A done deal becomes a cause célèbre

By Curt Sanborn
Honolulu Weekly
Oahu’s enviro-watchdogs had launched a last-minute, do-or-die mobilization against a super-luxury hotel/condo tower that wants to break some important zoning laws and squeeze itself onto a narrow strip of sand smack in the middle of Waikiki, between the old Moana Hotel and bustling Kuhio Beach Park.

They all turned out three weeks ago for the hearing: Hawaii’s Thousand Friends, the Surfrider Foundation, Ka Iwi Coalition/Save Sandy Beach and KAHEA. The Sierra Club, the American Institute of Architects (AIA) and Life of the Land submitted testimony. TV news crews were there too, as was a reporter from the Honolulu Star-Advertiser, to see what was brewing.

Oahu’s enviro-watchdogs had launched a last-minute, do-or-die mobilization against a super-luxury hotel/condo tower that wants to break some important zoning laws and squeeze itself onto a narrow strip of sand smack in the middle of Waikiki, between the old Moana Hotel and bustling Kuhio Beach Park.

The Sept. 23 public hearing, conducted by the city’s Department of Planning and Permitting (DPP), was the last chance for public input in the city’s permitting process for the tower. Up to that point, the project had sailed through all of its hearings and committee and Council votes with little controversy. The only organized opposition (temporary, as it turned out) came from Unite Here Local 5, the hotel workers union.

On Aug. 18, the Honolulu City Council voted 9-0 to approve Kyo-ya Hotels & Resorts’ Planned Development-Resort/Special District permits for a massive, $700 million redevelopment project involving both the Princess Kaiulani and the Moana Surfrider hotels. The Diamond Head Tower, set to replace the nine-story Ocean Wing of the Moana Surfrider Hotel, is conceived as the project’s trophy property.

The DPP’s Sept. 23 hearing was a climax of sorts. Testimony was evenly split, with the usual list of construction unions and business groups supporting the developer.

The issue at hand was Kyo-ya’s request for a key exemption, or variance, from existing city law that governs height and shoreline setbacks along Waikiki beach.

As proposed, Kyo-ya’s tower will more than double the allowed height on the lot and exceed the allowable square footage by a whopping 74 percent. The tower’s footprint will likewise trespass 60 feet into the 100-foot shoreline setback, a no-build zone devised in 1976 (in the wake of the giant Sheraton Waikiki) to enforce open space and prevent high-rise overcrowding along the world-famous and perpetually eroding beach.

“Why bother with rules?” asked angry surfer Tim Tybuszewski, co-chairman of the O’ahu chapter of the Surfrider Foundation, during his testimony. “Why even have a Department of Planning and Permitting? … [Kyo-ya] simply wants to redevelop and make more money, period. That’s what’s going on here.”

“This variance sets a dangerous precedent for Waikiki,” said Surfrider Hawaii’s co-ordinator, Stuart Coleman. He charged that the project had been hidden from the public, with “no coverage by the newspaper and only glossy coverage by the TV news.”

Marti Townsend of the Hawaiian advocacy group KAHEA called the proposed tower a “castle in the sand,” that flaunts existing laws and seriously impacts the public beach.

“Climate change is real,” said Life of the Land Executive Director Henry Curtis in prepared testimony. “We need to expand the distance new buildings are set back from the coast.”

In his prepared testimony, AIA President Charles Kaneshiro asked the DPP to consider the intent of the law governing coastal setbacks in Waikiki, which was, as he quoted from the Waikiki Special District guidelines, “to guide development, and to protect and/or enhance the physical and visual aspects of the area for the benefit of the community as a whole.”

By submitting testimony at the hearing, the organizations gain standing necessary to appeal to the Zoning Board of Appeals if, as expected, DPP Director David Tanoue approves Kyo-ya’s petition.

In a joint Sept. 21 press release, four of the groups–Hawaii’s Thousand Friends, the Sierra Club, the Surfrider Foundation and Ka Iwi Coalition/Save Sandy Beach–announced they intended to do just that: “We are confident that the facts are on our side,” Coleman said in the release, “and we expect that the zoning board will take a long hard look at the city’s decision-making process.”

Looking down the road, if the appeal fails, the groups can take the matter to Circuit Court, where, veteran observers say, the variance would likely be overturned.

“If this gets to court, I would be very surprised if it stands,” says planner John Whalen, the former head of Mayor Frank Fasi’s Department of Land Utilization (forerunner to the current DPP). Whalen is one of eight mayoral appointees to the DPP’s Design Advisory Committee, which concluded that the proposed tower was “a nice building in the wrong place.”

“I’m not a lawyer, but I don’t believe Kyo-ya’s request for a setback variance meets the County Charter’s three tests for hardship,” says architect and planner Pat Onishi, the city’s planning director under Mayor Jeremy Harris. “Most importantly, if the DPP grants this variance, I believe it will invite other variance requests from other beachfront owners.”

Tanoue has until late November–60 days from the hearing date of Sept. 23 –to make his decision.

Local 5 Takes the First Round

Since Kyo-ya first announced plans to redevelop the Princess Kaiulani and Moana Surfrider hotels in 2006, the feisty hotel workers union Unite Here Local 5 has been en garde for workers’ jobs, especially after news got out that the plan would actually reduce the number of hotel rooms on the properties despite an overall increase in square footage.

In a May 16 op-ed piece in the Honolulu Advertiser, union secretary-treasurer Eric Gill went after Cerberus Capital Management, the notorious Wall Street hedge fund and Kyo-ya’s owner since 2004.

“Cerberus has a history of laying off hundreds or even thousands of workers after buying up companies,” Gill wrote, citing huge layoffs at Chrysler, Albertson’s supermarkets, Mervyn’s department stores, a North Carolina textile company and even a school-bus manufacturer.

“It is absolutely unacceptable for companies that have been making money while the rest of us are suffering to then turn around and demand even higher profits at the expense of workers. The answer will be ‘no.’ Hotel workers will fight to defend our livelihood. We will fight to defend Hawaii. … It’s as simple as that.”

In the days leading up to the Aug. 18 City Council vote on the project’s two blanket permits, the union convinced Kyo-ya to ensure union jobs by committing to a minimum of 710 hotel rooms and a maximum of 200 residential condos and 221 timeshare units, according to the union. The agreement was announced at the hearing, whereupon the Council voted unanimously in favor of the permits.

“What happened in this instance,” says Local 5 spokesman Cade Watanabe, “is that local people are serious about seeing that our vision for the future is enforced versus a group of New York investors, who don’t really care about what happens here.”

Watanabe, whose union is known for occasionally taking stands on critical environmental issues, is asked about the proposed Diamond Head Tower’s beachfront encroachment.

“It’s premature for us to come out on the shoreline issue,” he says, “but we’ll continue to keep our eyes on the project. Just because we reached an agreement doesn’t mean we’ll move on. We believe this issue is related to the longterm viability of the visitor industry in Waikiki.”

Kyo-ya, the Historic Hawaii Foundation and the Outdoor Circle

“Rather than removing [the historic Moana Hotel building] to allow for a higher density tower, Kyo-ya has elected to redevelop the Diamond Head Tower, a tower that does not have the historic designation or such significance in the history of Waikiki.” –from Kyo-ya’s Final Environmental Impact Statement (FEIS) for the Princess Kaiulani/Moana Surfrider redevelopment, March 23, 2010.

The veiled threat in this passage is astounding. According to the FEIS, Kyo-yaelected not to tear down the 109-year-old Moana (now known as the “Banyan Wing”). What this exposes is that it can legally demolish the Moana at any time, even though it’s the beloved old Queen of Waikiki and is listed on both the state and federal registers of historic places. Adding insult to injury, Kyo-ya is using the Moana to argue for special treatment to build an overly large tower on the overly small lot next door.

It was enough to convince the Department of Planning and Permitting. In a July 24 staff report, the department confirmed Kyo-ya’s claim that the non-demolition of the Moana should be counted as one the project’s four public benefits. The report also noted the sacrifice Kyo-ya is making: “By choosing not to redevelop the Banyan Wing, the Applicant will forego over $100 million in value.”

The fact is that the Moana will never be torn down. So why make the threat?

The Historic Hawaii Foundation (HHF), which describes itself as “a statewide leader for historic preservation,” will surely know.

In early 2009, HHF reviewed the project and sent a letter to the developer expressing concerns about proper spacing and compatibility between the Moana and any new abutting structures like the proposed Diamond Head Tower.

“We do not have any notable concerns regarding the presence of this new structure,” the letter said. “Overall, this plan creates a more open feeling than the existing building layout and will enhance the character of this section of Waikiki.”

The letter was signed by Kiersten Faulkner, HHF’s executive director. She should have some insight into the Moana’s actual status that might begin to unravel the twisted logic Kyo-ya is using to finagle its variance.

She answered my questions via two long e-mails explaining that the law does not now protect the Moana. She said Kyo-ya had never threatened to demolish the Moana, at least not during her conversations with the development team. She listed various economic incentives that governments typically give to private property owners in exchange for preserving historic properties — things like tax breaks, tweaks to zoning, additional density and transfer of development rights to adjoining properties. Over the years, Kyo-ya has reaped millions in tax credits for its exemplary restorations of the old hotel.

What about the historic significance and value of Kuhio Beach Park and Waikiki beach itself? The beach is considered a natural resource rather than a historic property, Faulkner said.

It’s odd for the state’s leading historic preservation group to take such an anodyne position when the fate of the Moana is being used as a bargaining chip. But the mystery clears when you look at the board of HHF. Robert Iopa, lead architect for the Kyo-ya project, is HHF’s vice chairman and will soon become its chairman. Kyo-ya Executive Vice President Greg Dickhens has a seat on HHF’s board of trustees. Kyo-ya’s cultural consultant, Peter Apo, is a former HHF board chairman.

“The board is not involved in any review or comment on this project,” Faulkner said. “This review was handled by the staff.”

Meanwhile, over at the venerable Outdoor Circle, Director of Environmental Programs Bob Loy states flatly that the organization is not in favor of giving Kyo-ya a variance for the Diamond Head Tower.

“We have concerns about that type of construction going on so close to the shoreline,” he says. “There are laws against it, and it’s up to the government body to enforce the law and to do so in this case.”

When asked about the Outdoor Circle’s absence from the hearings, he blames it on resources: “We’re spread a little thin to go to hearings just to reiterate what the law already requires.” He adds that the Outdoor Circle was asked by Kyo-ya to testify in favor of the project, but the board refused.

From the Peanut Gallery

“Kyo-ya seeks deviation from shoreline rule,” read the business-page headline in the Honolulu Star-Advertiser on Sept. 24, the day after the DPP hearing. The news story by reporter Allison Shaefers was the Star-Advertiser’s first in-depth look at Kyo-ya’s suddenly controversial tower-in-the-sand proposal.

The article provoked some lively online comments. Much of the chat was about rich people and the sense that our city laws and politicians are pliable for them.

“Typical B$$$$$,” said one commenter. “This state and city are run with a third-world mentality.”

Two longer submissions, however, succinctly set up the community debate about the future of Waikiki.

On the one hand, there was this from “marktheman”:

“These setback rules have a history that is not just environmental but derives from the enlightened self-interest of the tourist industry, and it seems unlikely that they would have been enacted if the tourist industry in Waikiki had strenuously opposed them in the first place.

Also, within the local political elite at least since the 1970s and in the tourist industry, it was recognized that overdeveloping Waikiki was a mistake. …

By this measure, it seems that they are now killing the goose that lays the golden eggs. …”

And then there was this from “jobagangles”:

“This is silly. Most if not all of Waikiki’s hotels are already at the high-water mark. The law was passed after everything was already built! What was the point of a law like this? To ensure that hotels be torn down when they need to be replaced and made smaller? That is never going to happen. So, instead the group Thousand Friends wants Waikiki to stay the same and decay as is. Bad for Hawaii. Waikiki is where this kind of development should occur, not the north shore.”

Fair enough. So I called Rick Egged, president of the Waikiki Improvement Association (WIA), read him “jobagangle’s” screed and asked him if he had a point. The WIA, made up of Waikiki hotel owners, merchants and other boosters, is on record in support of Kyo-ya’s redevelopment plans.

“Yeah, that’s the basic point,” Egged says. He calls the Waikiki Special District setback rules an “overreaction” to the beach behemoths that went up in the early 1970s.

“There was very little thought given to what would happen down the road. We’ve had two rounds of revision, and still, 90 percent of buildings in Waikiki are non-conforming. Should the height and shoreline setbacks be scaled back? You can make a strong case that yes, they should be.”

Luxury Unbound

Renderings of the proposed Diamond Head Tower show a sculpted glass-and-concrete tower with spacious rounded lanai stacked up the makai/Diamond Head corner. About halfway up the side of the 26-story tower , a larger cantilevered lanai overlooking Kuhio Beach marks a sky pool and sundeck for the owners of the building’s 40 private apartments that make up the upper portion of the tower. (Lower floors will contain an independently operated 180-room luxury hotel.) The one-, two-, and three-bedroom residences range in size from 1,475 square feet to 1,980 square feet and will be sold in fee, as will a larger penthouse.

“Those apartments will be among the most expensive in the world,” predicts realtor Marysia Coleman, “certainly the most expensive ever in Honolulu.”

Coleman, who has been in the real estate business for 35 years, specializes in high-end real estate as vice president of Mary Worrall Associates Sotheby’s International Realty. She won’t hazard a guess at their prices but mentions the recently completed Trump Tower condo/hotel by way of comparison.

“This place is right on Waikiki beach!” she says. “If it’s built–and it seems to me that’s a big if–it’ll have amazing non-stop views. Owners will presumably have hotel service at their fingertips, and they’ll be able to rent their units out at phenomenal rates…Compared to other parts of the world, Waikiki is truly beautiful and safe, and the climate is simply the best.”

Last month’s issue of Honolulu magazine featured a list of the 25 most expensive private homes in the state. Most of them are brand-new retreats hidden away in gated oases among the lava fields of the Big Island’s Kona coast.

It was an eye-opening story that left at least one reader with a queasy feeling about Hawaii’s future. The houses ranged in price from $61 million to $16 million. Each entry was illustrated with an aerial photograph and captioned with a brief description of the homeowner.

As the magazine pointed out, “these are people not only rich enough to afford one $20-million house, but several of them, in different parts of the world.”

Among the owners were a few high-tech titans and Hollywood types, but mostly they were investment bankers, hedge fund operators and buyout artists–in other words, Wall Street winners in the demolition derby that is the radically financialized US economy.

These are the same people who run Wall Street hedge funds like Cerberus, Kyo-ya’s owner. These are the same people who hope Honolulu’s laws can be bought for a few political donations and the price of a glossy ad campaign on the local TV news. These are the people who need the Diamond Head Tower to leverage the entire Princess Kaiulani and Moana Surfrider redevelopment, even though our laws no longer allow towers in the sand.

With its sky pool and penthouses, the Diamond Head Tower is a gambit by–and for–these people. Let’s not let them get away with it.

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