LIHU’E – Honolulu Realtor and developer Peter Savio has such a smooth sales pitch, he makes even non-farmers believe they could buy a parcel of former Lihu’e Plantation sugar land and make a go of it as farmers. But his
LIHU’E – Honolulu Realtor and developer Peter Savio has such a smooth sales pitch, he makes even non-farmers believe they could buy a parcel of former Lihu’e Plantation sugar land and make a go of it as farmers.
But his toughest pitch continues to be convincing landowner Amfac Sugar Kaua’i, or one of its parent companies, that he has enough farmers and ranchers lined up to buy portions of the 17,000 acres to be able to deliver Amfac its requested cash deal about four months after a sales agreement is finalized.
At a meeting Tuesday with about 70 prospective buyers, agricultural experts, current and former Amfac workers and some current lessees of portions of the parcel, Savio said his $20 million offer is believed to be the highest of the four Amfac is considering.
Amfac’s response thus far, Savio said, is “get lost.” Amfac wants a buyer to plunk down between $20 million and $26 million in cash, as it needs the money to fund the closure of Amfac Sugar Kaua’i operations at Kekaha and Lihu’e.
The shutdown cost is estimated at approximately $20 million, according to Amfac/JMB Hawai’i president Gary Grottke.
“I need a partner,” Savio said to the gathering Tuesday at Lihu’e Neighborhood Center. He was referring to Kaua’i farmers who have been filling out questionnaires indicating sizes of parcels they’d like in what is shaping up to be a farm cooperative or, as Savio is more accustomed to calling it, a huge agricultural condo project.
Depending on buyers’ needs, a slaughterhouse, certified kitchen, central refrigeration unit, farmers’ market and farm equipment for borrowing could be included in Savio’s project. The farmers could also realize profit from managing the water systems and electric-generation capabilities which come with the acreage.
If enough local farmers are interested, Savio says, he can complete the sale and make about $1 million in profit, without bringing in an outside partner. Other developers of a similar-size parcel would expect to make between $6 million and $7 million profit, he said.
“I only care about selling it at less than market value,” he said, as bringing the product to the consumer at the lowest possible price means he can sell it fast, reducing his risk and exposure, and take home his $1 million.
And, he said, he cares about selling to bona fide Kaua’i approximately 7,000 acres of prime agricultural lands in the lower third to one-half of the parcel.
“I mean actual, honest-to-God local farmers,” he said. These parcels won’t be sold to “gentlemen farmers” and will carry restrictions indicating that a certain percentage of owners’ total gross receipts come from selling goods grown on the land, he explained.
The sprawling parcel, a boot-shaped mass stretching from King Kaumuali’i Elementary School in Hanama’ulu to well past the Kilohana Crater near the center of the island, is listed for $26 million.
It includes some attractive acreage right across Kaumuali’i Highway from Kukui Grove Center, which has a built roadway at what is known as Rapozo Crossing between the shopping mall and Kaua’i Community College, as well as two hydroelectric plants, drip irrigation, a reservoir and ditch systems, and waterfalls and streams crisscrossing it.
“We want something that will work. This is very much a community-based development,” Savio said.
Time is of the essence, he stressed, as infrastructure systems on the land are already starting to deteriorate as a result of Amfac no longer farming the acreage and performing regular maintenance.
At prices of $3,000 an acre for mauka ranchland (for cattle grazing and related uses) and $7,000 an acre for farms in the prime agricultural portions, the prices are alluring enough to make even those not currently in agriculture take notice.
And with future prospects which may allow owners to build homes on the parcels, the prices begin looking even better, several in the crowd stated.
But Savio said most farmers who have expressed an interest in portions of the land say they’d buy without assurances they’ll be able to build homes on the parcels. Savio stressed that he wants to sell the parcels to local agricultural entities.
“We really want people who want to farm the land,” he advised.
The purpose of Tuesday’s meeting, Savio continued, was to see if there is enough interest from potential buyers of portions of the parcel which he can use to make an even stronger offer to Amfac.
That being the case, his pitch to Amfac could go something like this: “We have a successful project. What we want is for you to sell us this land,” he said.
He said that as a “cost-plus” developer, and in order to keep the prices of the individual parcels down, some parcels won’t initially have electricity, drinking water, paved roads, sidewalks or sewer systems. If that’s what the buyers want, he can include those amenities. But those items will raise the price per acre accordingly, he warned.
Next month, Savio will make another offer to Amfac to buy the parcel. At that time, he hopes he can have in-hand letters from financial institutions indicating that interested farmers have pre-qualified for financing to allow them to purchase parcels.
That, he hopes, will allow him greater strength with to close a cash deal with Amfac within 120 to 150 days of Amfac’s accepting his offer.
Now, Amfac is telling Savio and other buyers who have shown interest in the parcel, “Show us the money,” he said.
There is “absolutely no guarantee that Amfac will sell me the land,” Savio continued. “If we’re going to do this, we have to do it within the next two or three months,” or the value of the in-place infrastructure (irrigation and hydroelectric plants) will deteriorate to zero.
Lenders from Farm Credit Services of Hawai’i, federal land bank and Bank of Hawai’i told potential buyers that there is money available to finance the purchase of parcels and get working capital for equipment, feed, livestock and other farming essentials.
“It’s a once-in-a-lifetime opportunity,” said Roy Oyama, president of Kaua’i County Farm Bureau. “In 50 years, (for-sale agricultural land) will all be gone.” Staff Writer Paul C. Curtis can be reached at pcurtis@pulitzer.net or 245-3681 (ext.
224).
