Update

Shoreline Disputes Stall Punalu`u Development Plan

From the Big Island comes word that the Hawai’i County Department of Public Works is recommending County Council approval of a resolution calling for the sale of three-quarters of a mile of old government road that leads to Ninole Cove and the county park at Black Sand Beach, the only easily accessible beach area in Ka`u and a popular camping area. Several years ago the state sold the road remnant to C. Brewer and Co., former owners of the Seamountain Resort at Punalu’u. A court challenge to that action resulted in a finding that the road was not the state’s to sell, but belonged rather to the county.

Since then, C. Brewer has sold its holdings in Punalu`u to the Japanese-owned Punalu’u Development, Inc., and the closely affiliated Sazale (Hawai`i) Corp. They are intending to complete the resort development plans for which C. Brewer won initial approval two decades ago.

Sale of the road remnant was vigorously opposed at a September hearing of the county Public Works Committee. Another hearing was set for late October. Opponents argued that sale of the parcel would deprive the public of vehicular lateral access to the shoreline.

Punalu’u Development, on the other hand, has argued that the county’s retention of this road “is a major obstacle in the development of our planned world-class golfcourse.” Should the county keep the road, its president, Kunio Arai, wrote in a letter to Mayor Lorraine Inonye this would have “a negative ‘domino’ effect on our master plan and could change the entire concept of our low-density five-star resort. While we seek to eliminate the road, you can be assured that we will provide the community with ample alternative shoreline access through a series of footpaths.”

Also hindering development has been ongoing controversy over the developer’s proposed shoreline certification, approval of which must be given by the Department of Land and Natural Resources. This is an essential step in acquiring a Special Management Area permit from the county. An initial shoreline certification by Punalu’u Development was rejected pending resolution of the illegal filling of state-owned Ninole Cove by C. Brewer. Punalu’u Development subsequently has sought a partial shoreline certification, sidestepping the issue of Ninole Cove altogether.

Challenging it on this has been Public Access Shoreline Hawai’i, a group led by Jerry Rothstein of Kona. In a July 31, 1991 letter to William Paty, chairman of the Board of Land and Natural Resources, Rothstein protested the state’s processing of the partial shoreline certification. “This re-application [for shoreline certification] is a clear-cut case of restructuring the survey to avoid dealing with the encroachment” on state-owned Ninole Pond. Rothstein continued: PASH believes it is bad policy to allow a shoreline property owner to pick and choose what parts of a shoreline parcel he wants certified and which parts not to certified… Encroachments would be left unresolved.” PASH also has objected to the specific delineation of the shoreline that places it makai of several other ponds in the area. Sazale has claimed that to make its resort succeed, it must have a golf course adjacent to the ocean. Its plans, accordingly, call for two holes adjoining the ponds – a proposal that could not be carried forward if the shoreline were certified mauka of the ponds.

At the moment, PASH and others, including the Punalu’u Preservation Committee, are awaiting state acceptance or rejection of Punalu’u Development’s proposed shoreline certification, notice of which maybe expected soon in the OEQC Bulletin. If the state accepts a shoreline certification that does not meet the concerns of these two groups, it is likely that a contested case hearing will be requested.

The Punalu’u Preservation Committee has separately announced it is intending to bring a complaint against Council Member Robert Makuakane before the county Ethics Commission. Makuakane, who has been an outspoken proponent of the road sale, “has been accepting free golfing privileges and possibly other gratuities at Punalu’u Resort,” the committee noted in a letter October 15 to Council Chairman Russell Kokobun.

Investors from Afar

Punalu’u Development, Inc., is just one of dozens of companies owned by foreign investors whose activities in Hawai’i have sparked concern. The more general subject of foreign investment in the United States was the focus of a recent report by the General Accounting Office, Congress’ auditing arm. The report, titled “Foreign Investment: Concerns in the U.S. Real Estate Sector during the 1980s,” looks mainly at the effect of foreign investment in Hawai’i, California and New York and includes a case study examining foreign direct investment in Hawai`i.

In the United States overall, 39.9 percent of the foreign direct investment in real estate comes from Japan; the United Kingdom is second-tanked, with 14.6 percent; Canada third, at 10.9 percent; the Netherlands fourth, at 9.5 percent, and the Netherlands Antilles fifth, at 9 percent.

In Hawai’i, however, the profile was substantially different. From 1959 through 1987, 80 percent of the total foreign investment in real estate was from Japan.

In the continental United States, foreign investment in agricultural land has been a concern, owing to fears that it could have an adverse impact on the nation’s food supplies. In Hawai’i, where agricultural land is subject to development as resort property (golf courses) surrounded by “gentleman-farmer” estates, agricultural land has a different meaning. The GAO found that as of 1988, 3 percent of Hawai’i’s privately owned agricultural land was in foreign ownership. Investors from the Netherlands Antilles owned 77.1 percent of that, or 43,703 acres. Japanese investors ranked second, with 6,992 acres of agricultural land (or 12.3 percent). The Netherlands was a distant third, with 3,330 acres, or 5.9 percent.

The extent of involvement by firms based in the Netherlands Antilles may come as a surprise to some. That is not an accident; people who conduct business there generally prefer a low profile. As the GAO report notes, the Netherlands Antilles is an “identity haven” – a country, that is, “whose laws place restrictions on revealing the identities of owners or shareholders of corporations through such means as issuance of bearer bonds or allowing citizens or other countries to funnel investments through ‘shell’ or paper corporations established in that country in order to prevent the disclosure of the investors’ identities.”

Up to five copies of the GAO report may be obtained without cost by writing to the U.S. General Accounting Office, P0. Box 6015, Gaithersburg, Maryland 20877. Ask for report number GAO/NSIAD-91-140.

There Goes the Sun

Governor Waihe’e’s veto of a bill that would have encouraged the use of solar water heaters in state-sponsored housing was reported in an [url=/members_archives/archives_more.php?id=633_0_33_0_C]August 1991 article[/url] of Environment Hawai`i.

The veto was made despite support for the bill from no fewer than three members of the governor’s cabinet and Hawaiian Electric as well. Suspicions that Waihe’e was acting at the sole behest of Pacific Resources, Inc., have been supported by the disclosure of a letter from Mel Nakamura, a vice president of The Gas Company, a subsidiary of Pacific Resources, Inc., which is in turn a wholly owned subsidiary of BHP an Australian company with extensive holdings in oil.

Nakamura’s letter, dated May 24, 1991, thanks the governor and his assistant Joshua Agsalud for taking the time to meet with PRI President Robert Reed, its counsel Susan Kusunoki, and Nakamura. The topic of the meeting was the legislation that the governor subsequently vetoed. Nakamura stated it would have a “severe impact” on The Gas Company inasmuch as it would inhibit its “ability to compete.” He indicated that both the Public Utilities Commission and the state’s consumer advocate were supportive of his position, although they did not submit written testimony to the Legislature.

“As stated at the meeting,” Nakamura wrote in closing, “The Gas Company supports the concept of solar water heating as it is truly a renewable source of energy. However, mandating its use at this time is not in the best interests of the consumers of this state.”

The Ulveling Study

In [url=/members_archives/archives_more.php?id=534_0_33_0_C]February 1991,[/url] we reported that former DBED Director Roger Ulveling had no sooner resigned his post than he signed a $45,000 sole-source contract with the Public Utilities Commission to conduct a “study of the availability of electricity from nonfossil fuel sources in Hawai’i, the feasibility of utilizing these sources to produce electricity, and plans and incentives to encourage the use of the sources in the production of electricity.” In a letter April 5, 1991 to Rep. Mike O’Kieffe, Yukio Naito, PUC chairman, explained the circumvention of the bidding process in the following way: “We contracted with Mr. Ulveling to do the study, because of our need for an immediate study and Mr. Ulveling’s availability on short notice… The need for the study is immediate, since the commission will shortly begin formal proceedings in the integrated resource planning docket that the commission instituted.”

Urgent the need was – and remains. But Ulveling’s study, a draft of which was to be submitted April 26, 1991, is nowhere in sight. Work by the parties involved in the integrated resource planning docket has had to continue without benefit (or burden?) of Ulveling’s report.

A spokesman for the PUC said that Ulveling had other jobs he needed to do, so the energy report had been delayed. Ulveling has received $31,300 for his work to date (including a work plan and progress report).

Volume 2, Number 5 November 1991