House Speaker Saiki makes OHA offer to kapu housing in Kakaako Makai
April 5, 2023

The leader of the state House of Representatives wants to make a deal with the Office of Hawaiian Affairs to keep housing from ever being developed on land the agency owns in Kakaako mainly in exchange for $165 million.

House Speaker Scott Saiki, a powerful opponent of allowing residential use on the peninsula in Kakaako makai of Ala Moana Boulevard, made the offer in a letter sent to OHA’s board of trustees Monday after meeting in person and exchanging aspirations Friday.

OHA representatives said in a statement Tuesday that Saiki’s proposal involves a number of complex issues to which the agency’s board must give serious consideration before commenting on the offer.

In his letter, Saiki proposes that an easement, a protective covenant forever tied to 31 acres currently owned by OHA in Kakaako Makai, be drafted to prohibit residential development and limit building height and density on the land to protect public access and scenic views in perpetuity.

In return for recording the easement, the state would pay OHA $100 million and provide $65 million to fix damage to a wharf area on part of OHA’s property fronting Kewalo Harbor.

Saiki also proposes in his letter that OHA’s future annual interim payments for ceded-land revenue the state owes the agency increase to $25 million on July 1, 2024, from the current $21.5 million, and then rise each year thereafter by a factor representing a three-year average local urban core inflation rate.

A vehicle for these things to happen could be Senate Bill 1235 if desired by OHA and amended by a committee in the House where the bill has yet to have a hearing, according to Saiki’s letter.

Any such deal would ultimately be up to the full House and Senate if supported by OHA.

Generally, senators have been supportive of improving the value of OHA’s Kakaako Makai real estate by allowing residential use, which was banned by the Legislature in 2006 to block a development project initiated by another state agency.

In the House, Saiki (D, Ala Moana-Kakaako-Downtown) has been a linchpin blocking such a change in large part because some community groups and many residents in the district support the existing ban.

Sen. Jarrett Keohokalole, co-chair of the Legislature’s Native Hawaiian Caucus, supports allowing OHA to develop housing in Kakaako Makai that could boost revenue for the agency serving Hawaiian beneficiaries, and said he fully supports an effort to reach some sort of compromise.

“It would be a shame in a second (state budget) surplus year that we can’t come to a negotiated agreement,” he said.

Keohokalole (D, Kaneohe-­Kailua) also is hopeful that enough time remains to achieve a mutually acceptable deal before the Legislature adjourns for the year on May 4.

“There’s still time but not a lot,” he said.

OHA, which serves beneficiaries through programs, grants and other ways, has claimed to lawmakers this year that it was shortchanged by the state when it agreed in 2012 to accept the largely industrial and undeveloped Kakaako Makai real estate in lieu of $200 million the state owed the agency for unpaid ceded-land revenue.

The agency accepted the land at that time after appraisals commissioned by the state and OHA both concluded that the real estate was worth about $200 million.

Earlier this year, however, OHA claimed that its prior appraisal was rushed and not an ideal thorough assessment given time pressure to accept the state’s offer. Based on a new appraisal this year by Washington, D.C.-based FTI Consulting Inc. accounting for deferred maintenance and hazardous-materials conditions, OHA claims the value of the land is $43.6 million with current zoning.

“Clearly, Native Hawaiians were seriously shortchanged,” OHA board Chair Carmen Hulu Lindsey said in March.

Saiki on Tuesday said his aim is to address that issue while keeping much of Kakaako Makai open and accessible to the public.

“The hope is to make OHA whole by preserving open space,” he said.

As a way to enhance the value of its Kakaako Makai land, OHA has tried and failed four times since 2012 to have the Legislature allow residential development on some or all of its Kakaako Makai land, which includes three parcels fronting Ala Moana Boulevard and almost the entire Ewa waterfront edge of Kewalo Harbor.

A bill this year that advanced the furthest among similar measures but stalled in March, Senate Bill 736, proposed to allow residential development on all of OHA’s Kakaako Makai land while also doubling a building height limit to 400 feet from 200 feet on three of OHA’s nine parcels. SB 736 also contained a $65 million appropriation for wharf repairs.

The bill suggested by Saiki as a work-out, SB 1235, originally focused on an OHA working group and later was amended by a Senate committee to include the $65 million appropriation.

There is a Thursday deadline for committees to take final action on bills, though Saiki said there could be another way to realize his proposed compromise other than through SB 1235.

Saiki said in his letter that his proposal is premised upon the current state budget surplus, which is close to $2 billion, and that there is no guarantee that future surpluses will exist to allow the Legislature to consider the payments put forth in his proposal.

Under Saiki’s proposal, OHA would have until June 30, 2024, to record a negotiated perpetual easement with the state Bureau of Conveyances, or terms of the offer would be voided.