Green simplifying Aloha Stadium redevelopment partnership plan

Gov. Josh Green has decided to pursue an alternate path for redeveloping Aloha Stadium in which a private partner would develop and operate a new stadium wholly or largely paid for by the state.

Under the new plan, the state would contribute $400 million appropriated by the Legislature in 2022 for a new stadium along with about 25 acres of land leased to a private partner willing to design, build, operate and maintain a new stadium in Halawa for 30 years.

The envisioned change is intended to replace a long- standing plan to have a private developer design, build and maintain — but not operate — a new stadium.

Luis Salaveria, director of the state Department of Budget and Finance, said the change is based on recognizing that the private sector can operate such a facility better than the state in addition to more efficiently building and maintaining it.

Salaveria said the new model for redeveloping 47-year-old Aloha Stadium, which was largely condemned a little over two years ago after long suffering from rust and deferred maintenance, also was based on a new economic analysis of the best value for spending taxpayer revenue on a new stadium, which under the long-standing plan includes higher long-term costs paid by the state to a private partner earning no revenue from stadium operations.

The Feb. 16 analysis by PFM Financial Advisors LLC, a New York-based firm retained by Budget and Finance, claims that the 30-year cost to the state for a new stadium, including financing and maintenance expenses, would be $1.49 billion under the long-standing plan, or nearly $460 million more than a $1.03 billion price tag if the state had no private partner.

Salaveria said the new plan is a blend of the two scenarios with a private partner taking on more risk by essentially owning and operating a new stadium for 30 years.

“It becomes an issue on where we are putting the risk transfer,” he said.

The private sector, according to Salaveria, should be able to deliver competitive bids to design, build, operate and maintain a stadium that benefits the state, and that bidders may chip in to produce such a facility on top of the state’s $400 million contribution.

A new Aloha Stadium to accommodate University of Hawaii football, other sporting events and a wide range of entertainment has been projected to ideally be around 35,000 seats, down from the current 50,000-seat facility, which has long been the largest outdoor entertainment venue in the state.

Salaveria also said that about 73 acres of state-owned land around the existing stadium would still be offered up for private development of restaurants, retail, housing, a hotel, parking and other things expected to generate revenue for the state. This revenue, however, would flow to the state’s general fund under the new plan instead of going into a special fund that helps pay off public stadium development costs under the long-standing plan.

“The governor is not abandoning the public-private partnership (P3) model,” Salaveria said. “He is actually committed to the P3 model. We’re trying to take something that was very complex and make it simpler.”

There are concerns that the new plan will cause another long delay in replacing the stadium and might not result in a partner that sees a new stadium in Hawaii as a profit center.

Salaveria said it’s realistic to expect private-sector interest in making money off a stadium paid for by the state.

As for how soon such a request for proposals could be put out, Salaveria said it is too soon to estimate. Such an offering is intended to be made before seeking bids for developing the surrounding real estate into a long- envisioned New Aloha Stadium Entertainment District.

Chris Kinimaka, public works administrator for the state Department of Accounting and General Serv­ices, which has been leading the long-running redevelopment effort, said delaying stadium replacement bids and surrounding real estate development will increase the cost of replacing Aloha Stadium while also deferring income to the state.

DAGS has been leading redevelopment planning work for many years with a team of private consultants on behalf of the Stadium Authority, an independent state agency that long operated Aloha Stadium and is in charge of redevelopment. The Stadium Authority board has yet to meet to discuss Green’s new plan.

Claire Tamamoto, a Stadium Authority board member and president of the Aiea Community Association, questioned the wisdom of abandoning a plan that already has a lot of community input, professional work and economic analysis put into it.

“You have something in place already,” she said. “Why would you not use something in place? We’re talking about another delay. I think it’s a little shortsighted.”

Tamamoto also questioned to what degree a private stadium operator would serve public and community interests.

DAGS for many months has said it was more or less ready to issue a pair of requests for proposals to redevelop the stadium and surrounding real estate.

To date, about $25 million has been spent on the redevelopment effort, which has included land-use approvals, an environmental study, conceptual plans, feasibility studies and selecting qualified development partners.

The effort dates back more than a decade, and at one time a new stadium was projected to open this year. Some prior delays spanning several years were caused by changes imposed by the Legislature.

In September then-Gov. David Ige directed DAGS not to proceed further with the long-held plan, and he later sought to have a contractor design and build a new stadium for the state to operate and maintain.

Green took office in December, and the most recent estimated timetable projected signing development contracts at the beginning of 2024 and having a new stadium open in 2027.