Alexander & Baldwin plans to boost its investment in the 1,002-acre project at Kukui‘ula in Po‘ipu, a financial push to increase its equity investment and ownership in the project. The company is now committed to providing $50 million to $75
Alexander & Baldwin plans to boost its investment in the 1,002-acre project at Kukui‘ula in Po‘ipu, a financial push to increase its equity investment and ownership in the project.
The company is now committed to providing $50 million to $75 million to build the resort community project near Koloa.
A&B is a partner with DMB, a Scottsdale, Ariz.-based developer, in Kukui‘ula Development Co. Hawaii, a company formed to develop the project.
The plans by A&B leaders to make a significant financial contribution to the project means “A&B’s financial stake and expected returns from the venture will significantly increase,” Stanley M. Kuriyama, chief executive officer of A&B Properties, Inc., said in a statement.
While A&B leaders are not in a position to “indicate what the amount of the return would be, we generally expect that A&B’s share of the distribution will be 50 percent or more of the total distributions made by the venture,” Kuriyama said.
He also said the distribution of the profits is based on a “very complex formula,” and “this is a project with a long, 10-to-15 year development time frame.”
While the A&B and DMB leaders have an “equal voice in all joint-venture decisions,” Kuriyama said, financial interests will be determined by “how much each partner contributes to the venture by way of land and cash, and how the joint venture performs over time,” Kuriyama said.
A&B owns the land, and DMB brings cash and development expertise to the table.
Prior to the decision by A&B leaders to infuse more capital into the Kukui‘ula project, A&B’s “primary contribution to the venture was the fee-simple title to the 1,000 acres and improvements,” including a wastewater treatment plant, Kuriyama said.
He said that contribution would result, over time, in a certain return to A&B.
Earlier, an A&B Properties employee said the company has put $50 million into improvements to the land, including building the sewage-treatment plant, and at that time had gotten nothing in return on that investment.
Related to its planned infusion of funds, other funds for the development of the project are expected to come from property sales, Kuriyama said.
Kaua‘i residents who attended county meetings on the project heard claims by one resident that some individual lots could sell for almost $1 million. He said it was a price tag that most local residents could not afford.
“Kukui‘ula will be very high end,” said Dr. Leroy Laney, Hawai‘i Pacific University economics professor and consultant to First Hawaiian Bank. And although the entire project won a visitor destination area that allows timeshare and vacation rentals, Laney thinks few owners will place their luxury abodes into any vacation-rental pool.
Representatives for the developer have said that they would like to see local residents buy into the project, if they are able.
But they said they needed to sell lots at open-market prices to ensure the profitability of the business venture.
A small number of affordable housing units are planned for the project, a requirement established by the Kaua‘i County Council before county lawmakers recently rezoned the 1,002 acres. The affordable units are to be built for resort employees and first-time Kauai buyers.
Some 1,500 housing units, including single-family and multi-family units, can be built under the zoning recently approved by the council. The prior zoning allowed for 3,400 units, but the council opted for the lower-density project as a way to reduce the project’s impact on the South Shore.
A&B President and Chief Executive Officer Allen Doane said, “Together, A&B and DMB are committed to creating an exceptional residential resort community, unlike any other in Hawai‘i.”
DMB Associates Inc. President Drew Brown said, “The joint venture will continue to work diligently with the community and the county as we proceed with development.”
The project includes a Tom Weiskopf-designed championship golf course, golf clubhouse, dining, spa and beach club facilities and off-site hiking, boating and beach activities.
In addition, 17 miles of walking and bike paths are planned to link homes to each other within the project, and to amenities.
Plans also call for a 20-acre community park, employee housing, the dedication of the land fronting Kukui‘ula Bay for public recreational use, and funding for traffic improvements.
Some traffic improvements located outside of the project are to be developed over a number of years, and have sparked concerns from some residents.
They contend traffic congestion that is anticipated from the project will only add to heavy traffic flow in South Kaua‘i now.
Representatives for the developer, however, have committed themselves to developing traffic improvements that came after negotiations with the council and residents.
The improvements include constructing a single-lane roundabout at the intersection of Po‘ipu Road and Lawa‘i Road, a “western bypass” road that would run from the roundabout mauka to Koloa Road, and a “northern leg” of the bypass road to run from Koloa Road to Maluhia Road.
The county is to build the northern leg of the bypass road.
Lester Chang, staff writer, may be reached at 245-3681 (ext. 225) or lchang@pulitzer.net
