In 1879, three years after King Kalakaua signed the Treaty of Reciprocity with the United States, which opened wide the door to sugar growers, the Pacific Sugar Mill was chartered to do business on the extreme northern end of the Hamakua Coast, island of Hawai’i.
Four years later, in 1883, W. Herbert Purvis, one of the plantation’s founders, introduced the mongoose to Hawai’i, in the vain hope of controlling rats on plantation land.
With the mongoose being a diurnal creature, and rats being largely nocturnal, Purvis’ pioneering efforts were catastrophic. The mongoose ended up preying on hapless native birds, contributing to their decline and near-extinction, in several cases. (The rats meanwhile grew fat on cane; arsenic was used to control them for a long period, with consequences to near-shore water quality continuing to be detected to this day.)
Now, Hamakua Sugar Company, descendant of the Pacific Sugar Mill, is once more setting forth in uncharted waters, seeking on an unprecedented scale to sell of large chunks of its cane land to developers as a means of avoiding bankruptcy. If its efforts bear fruit, other plantation owners may well follow in its tracks, just as they welcomed the mongoose. The looming question: Will the results of this new experiment be as devastating as those brought about by the first one?
Sentimental Favorite
As much lip service as has been paid to the benefits of long-range planning for the Hamakua Coast, the term of the long range has been surprisingly short. Few people have challenged the assumption on which Francis Morgan’s entire scheme rests: the assumption, that is, that once the debt monster has been slain, everyone will live happily ever after.
That assumption may be true. But an equally valid prediction would anticipate further troubles down the road (an end to federal price supports, failure on Morgan’s part to meet increased yield expectations, bad weather of the sort that caused severe crop losses in the recent past). If any one of these, or worse yet, any combination of these, occurs, is it not reasonable to think Morgan will be knocking on the County Council’s door with yet another development plan for lands removed from an ever-shrinking plantation core?
The Last Resort
Actually, Morgan’s prospects may be clouded long before any of these possibilities come to pass. At the heart of his bail-out plan was the sale of 3,900 acres of land in Kukuihaele to a company headed by the developer Eugene McCain, who, in turn, had a separate agreement to sell the makai lands to Sokan, Inc, the Japan-based company whose largest Hawai’i project to date has been the controversial development of a resort at Waihe’e dunes on Maui.
The agreement of sale collapsed on New Year’s eve last year. Sokan, whose Maui project has run into prolonged delays over permits, wanted to purchase the land after all approvals for the project had been obtained short of actual building permits. Terms of the Sokan-McCain-Morgan agreements were not made public, so it is not possible to know exactly what breaches of contract Sokan claimed.
Morgan does have until the end of the year to find a new developer. The investment climate on the Big Island is not what it was even a year ago, however. By nearly all accounts, the resort supply in West Hawai’i is close to exceeding demand. Occupancy rates are low, price wars have caused profit margins to be pared to gossamer thinness. The resort development proposed for Kukuihaele would likely be even more vulnerable to a soft tourist market. There is no denying the beauty of the land, but it does not typify the sun-surf-sand resort that most tourists expect when they come to Hawai’i.
The Search for Alternatives
Francis Morgan paid Theo Davies too much for the Hamakua Sugar Company. Compounding the error, the Western Farm Credit Bank gave Francis Morgan too much credit. Other lenders (including the state) may also be regarded as having jeopardized the good of the whole for the sake of a few.
That is not to say that the state and county should have done nothing but watch as Hamakua Sugar Company failed. It is to say, however, that their role as safeguard of the public’s interest might have been better served had they been, first, less credulous in accepting Morgan’s representations and, second, more aggressive and innovative in the search for alternatives to sugar cultivation in the Hamakua district.
If the resort idea dies aborning, it may yet be possible to explore alternatives. Among those holding greatest promise might be the development of small farm lots (of meaningful size, not the five- or ten-acre gentleman-farmer parcels that are multiplying statewide). Morgan’s lawyers say he has looked at this possibility and has found it wanting.
True, establishing viable farm lots requires a substantial initial investment in infrastructure – one that neither individual farmers nor Hamakua Sugar may be able to make. However, one of the largest – that for water – might be overcome if the Hamakua ditch system were tapped for irrigation purposes. Already existing cane haul roads could be used as is or modestly improved to allow access. If Morgan were to retire his $10 million loan from the state, that same money could be made available for low-interest loans to qualified farmers, to help them cover up-front costs until such time as their crops can be marketed.
Avoiding Chernobyl
Then, too, the state and county, together with Hamakua Sugar, could more vigorously pursue the construction of low-cost housing. Resort nodes are the Chernobyls of affordable housing, as one well-known Honolulu economist has explained. When they go in, everything for miles around becomes “contaminated” for purposes of housing within reach of the average resident.
A strong argument can be made that the Big Island (indeed, the entire state) needs more low-cost houses and fewer high-cost resorts. The Kukuihaele area provides an ideal site for worker housing. It is within reasonable commuting distance of the West Hawai’i resorts as well as employment centers in Waimea and Hilo. The county and state could install the needed infrastructure (sewers, utility lines, water service and roads), with buyers of house lots being collectively assessed an impact fee to help offset development costs. Morgan would be able to get a fair return on his investment (if not a windfall), while the net cost to the taxpayer would be minimal.
Overdue Process
In their zeal to help Francis Morgan out of the maze of debt he has built around himself, state and county officials seem to have worked with him and his corporate officers to devise ways of circumventing the much-maligned environmental impact review process. This process customarily requires developers to prepare environmental impact statements for projects as large as what Morgan is proposing. And when an EIS is prepared, it is subject to public review and public comment, which often can be unsparingly critical.
As things turned out, it would have been possible for the EIS process to have run its natural course within the time frame established by Morgan’s creditors. (See the discussion in the April 1992 edition of Environment Hawai’i.) In fact, had this route been taken, it is likely that the ongoing court challenges to county approvals, which allege violations of the EIS law, would have been avoided.
A number of other benefits are associated with the public vetting of issues that accompanies the EIS process. Many future problems that can be associated with development can be identified early enough to allow for their prevention. To give but one example: The Kukuihaele Land Use Plan suggests that a possible amenity attractive to resort guests would be the development of a rubber-hulled boating tour industry at the mouth of Waipi’o Valley. While visitors might enjoy this, the development of this type of operation on Kaua’i’s North Shore has been an environmental and planning nightmare.
Last, but by no means least, full ventilation and review of the proposal at an earlier stage would have enabled the county to take a more disinterested, less partisan stand with respect to the project. As it is, the county administration and County Council are in the position of being the foil for a private developer advocating his project not only in the initial stages of approval, but also now defending it, and the process of approval itself, in three separate court cases.
One of those cases the second one to be brought by Henry Ross was recently decided in Ross’s favor. Judge Ernest Kubota agreed with Ross that the county that county violated public notice requirements in its haste to approve rezoning bills last December. The resulting ordinances have been voided.
In that case, Ross presented disturbing evidence that strongly suggests the Office of County Clerk and the Office of Corporation Council may have colluded to fabricate and destroy documents so as to create a paper trail supportive of their version of events leading up to County Council approval of the project.
For Readers’ Information
In the January 1992 issue, it was mentioned that Environment Hawai’i had made application to the Internal Revenue Service seeking recognition as a 501(c)(3) (tax-exempt) corporation. The IRS has determined that Environment Hawai’i so qualifies. Contributions over and above the basic rate ($35 a year for individuals and $60 for institutions and corporations) may be deductible to the extent allowed by law. All will be most gratefully received.
Volume 2, Number 11 May 1992