Supplemental EIS Says Economics Don't Justify Full Build-Out at Turtle Bay

When plans to build 3,500 more units at Turtle Bay Resort resurfaced in the mid-2000’s, the move set off alarm bells among community members worried about the impacts such a massive development would have on the North Shore’s rural character, as well as government officials who believed such projects should have some kind of shelf life.

As many expected, in the supplemental environmental impact statement (SEIS) prepared for the revised plans, the resort’s landowners (currently Turtle Bay Resort, LLC or TBR) have significantly downscaled the project. TBR has reduced the number of proposed hotel units by 75 percent and the project’s overall density by 60 percent. Rather than building some 2,000 resort condominiums, TBR is proposing to build 590 “resort residential” units, which could consist of duplexes, single-family homes, or multi-family homes. The proposed hotels also will not be full-service, but will more likely be timeshares or condo-hotels.

The reduction has largely been characterized in news reports and by resort representatives as a response to public input, gathered over the past two years from hundreds of meetings and interviews with community leaders. (According to resort representatives, the company spent $37 million developing the new plan, including $2 million on a supplemental environmental impact statement and community outreach.)

Ralph Makaiau, TBR’s project manager for development who has worked at the resort for 40 years, adds he’s put great effort into convincing the property’s various landowners over the years (there have been at least four) that their most valuable resource is the beauty of the land, not things like scented bathroom soaps and soft pillows.

Even so, TBR’s SEIS for its revised project includes a full build-out as an alternative. However, the document also explains how that’s not really an option, at least not right now.

In the mid-1980s, when then-landowner Kuilima Development Company received land use entitlements for the expansion, the City & County of Honolulu’s development plan for Ko`olau Loa called for another 4,000 units at the resort. A report by Hallstrom Appraisal Group, Inc., at the time also predicted that demand for resort units on O`ahu would grow from just under 40,000 units to nearly 60,000 units by the year 2000. The report stated that the Turtle Bay Resort property could absorb between 5,000 and 6,000 of those resort units.

Those projections have since proven false, according to TBR’s SEIS.

HVS International Consulting and Evaluation, an “internationally recognized firm specializing in real estate market assessment,” concluded that the project envisioned in the mid-1980s “is currently NOT a financially viable scenario due to changes in market conditions,” the SEIS states.

“The density of development and the total number of units in the full build-out alternative were predicated upon creating sufficient mass for the development to create economies of scale. But comparable projects completed elsewhere in Hawai`i since 1985 have demonstrated that success can be achieved at a reduced scale. …

“Based on the proprietary market analysis conducted for the resort owners, it is estimated that current and anticipated market conditions would require 39 years for the market to absorb the available new resort and residential units. Assuming construction of a full build-out alternative was to begin in 2015, it is estimated based on anticipated market absorption rates that the final units would be constructed in 2053,” it continues.

The SEIS, prepared by Lee Sichter, also notes that traffic impacts of the full build-out alternative would be “at least twice the traffic impacts as those anticipated for the proposed action.”

For Further Reading

• “Spurred by Kuilima, Environmental Council Considers Shelf Life of Disclosure Documents,” June 2006;

• “Attorneys Debate How Deadlines Apply to Kuilima Resort Expansion Project,” “Need for the Proposed Development,” and “Kuilima Resort Submits Status Report,” September 2008;

• “Commission Delays Forcing Developer to Justify Urban Designation at Kuilima,” March 2009;

• “No New EIS for Kuilima,” (New & Noteworthy), July 2009;
• “Land Use Commission Tries But Fails to Resolve Dispute Over Kuilima Resort,” and “State Supreme Court Hears Arguments Over Supplemental Review of Kuilima Expansion,” March 2010.