Steering Growth – Extended Version

Hawaii Business invited six influential business people and political leaders to talk about development and preservation. The moderator was Jerry Burris, editor-at-large of Hawaii Business. The panelists were:

D.G. “Andy” Anderson, developer, former state senator
W. Allen Doane, former chairman and CEO, Alexander & Baldwin, Inc.
Micah Kane, Kamehameha Schools trustee, former director of the state Department of Hawaiian Home Lands
Harry Kim, former Hawaii County mayor
Jan Yokota, vice president, Pacific Region, HRPT Properties Trust
JoAnn Yukimura, former Kauai County mayor

Burris: I would like to welcome everybody to the Former Mayors of Hawaii Club (laughter). The subject is about development. It’s about growth. It’s about how does Hawaii protect what is special about this place. Especially about, you know, how do you combine these few things and what are the natural consequences? You folks are here today …

Anderson: Because nobody else would accept (laughter).

Burris: Because you’ve been through the wars in various ways. The Waiawa project seems to have hit the skids and that brings up a lot of thoughts if you go back in time. And I guess I would like to start by just asking is there a limit to development? Should there be a limit to development on an island state like this? Let’s start with you, Jan.

Yokota: Thank you. The population has remained relatively stable. I think we’re up to about 1.2 million right now. Should there be a limit? I guess the answer is yes, but the question is how? Where is the growth? I do believe the urban core is where a lot of the growth should be directed when there is growth of population, so we can preserve some of the agricultural lands. I’m speaking about Oahu. It would be very different on the Neighbor Islands. It’s important to try to concentrate growth in the urban core to the extent you can for transportation reasons, sustainability reasons, sufficiency of infrastructure – all of those things.

Burris: How about on the Big Island, Mayor?

Kim: First of all, one of the realities for us was limited growth. It was a numbers game that is very difficult for us with the United States in the background. But for a long time, I’ll be very personal, I’ve been very sad and dissatisfied of how we’ve grown and where are we going. And Micah and I have talked about some of our personal sadness in regards to the direction of Hawaii and what has happened to Hawaii’s people. I definitely believe that all the leaders, some of them here, need to be aware of what we have to do to change things. At the end of the road, I think we’ll all be very sad of what is there if we do not change.

Burris: Andy?

Anderson: I see the islands, every island, trying to be a state entity. They want economic development. They want housing, they want open space, they want ag. I think you got to look at the state as all islands. Take Kauai and bring it back and attach it to Hawaii. Bring the big island of Maui and attach it to Waimanalo and Kaiser area and make a state out of it. We have to have ag land in the state, it just doesn’t have to be on this island. I don’t think you can preserve ag land on Oahu. We’re going to preserve a few acres here and there, but this is the economic hub. This is where it should be the financial engine. This is where the growth should be. Had the Superferry not gone down, you would’ve seen the ag lands on the Neighbor Islands begin to develop, but this Gentry thing (the cancelled Waiawa project) – I was reading the funny comments down below (the online news story) this morning and somebody is talking about “open space.” Well, it’s always nice to say open space if it’s your land and you’re paying the property tax. I mean it’s easy to tell another man how or a woman how to use their land. But I think the state as a whole has lots of ag land. I think the state as a whole has lots of open space. Honolulu is going to grow, I don’t care what you say. Gentry went down with Waiawa. Kamehameha Schools, I didn’t realize, owned most of that land. It has a fiduciary responsibility. And if we’re going to provide homes and jobs for our kids, then it’s going to happen. Or we’re going to stifle. And if we stifle, then what’s left of housing is going to go very high because of demand. So I think Oahu can grow. I’d like to see nice growth and thought-out growth and not just random mountain-to-the-sea, but there is room for Oahu to grow. And there is ag land and open space on the Neighbor Islands. So I think it’s time to look at the islands as a state and not just island by island.

Burris: I remember your former boss, (former Honolulu Mayor Frank) Fasi, once said that it’s absurd to think of Oahu maintaining agriculture.

Anderson: I would agree with that. When we talk about ag land, drive up Kunia, which is some of our most prime land. It’s all fallow. Take a look at Dave Murdock’s land, all from Mililani going down. It’s all fallow. I mean there aren’t enough farmers and there aren’t enough housewives to buy all the produce that it could grow. Anything that we grow is still more expensive than the imported tomato. And so the housewives today buy the $1.29 tomato vs. the $3.39 tomato, where it comes from a 3,000-acre farm on the Mainland. So it sounds good for the politician. Open space, ag. I don’t think it’s real.

Burris: Allen, what do you think?

Doane: I certainly think that the question is limited growth. I think the answer is yes. There will be some growth, it’s got to be very wise given some of the mistakes that have been made over the years, but will there be some growth. But there’s going to be a major thing in the next 10 or 20 years: It’s going to be redevelopment. It’s going to be taking existing locations. It’s going to be some of the places where there are buildings. They were there for a purpose because they were the very best places. And I really think that in many cases, you’re going to see a lot of renewal in existing locations. I think it serves a couple of purposes. It will upgrade what is already in a place whether it’s a home, whether it’s something at Kakaako. And at the same time, it’ll preserve open space – if you’re not developing some place that already is open. So I think there are going to be some different things the next one or two decades.

Burris: JoAnn?

Yukimura: Just a preliminary remark. It’s to say thank you for this discussion. I just love a good discussion, as I told Steve (Petranik, Hawaii Business editor) when he called me. But more so when you’re talking about decisions that are so critical to our state and our economies, to have something like this is really important and very valuable. With respect to the question, I think I sort of agree with Jan that it’s more about how rather than whether you limit growth, but how and where. I think we’re entering a very different era and the assumptions that we’ve normally gone by are not going to be workable assumptions very soon. For example, we can get these mass-produced tomatoes from the Mainland now for very cheap but the price of oil is not going to stay anywhere near what it is today because we are, by the very laws of nature, reaching some limits to this limited fossil fuel. And so having resources and using resources close to home are going to be really important, even close to people who live on Oahu. And I’m sorry I don’t remember the specific statistic about Singapore, but a huge percentage of Singapore’s food is grown within the city limits of Singapore and that is a function of both transportation costs and other issues. So you know some of the best lands here on Oahu, I mean I just flew over it today as I came over from Kauai. It’s the flat rich soils of Central Oahu and I see suburban growth just sprawling all over. And that is the mode of every island right now. Kauai is becoming, even as we talk about preserving rural quality, we’re becoming suburban where you have to drive to every place, your children have to be driven everywhere. And it’s not going to make much sense. In fact, the Smart-Growth people are saying that suburbs are quickly going to become the dinosaurs of our age and that it is more about dense growth, it’s about energy-efficient growth and growth patterns, it’s about not seeing open space or ag lands as an opposing force to development. But it’s something that is essential to livable and great places to work and live in. And so, you know, there are limits we have to – I mean 6 billion people on this earth with ever-limited resources not only oil, but iron, sand, steel.

Burris: Water?

Yukimura: Water. Yes, where sustainability is not going to be a matter of choice. It’s going to be a matter of necessity. And the good news is that it can still be very prosperous and wonderful in terms of places to live and ways we can have our children grow up. But it’s going to bring a lot of shifts in our thinking. Thank you.

Burris: Micah Kane.

Kane: I have a little different take – I think we as a state made a fundamental mistake when we started pushing government’s responsibilities onto the private sector in the form of infrastructure. And that is your prime incentive to mold development to areas where you want growth. When you start passing exactions onto developers, it starts to disincentivize a developer to go into growth areas where entitlements have occurred. In other words, we’ve entitled land at the state level and at the county level we’ve all agreed where growth should occur. But we didn’t do is complement the infrastructure. That is what we we’re catching up on together in Laiopua. In the ’80s, Gov. Waihee designated major master planned communities. That was a good thing and it designated funding to go along with that investment. Unfortunately, there were some hiccups along the way and we didn’t get far enough along to really see those communities materialize during his time. Some of the stuff that the mayor (Kim) and I worked on was actually going to back to those infrastructure improvements as government taking back that burden. The private sector will always follow the money. They’ll follow money and they’ll follow certainty. Obviously, Waiawa had a huge amount of uncertainty because of infrastructure improvements that needed to occur on that part of the hillside. The moment government steps away from that, the private sector looks at it as “I got to put a water system here in Laiopua vs. a water system in Kohala, then I’m going go Kohala, you know. And so what you end up with is a mish-mash of infrastructure that is uncoordinated. And so now it becomes a profit-making decision as opposed to whether it’s the right thing for our state. And then you’ve got administration after administration who are making independent decisions based on those requests that are coming in. And I just feel that if government takes back their core responsibility – roads, water, sewer and public facilities – the private sector will follow. And you’ll inherently start to preserve spaces that we as a state want to preserve because it’s too difficult, you know, it’s just way too difficult. Then I think we forget that those natural forces are there for us to just embrace. Right now, we’re fighting it.

Burris: What you just said made me think of Kakaako. Government there stepped in and sort of did what Micah was talking about. Did that work? Did it work as expected?

Yokota: It worked very well in terms of creating the environment for landowners who should do the kind of projects we want – but you had to have the economy as well, so there were times when it made sense to develop and sometimes when it didn’t, depending on the economic climate. But what Micah was saying makes a great deal of sense. The state government over a period of decades decided to commit infrastructure monies to this area and that really laid the platform for development of Kakaako. I completely agree with what Micah has said. It’s very important. It’s a good model. And it was not only just one administration, but it was a number of administrations, so you have that over a 25-year period. And that is what is important – consistent commitment.

Kane: But in terms of growth, a good case in point: Leialii preserves Honokowai; Laiopua preserves Kohala; Kapolei preserves Wahiawa.

Burris: It’s a tradeoff.

Kane: It’s a tradeoff because you’ve invested into the infrastructure and said this is where people are going to live. And, you know, the mayor (JoAnn Yukimura) talks about flying over Oahu and seeing ag land in Kapolei. Well, there was a time prior to the ag community that Kapolei was a thriving place of a lot of people. It was estimated to be one of the second most populated native Hawaiian communities in the archipelago. It was a good place to live then and it’s a good place to live now. We view it as ag land because of what happened in the 1800s and 1900s. I think a lot of that we have to go back a little bit further. I’m sorry I keep going back to it, but there are a lot of answers to our questions there.

Yukimura: I agree with what Micah says about government committing and having responsibility for infrastructure where we want growth. The problem has been that there has been, at least on Kauai, no clarity about where you want growth and Nukolii is a perfect example of that. That is in an open space that was zoned ag and we were to preserve the space in between the two communities of Lihue and Wailua-Kapaa, and there came the developers and said, “We want to develop. We want to change from open and ag to resort in the middle of nothing else.” Not adjacent to any other urban growth. And, you know, the politics against huge citizen opposition put the growth there. And interestingly enough, that hotel is now in receivership, which shows that it wasn’t a good idea anyway. You have to drive somewhere if you want to go to another restaurant, whereas, if it had been part of the Coconut Coast, people could have walked.

So it’s partly about having a good plan and then following the plan. And great that Kakaako and especially infill and within Honolulu (are moving ahead), but if at the same time you have growth everywhere else, you can’t focus the tax dollars on that infrastructure and that is why it’s so important to know where you want growth and to have consistent support through generations of politicians so that you can have that consistency. And the other thing is you need to have clear requirements for the developer so that the external costs are not laid on tax, on the people of Hawaii, the cost for affordable housing. I mean if you just have developers provide market housing and not share some of the cost of affordable housing or create environmental problems and not pay for that, then those things are out of balance again.

Burris: You were talking about Nukolii and I’m thinking about Waiawa. Now, I wonder if you think that part of the fatal flaw of that project might have been that it was a hopscotch development. Do you think that is an argument that carries any weight?

Doane: I don’t know if it was a fatal flaw or it is fatal flaw. I think that there are some pretty imposing infrastructure issues that go into crossing a huge gulch, which a lot of people knew about. In a different market environment, it would probably be OK. The world I live in is one of usually having to deal with less than ideal alternatives. I’ve been reading the newspaper a little more in the last couple of weeks than I was before and I’m looking at the state that has the highest marginal tax rate in the U.S., with, in some ways with our GET, one of the highest sales taxes when you compound it. Then I’m looking at a state that has 163 school days. And, you know, we’ve got to have some much deeper thinking here about an economic foundation for this state because growth and homes and development, they really respond to demands instead of creating them, and the demand is created by healthy lifestyles that involve families, that involve jobs, and involves optimism about the future. And I think that right now, we’re in an environment where over the next three to five years, people are going to have to make some tough choices about alternatives that are less than ideal. So I don’t know where the balance goes on the public and the private side with all of that. But I think that you need to step back at this point economically and look at the context of the state and ask yourself what is the state, what are the counties reasonably able to do?

Burris: Andy, you’ve got a small development going up on the North Shore, and you’ve done a lot of development over the years. Wearing a developer’s hat for a moment, do you feel that it’s your responsibility to build affordable housing or is that something that government should do or the market should determine?

Anderson: I don’t see building affordable housing as my responsibility unless it’s a burden on zoning, or if I get some special entitlement that comes with it like it did with Kakaako for a while. But in the 50 years I’ve been around, I’ve seen this affordable housing formula, the attached HCDA (Hawaii Community Development Authority) at 30 percent, 20 percent, went down to zero. I’ve seen that affordable housing percent go up and down from wherever it was to zero. It doesn’t work for lots of reasons. I think you can build affordable housing in Hawaii, but you need the same kind of mentality, money, thinking, land and commitment as he (Micah Kane) did with Hawaiian Homes. It’s a state responsibility with the private sector, of course, but it’s a lot of lip service I mean we go into it for a while and it doesn’t work. The politician amends the statute, ordinance, whatever it is, and takes it away or lessens it. I don’t think we’re ever going to provide the affordable housing in the numbers that somebody wants. The houses that I build in a very small scale but, you know, A& B, Murdoch, Schuler, (DR) Horton, Hawaiian Homes, I mean, where do your people come from? You built 1,000 homes last year. Where do they come from? Living two families in the house.

Kane: They come Mililani to Makaha. They come from either rental communities or multifamily homes.

Anderson: So there is a demand. I mean is it fair to say that I should have my grandkids or my kids living with me forever in my house? I really would like them to have a house, affordable or a co-sign or make the deposit, but he is building basically affordable homes for a Hawaiian community. He has gotten the funding for it. But if he didn’t do that, these poor Hawaiian second families in these homes or moving out a rental, would be deprived for the rest of their life in their own state. Should we not build because of environment? Should we not build in open space for a demand that is pent up? I don’t think we know the demand for housing in this state, affordable and/or market. I mean everything that these people build, it gets sold. They’re not building what – he is got an environmentalist growing a resort group, but the Murdochs creating Mililanis. They’re not building for the tourist. They’re not building for the newcomer. They’re building basically for the Kamaaina. And so do we stop? Am I forever going to have my kid and his wife and three kids living in my house? I hope not.

Burris: Harry, before we started, you and Shara (Hawaii Business writer Shara Enay) were talking about having dreams and how hard it is not to have a dream because of the cost of housing and how difficult it is for a young person. Is the day coming when kids growing up here – average kids with average jobs – are going to be able to afford a house either on your island or anywhere?

Kim: I promised my wife I wouldn’t be argumentative today.

Andy: I promised myself that too (laughter).

Kim: But you know you lied (laughter), I’m listening to when you talk about solutions. I surrounded myself with some people with kind of thinking that I needed it. One of the most important views was James Camp and Associates in regards to community building. He would talk about all the solutions. In 2006, there was a study of the state that looked, by county, at how many people are homeless or are at risk. At risk meaning those who live literally month-to-month. If anything happened to their jobs or a major expense or anything like that, they probably could survive another two or three months, but then they would become homeless. And the second category was those who are hidden and those are the ones that live two or three families together to survive. And I wonder how many of us don’t realize how scary a threshold we are at now because that was 2006, and everyone agrees that this number must be higher today. That number for Kauai, JoAnn, you had the highest percentage at risk or hidden, near 30 percent. The rest of us were near 25 percent. Just swallow that for one second and I’ll say collectively, “What have we done?” my prediction is that we are the cause of 200,000 to 300,000 people in this state who are at risk, that are hidden, or are homeless. This is what has happened to this state of Hawaii, our people. What happens if the figure becomes 50 percent one day? Is there a threshold where we say that we’ve lost a community? We are near it. How long do we go before we say, “We can’t allow or tolerate this?” It’s not a matter of who we thought is responsible for the development of housing. It’s a matter of what is causing this kind of lifestyle to occur in this small state of 1.2 million people.

Burris: If that is the problem, what is the solution?

Anderson: I believe the counties should be involved in affordable housing. We abandoned it here (on Oahu). You go back and look at Mayor Fasi’s record of building affordable condos. They’re all being sold today by this mayor. We had a very aggressive program of providing affordable housing, condominiums, etc., for a group of people who needed help. Why did the people of Oahu vote to abandon it? I mean where is this concern about my kid, my neighbor and my brother? I mean we voted to abandon the Housing Department. I don’t know why. But we used to take CDBG money (Community Development Block Grants). We would fund like we did block aid Hawaii, making millions of dollars. Alvin Pang would build a unit. When it was finished, we would rent and re-finance it, and took our money back up into another project. If you look at Fasi’s record of providing affordable condos, apartments, etc., it’s quite impressive. I don’t see why we can abandon that as a county and say it’s not a problem.

Kim: I didn’t say that, Andy.

Anderson: No, you didn’t. I know you didn’t, but you have housing on your island. And I think all the islands have it except Oahu.

Yukimura: It’s one of the biggest mistakes I believe to sell off public housing.

Anderson: I agree with you.

Yukimura: And it is truly a major responsibility of government to participate in the creation of affordable housing. I think the private sector has a responsibility as well. But I think part of the solution is that for affordable housing, and this is a very major shift in thinking again, it is not to be a commodity on which you speculate, but it has to be a resource that we need to keep insulated from the market. And so that means that if people buy a single-family house and that becomes re-sellable, there is a limit on how much they can get. They have to sell it to another eligible family. There should be some reasonable profit for improvements made and so forth but not this kind of speculative thing that we were experiencing during market. For example, in Kilauea, the county participated in a private-public partnership in housing. People who really needed the housing got it for $102,000 about 10 years ago. And they had with a 10-year buyback but after 10 years, they could sell it for $600,000, which was the market, the going rate for houses like that two years ago. And so you will have houses going out of the affordable inventory faster than you can put houses in, much less from creating the growth that you need. It’s not just the way Kukui Plaza used to be and on our island, Kalepa Village and Paanau housing. Those need to be maintained well. And they’re rentals and they will be forever available to people who need the pricing that we offer. But then if you offer for-sale properties, then you have to have an in-perpetuity buyback on them so that they’re always in the affordable housing inventory. That is the only way we’re going to ultimately solve the problem.

Anderson: Where is the incentive for the developer to build affordable houses? I pay the same amount per square foot of the land that I would pay for a market house. I pay the same amount of real property tax on the affordable houses I do for a market house. I have to wait two years for the city to process the blasted permits for an affordable house or a market house. There are no incentives. The bank loans you money probably less than an affordable house because you can’t guarantee the returns, so if you look at the hurdles that are there for somebody to make a commitment, it’s difficult because it’s the same hurdles as market. I use Micah as an example because it’s Hawaiian land, special funding, with government employees designing. He is very unique, but if you took him and put him in charge of affordable housing in the state with carte blanche, cut through the permit process, commit some state land, some cheap dollars for funding, he could do it I think.

Kim: I totally disagree with the direction we’re talking about. Some time ago you asked in regards to my position on developers. I had a feeling that you were going to say I don’t like developers. But I said developers were my only hope in regards to addressing the problem and I believe that more today than ever. There are two developers on the Big Island that I would like, if any of you have time, to see their job. The incentive was to try to help us make Hawaii a better place. And no one made less profit for them. And that is Ooma property and the Kohanaiki property. Two of them so engrossed in suits and counter-suits, for the Kohanaiki property it was almost 14 years. I then appealed to the developers to help us to address certain problems by what they developed and how they developed it.

Burris: But you know that doesn’t answer Andy’s problem. It’s appealing and it’s wonderful to appeal to a developer by saying, “You need to make our community stronger by helping us make affordable housing.” But the developer then has to answer to the people who give him the money and he has to say, “Can I do this?” It wouldn’t be fair to ask a developer to go in the red to meet a wonderful goal.

Kim: The answer is not to ask a developer to build more housing. It is not to ask the developer anything specific. It is to ask, “Help us develop a community.” I don’t think anybody here would deny that the type of development we have created, and not here in Hawaii only, but in a lot of places, encouraged cars and automobiles because of pod-type-building mentality. And what we’ve talked to these developers about how to stop that and help us build a community atmosphere that will address all these things. In regards to what Ooma has done and what Kohanaiki has done, I think all of you would be very awed by these developers. We appealed to them personally and they had to throw away, literally throw away, their entire design of what they were going to do and we all know that costs a lot of money. And I’m going to do something I have never done before. I’m going to go to the Land Use Commission hearing, hopefully some time in January, February, to support the Kohanaiki development.

Yukimura: I think there is a way to actually put together what Mayor Kim had said and what Andy Anderson had said because I do believe that we have to make it workable for the developers because we need them to be part of this. And what we tried when we passed the affordable housing ordinance, which was nothing as I had envisioned it, but anyway, what I see as being workable is to require the developer to do on-site housing. That is when they have a development they’re doing, they need to include on that particular site, or close by, affordable housing. But their responsibility would be narrowly to give the land and to bring the infrastructure up to the housing site. And they’re doing it anyway for their development. So the additional cost shouldn’t be that much more. Then the counties taking the land or using a nonprofit developer would do the development of rentals or cooperative housing. And there would be design controls so that it would mix well with the development. And I have seen some smart growth. Actually, Mayor Kim, the UniDev developers have done development where the homes are actually intermixed in the whole development and you can’t tell an affordable unit from a market unit. And doing it that way, you know, the developer doesn’t have the whole burden of doing 80 percent and below maybe on income, which is a very deep subsidy. That can be taken on by a nonprofit or county developer. But if you have the land and off-site infrastructure, then it’s a workable prospect for the county.

Burris: Mayor Kim, in a few cases like the Mauna Lani, they did build housing and kind of workforce housing in the resort, mauka. Has that worked out or has that stuff slipped out of affordable.

Kim: If your mission is just to provide a few or a number of houses, affordable houses, I know we will always fail. Our mission was not that.

Yukimura: 30 percent?

Kim: Yeah, even that. I don’t care if it was 50 percent because it stayed for a while. Our mission was to work with all developers to, No. 1, understand what has happened and what is happening to the island of Hawaii. Secondly, to work as a partner in this on how we can address it in how we develop and what we develop.

Anderson: You had an exciting program going with Waikoloa.

Yukimura: That is the Unidev, right?

Anderson: UniDev came in. That was an exciting program. Free land. That thing has been about six, seven years, eight years.

Kim: Going on six.

Anderson: Six years. Is that going to happen?

Kim: A part of it is happening now. Obviously with the crash, in the event where housing went down, some things have to be re-evaluated, but basically what JoAnn was talking about is a very good idea. The whole thing was, the question was they asked, “What stops people from buying their own place?” The down payment was a major portion of that. So we took that away by making it a lease-for-ownership type of situation. But I still want to state that, you know, I wish we had all my developers here in regards to what they gave and in regards to try to make – I’ll use the old word – when you talk about sustainability, you rarely hear about sustainability of a culture or a lifestyle. And that is what we’re trying to address here. I’ll emphasize it again. I think we should all be very, very scared of what we’ve done, where we’re going if we don’t change our whole mindset. You cannot tell me you’re not scared that 25 percent – that’s a minimum of each county – is at risk or hidden or homeless in regards to lifestyle. I remember we had this discussion with Mayor Tavares (Charmaine Tavares of Maui County) this is you could call her up as far as the real story, saying – the public said the cost to buy a piece property in Maui for the American dream of approximately 6,000 square feet. The cheapest lot they could find was $400,000 for the lot. And Mayor Tavares, I told her we found one for $350,000, but you know what she said? “Harry, I’m the mayor of Maui County and I live with my mother because that is all I can afford.” I’ll tell you why I came here. I wanted an opportunity to talk to people like you, you know, like we talk to all developers. Can you slow down and take a look at what is happening to our state and our people.

Burris: One thing, you know, you talk about being scared of where we’re headed. Allan convincingly said something about in a very few years, we’re going to have to be making some very difficult choices. What were you talking about?

Doane: I just think that the economic environment that we’re in nationally, state, county, at all levels, is one that I think really have to come back and ask yourself, “Where are the resources? And where are the priorities?” And setting your objectives. Usually, in forums like this, you start at this high level and you leave you where you started. Today you’re all lathered up because things aren’t going well. And, when you go back and you kind of go back to what you were doing before. I think that certainly I go back to – you mentioned it – there have been a couple of things that have stunned me. One is Kakaako, which I won’t mention today (laughter), where we went along with the state and got a very bad result. It didn’t turn out that way, but we started our development at Kukuiula (on Kauai). I can’t remember. I think I was born then (laughter), but I know I was not of age yet, but it was a long time ago. And then after we started the development going we had (Hurricane) Iniki. And, funny thing, we finished up only two things after that. We had this big development we spent all this money on. We did the affordable housing first. And that the other thing we did was, as we had a decision to make, these were 100-plus affordable units.

Yukimura: 140.

Doane: So we ended up building a $15-million sewage treatment plant knowing that we weren’t going to do any development for a decade. You know why we did that? Because we had an obligation for the community to get this housing going. It’s 1992 when we did that. So we ended up building the sewage treatment plant. And then when I became CEO about five or six years later, we took the $15 million writeoff. We wrote the whole thing off because it had no value to us economically.

Burris: So the market stuff never went in?

Doane: Well, there’ve been a few homes, a handful built, but I’d say we’re about two years from having first housing stock. But we, not an example of economic heroism here, but you had a company that is fundamentally grounded in Hawaii and we made a commitment, tried to live up to our obligations. And, well, I think we’ve had some strong differences in the past in terms of what is appropriate to do from a business-government standpoint, we had an obligation to the county, the people. We did it. We’ve also just sold I believe at a very low price about 75 acres up in that Eleele area to the county so that the model you’re talking about, that’s exactly it. We don’t have any other developments. We have no requirements. And we’ve done that and it’s because it’s a very logical place for housing.

Kane: I think Mr. Doane’s comment about where the market is at right now is the primary problem. And that until the private sector engages, we’re going to continue to see this plateauing and down just a little, up and down, until we provide certainty to the private sector that they can engage. And right now, there is not enough certainty there. And I think we as a state have to step back and recognize that we’re competing with other states and other countries for that investment. And we’re starting to recognize that our differences need to be set aside just as they do at a time of crisis, and recognize that we’re a single team that needs to go out and attract that investment. And too often we have to hurt too much before we do that. Of all states, we have the best opportunity to get the flow of capital going again because our evaluations have maintained where they are right now. So there is equity there. And I think if we give our community an opportunity to start buying down as opposed to buying up, and that is going to be predicated on again giving developers certainty that they can re-engage in the market so that they see buyers there. And people will, the individual, because there is I think there is a big demand for it. They’re my peers. They’re like Shara (Enay, Hawaii Business writer). They’re our peers who have engaged in the market or stretched like if you give me an opportunity to buy down it out, and my value stays up, I will buy down. And if it moves up, it moves a loan out of Bank of Hawaii. It just starts that flow of capital again and we’ve got to find a way to do that. Another point I just wanted to make with regard to affordable housing is that the moment the state steps back from its responsibility, affordable imposition become much more punitive to the developer. And I think those are fundamental concepts we just have to understand.

Yukimura: We just can’t do development as usual, though, because it I think we’ve seen it doesn’t work. And this certainty, I totally agree, but how do you get certainty? You get it from a very good plan that has been put together by all parties, where they understand what the consequences of their collective choices were and we’ve seldom done planning like that. Because if you have a plan that everyone actually has been part of and understands, there are more chances that it will actually happen from generation to generation of leaders, because we know the scenarios: The new leader comes in, changes all the plans and does his thing, and the next leader changes all the previous plans. There is no certainty in that.

Burris: I wanted to stick on the certainty for a second. I’ve always heard that it’s not so much the environmental rules, the planning rules, all the things that are a problem. It’s the lack of certainty. If you knew it would take a certain amount of time to get permits or get told no permits, then you could work plans, but it’s all too vague.

Anderson: I’ve always said that one of the biggest contributors to the high cost of living in Hawaii – be it market houses or affordable housing – is government. Government I think is the biggest culprit in contributing to high cost. And the time it takes before a developer can get a permit can be two years. Haseko was 25 years. Gentry at Waiawa was about 20 years. It seems like we can’t make up our mind as a government. And the permit process, land use, city, county, Kakaako, the duplication. Time is money with the developer. And time, labor cost goes up, real property goes up, interest rate goes up. I mean every month you delay me is a higher cost of my product that I have to pass on. My little project I’m doing has taken me almost two years for a 23-lot subdivision. I got held up seven months for a driveway issue. A driveway issue! Something you could’ve done in 20 minutes. I don’t think government, and I’m going to say government employees to some degree, respects the problems of time and what time does to the cost of living far as the finished product. It’s a mentality. (Bureaucrats think:) “I’ve seen mayors come and go. I’ve seen governors come and go and I’ve been doing it this way for the last 20 years, I’m going to do it this way when you’re gone.” You need a leader to motivate these people, to put some urgency. You have got to excite them that they are participating and they help things get better for their kids as well as yours.

Burris: One of the Economic Revitalization Task Force’s proposals was you would get the permit and then you start moving and then if there is a problem later on you have to fix it rather than waiting for the issue of the permit. Did that ever happen?

Yukimura: Well. I hope not. That is a terrible way. Who does a house that way? I mean, you build something and then you figure out what the next step is and you pick up plumbing here and then you decide. No, you need a plan, but there is in the Northwest, can’t remember which community, they used the consultants there, some planning consultants, and these developers for a major section of a city got their permits in six months and they did it through what they call form-based codes, which was a very long planning process where you define your standard such that every house has to be within 10 minutes of a bus stop. They had very specific requirements, but if you met all these requirements, you got the permit. And so talk about certainty, there was, you know, it was very detailed in terms of design, in terms of street layouts, patterns, and so forth, very much based on Smart Growth principles. In another case, the developer got a standing ovation at his public hearing – that was in British Columbia – because they had done a very inclusive planning process. Both the public process as well as the private planning process had been well done and there were clear standards for the developer.

Doane: It’s very difficult right now; we are so deep in the hole. It’s real hard to see what the future has to offer. I would certainly take into account Mayor Kim’s comments about the broader societal issue here, and housing and the economy are integral parts of it, but they are part of a much larger picture. With medical technology the way it is, I have got a couple of children who have just been born who will be living in the next century. You cannot be thinking about what you are going to do for the next five years or 10 years. Really you need to take the longer view. There are some success stories and they are not necessarily replicable in all areas, but I think that includes Kapolei, except that the infrastructure followed rather than led the housing. But you know what? It was not the worst idea ever to have housing there and a lot of people, they do not like the drive, but it’s giving them an opportunity to buy a home they would never otherwise have had.

Anderson: Where would those people live today if we didn’t do that?

Yukimura: Kakaako.

Doane: Even if they are living in Kakaako. That example, the development high rise that we built is to my knowledge the first and the only where we have worked for this gap housing, along with market-priced housing, and that was a 20/80 split. And from a social perpective of people living together, it has worked pretty doggone well. Now it’s not at 80 percent (of median income), but it’s at the 100 and 140 level, but it has worked really well with the market housing. The biggest home run that has been hit in this state in the last couple of decades is from the military and the federal government. They did not have any money. They have houses, like a lot of houses in Kaimuki that are really old. And they had a solution, which was you come in, you (the contractor) get a 50 year deal, and you build a house you got to stay with it. And guess what, there’s a lot of military housing going on that’s created a huge amount of work for people who in this environment would otherwise not be employed. What Outrigger did in Waikiki, you got to feel pretty good about that. They did it on their own. They had their struggles along the way, but that was a really, really good result there. I’ll give you just one small idea and one bigger one in terms of the core because I really believe that no matter what we say on Oahu, we’re going to have bigger traffic problems in the future even with the rail, which is going to make living in the core a lot more desirable. In one sense, I think doing something right in Kakaako over the next 10 or 20 years and having a whole diverse number of housing types has got to be pretty dense.

Anderson: What kind of a population can you put into Kakaako?

Yokota: Another 20,000 to 25,000.

Doane: Another 10,000 to 15,000 people (than now).

Anderson: All in high rises, though?

Yokota: You do it in a mix. When we looked at the plan – I thought it was a really good plan because there was a large amount of open space. You can do that when there is one landowner, you can plan the area such that you concentrate those free open spaces into a single more usable space for the community as opposed to little spaces. I thought it was a really good plan to do that. You can mix the high rises within, as this will really create more of a variety in the heights as well as in the community. Maybe that is what it takes: a large landowner.

Anderson: Can we force people into a high rise?

Doane: A lot of them want to be there.

Anderson: How many people can you put into a high-rise concrete and glass condominium? I got two kids, I got a new family. I want grass, I want a dog. We’ve always had a hard time figuring what the buyer wanted. When we were looking at the Second City, this is 25 years ago, the argument was all in Ko Olina or to take some up and toward Mililani and the heights as well. Some like high elevation, some like low, but we always found it difficult to direct a person to go into a unit that we thought was good for them.

Yokota: The younger generation is much more likely. They’ve lived in different places and they are much more accustomed to an urban lifestyle. I have had the younger people say, “I do not need the kinds of the size of the units that are typically in high-rise units because my living room is really in the community. I’m out there far more than I’ve been in home.” So I think the younger generation has different expectations. That’s where you’ll have a lot of the growth.

Yukimura: You have the mixed uses, so you’ll have jobs close by, you have services close by. People do not need a car. In Vancouver, you can get around without a car between transit for the far distances and walking or biking for the short distances. And the energy efficiency of that kind of lifestyle is a far less impactful on the earth. And the income market is actually building in those areas. There is a market for it. They are very prosperous communities as long as you have the open spaces, the parks to go to and so forth.

Burris: Another market for Kakaako is those empty nesters, someone who had the house and the dog, but now kids are grown.

Yukimura: That’s a huge percentage of the population.

Anderson: There is a tremendous number of young couples who would be comfortable there, husband and wife, but the moment the first kid comes along, you’re looking for a house. They’re looking for the grass. They’re looking for a little bit of the yard, so you can’t shut that down totally. It’s got to be a balance.

Kane: I think the empty nesters will be attracted to healthcare also. That’s probably one of your single most desired services that empty nesters are looking at.

Burris: You were talking about how the young people could use their neighborhood as their living room, so to speak, like in Tokyo or Hong Kong, where people live in the city. They sleep in their apartments, but they go to restaurants and coffee shops.

Yukimura: It’s another generation. That’s their lifestyle. But there’s not that kind of opportunity here (in Hawaii). There aren’t too many places like that where they can come back and live like that.

Burris: A young couple – let’s say, school teachers, with a combined income of $100,000 a year, or $120,000. Can they buy a livable unit in Kakaako right now?

Yokota: Yes, with an income of $100,000, you should be able to afford to buy a unit.

Doane: Yes. Absolutely.

Yokota: There is a shortage, though, of rental units and I think the state has to find a way to build rental units. On the Neighbor Islands, it easier for landowners to set aside land that can be used for the development of rental units, but in the urban areas, it is very expensive to do that, but like Alan did, you would want to do it within mixed in a high-rise village.

Doane: Hawaii is so unique in a couple of ways. You look at the national industry and there are all these very large companies that own lots of apartments serving different levels of income. In Hawaii, it almost does not make sense. There are individual apartment owners, but there is really no industry. No one builds that kind of product here. The other thing that’s really odd, and it goes back to buying down, is that in most places you go the entry house is worth 75 percent of the value and the land is worth 25 percent . Here you go anywhere in Kaimuki, Palolo, the house is worth 25 percent and the land is worth 75 percent. There is no one solution to all the problems we have, but if there was something where you could provide a lot of houses that could probably use being leveled and if it only represents 20 percent to 25 percent of the value. If you could provide somebody just enough tax incentives so they can get a place on 8th Avenue (in Kaimuki) or something off Waialae (Avenue), that has been sitting there. It was the grandfolks’ home. And the place is worth $600,000 to $700, 000, but the home is only worth $150,000. Do you knock it down and let them build it themselves? Let them build it with small builders. There is this huge amount of wonderful land that can be redeveloped. Take the footprint that we’ve got in some cases and redevelop that and have a policy that is proactively encouraging that. At the same time, that is very limited growth in terms of new footprints in placed in Hawaii. Because there are just so many places here where if you just had a $100,000 to $150,000 or if the owner had a tax credit over five years or something. You would see revitalization occur. And everybody knows we need it right now.

Anderson: If you drive through Kapahulu or Kaimuki on any day, and I drive those streets a lot, there’s a tremendous number of new homes in every block. I guess mom and dad or grandma and grandfather are passing away and the kids are taking it over and their 75- to 80-year-old house, single wall, Hicks-type construction, comes down. But I’m always amazed of all the new construction within the core happening every day, so Kaimuki and Kapahulu in the next 10-15 years, I would imagine is going to be all new.

Burris: How is the rail line going to affect the government of Oahu and the look of Oahu.

Yukimura: Just so you know, it’s not only an Oahu issue. We, at least when I was mayor, we looked at a rail line for Kauai

Anderson: Really?

Yukimura: Yes, because we just have a belt that’s perfect for transit and fits our plan of villages that become towns and transit in between.

Burris: Is rail going to happen (on Oahu), Jan?

Yokota: Well, I hope so. One of the questions (submitted it advance) was what’s the best way to have development around the rail stations. I think there has to be a very concerted effort to work with developers in the type of plan so there are incentives for development around the rail stations, whether it’s various kinds of financing techniques or a tax commitment or some community facilities. Something like that where it helps the developer build the infrastructure that is necessary to run rail stations. In other words, if you want affordable housing in the area, you want additional facilities around the rail stations, I think it has to be something where the government works or incentivizes private developers. Unless there’s planning there, it’s not going to hold.

Kim: There is transportation problem. Shara says she’s so lucky that she lives only five miles from work, but it still takes her 35 minutes to get to work. I’d quit the first day I’d have to do that. I ride my bike. I’ve read that Honolulu is second only to L.A. in average commute time. One of the reasons I talk so much about Ooma, is the developer has worked with the theme of live, work, and play.

Yukimura: I think transit is the way of the future, if you look at the energy picture in the long run. But it can be done well or it can be done terribly, and I think Jan is right if you don’t plan it, it’s not going to happen. The biggest subscribers of transit are those who are moderate and low income. Look at New York City, Seattle, Portland and so the idea of affordable housing around those transit stops is an incredible opportunity and that’s what they call transit-oriented development pods. So all these opportunities come with the transit and of course we are glad they are including the airport. If you don’t build them right, it’s going to fail. But done right, that’s what will make cities thrive.

Kim: I’ve used your bus for 20 years coming to Oahu. I’ve never rented a car because I love your bus system.

Anderson: But we subsidize it. I mean we subsidize the bus in the multi, multimillions of dollars a year.

Yukimura: We subsidize the private car owners…

Anderson: And we are also going to subsidize the rail in a number that we don’t understand or appreciated yet. Feeding counties is going to need an awful lot of subsidy dollars. Where does the city and county get its money from basically? Real property tax. They’re not going to get real property taxes to pay for all these subsidies and all their other rising labor cost etc. From affordable housing on some kind of incentive program and/or cheap rail stops. They’re going to generate the dollars that they need by some growth. I mean so do they stop development? Stop the real property tax income? Then how do they pay for all these subsidies? I mean we’re kind of caught in a Catch-22 in some of these things. The subsidies that we’re going to pay for transportation minus the car are astronomical.

Yukimura: If you haven’t done Kapolei, what kind of public monies would you have had to invest in transit and Kakaako and development here?

Anderson: I like Kapolei.

Yukimura: No, it’s not about Kapolei, it’s a conceptual thing. It’s about making choices on where you put the public money.

Anderson: Why are you negative about our city and our state? I kind of like us. I really think I live in a great town. Honolulu to me is exciting. It’s providing economic growth. It provides for my children and my grandchildren. It provides for me and I got a couple hundred employees. I mean if I want to go to Waikiki knowing what it is, I’d go there. If I want to go to the North Shore and get stuck 45 minutes going down three miles because of turtles, I’d go or I don’t go. But we planned 25 years ago, longer, for the Second City. We’re talking about intelligent planning a little while ago. There are some people today out there trying to block off some of this Second City destination area that we shouldn’t build homes there anymore. I mean if government does plan intelligently and then the activists or the conservative person, or whoever comes in, and wants to change it all, you can never plan. I mean you got a plan. You do it right, hopefully. You make a decision and then you live with it.

Burris: One of the big ironies there as a Second City – the whole idea that was build a place where people would live and work and not commute back and forth.

Anderson: All our people work in town.

Doane: And that part of it didn’t work.

Kane: I was going to ask Mr. Doane for his comment: Is there a tipping point? Take for example, if UH-West Oahu were to happen, is there a tipping point where there would be a massive redirection of flow (of commuters)?

Doane: I think there is going to be. It’s going to take a while. I don’t know, what’s your opinion on it?

Kane: I don’t have a good feel. I feel like if UH-West Oahu comes along, if Kalaeloa develops into what it potentially can.

Doane: The Family Court is out there. I’m not sure if rail is going to work or not. I hope it does, but it’s like there’s two times to play on a tree: 20 years ago and tomorrow. I’m going to wish we had had the rail 10 or 15 years ago. I really wish we had because I don’t know if it would make it better, but it’s the only alternative that I’ve seen that could make it better.

Yukimura: That’s right.

Anderson: Or building more freeways.

Doane: And I think we’ve got enough of those. I wish we had done it 10 or 15 years ago. It’s going to be another 10 years before it goes, but I think it’s the one option we do have to take a situation that is going to get worse even with rail, it’s just not going to be as worse as it would be without rail.

Yukimura: But if gas goes to $120 or $150 a barrel, well, it’s going to cost more to build the rail. But people are not going to be able to drive their cars. They’ll have a hard time commuting to Kapolei.

Anderson: Mayor, I guess I’ve heard this, people are not going to be able to afford to do something and the economy is bad and I go into any home from Manoa to Waikiki to Kahuku or to Waianae: Every Friday night, dad’s got his beer; every kid down to 10 and 11 years old had a damn cell phone; every kid’s got computer games. If things are so bad, where are these people getting this disposable income to buy things that you would think they’re second or third priority?

Yukimura: On Kauai, people buy cars because they can’t afford a house. They don’t have any prospect in owning a house so they buy a car. And the other piece of the formal housing solution, and Micah knows this well, is mortgage-ready families. And there are a couple of wonderful homeowner programs that are teaching families to be mortgage-ready. But we have had situations where there are houses available and people are not ready yet and so that’s the human factor. The solution to affordable housing is not just one thing. It’s doing proper public requirements for developers and it’s about developers stepping forward to do their share and it’s about creating mortgage-ready families, which in this day and age of credit cards and unbelievable personal debt, we have to shift again.

Doane: I think that some of the things that people have disguise real problems. I don’t know whether it’s 20 percent or 30 percent. But there is a major element and it’s not just Hawaii. It’s just about everywhere you go. There is a fairly large element of the society that right on the edge at all times and there’s a smaller element of society that’s over the edge and whether they’ve got video games or they got a car on credit or something, there’s some deep problems there that get camouflaged by maybe some of what you might be seeing with these folks, so I do subscribe to the fact that there’re some very basic issues. The difference to the most part in Hawaii is you see it. You see it more here. In some places (elsewhere), it could be 20 miles away. Here, all you got to do is drive a quarter-mile or half-mile or you might be in the middle of it somewhere or maybe your friend’s friends. I do subscribe to the fact that there are issues.

Kane: I think Ms. Yukimura’s point shouldn’t be lost and the case in point is what is happening right now on Kauai and DHHL (Department of Hawaiian Home Lands). There are available loans in the $140,000, $150,000 price range right now for anybody who jumps on that list. The problems are qualifying for a loan, getting their FICO scores up, and getting consistent income. Obviously the pre-qualifying requirements have hiked up substantially over the last 6 months to a year.

Anderson: In the $140,000, how far below market description definition on Kauai? What’s the market on Kauai?

Yukimura: Let’s see for a family of 4 people, median income was about $65,000, so whatever you can afford with that.

Anderson: Not much.

Yukimura: No.

Hawaii Business Publisher David Tumilowicz: You know one of the things that hasn’t come up explicitly, although it’s been alluded to a couple of times: Mr. Doane talked about in the kind of economic context the national and international and they’re all part of the formula for DHHL success was to make affordable housing with economic development and, Mayor Kim, when you refer to the root of the problem, we can look at controlling housing cost or we can look at raising people’s income, so I’m wondering if you all would comment explicitly on the connection between economic development and land development.

Yukimura: If you’re thinking of economic development, we have to go the issue of education and I think that is going to be the subject of another of your forums, but the level of public education where I think 27 percent or 30 percent of the 9th graders are not graduating from high school, in a world where the college degree is the standard. If you don’t have good public education, the future is very dim. And it factors into all this, being about mortgage-ready families, health – there’s a huge correlation between level of education and health – all of that. So to me that’s the bigger connection than economic development is to development?

Kim: What we have done in past couple of years really identifies what our values are or what we’re willing to pay for and not willing to pay for. For example, yesterday’s news that the state is contemplating raising the one-way bus fare for kids by $1.50 to $3 a day. The way the university system has changed in regards to tuition. After all the threats and in a multitude of other things that reflect what kind of values that we have that devalue ourselves to this lifestyle. I’ve come down to this: It is simply us in the community who determine what kind of lifestyle we want, and we need to aim for and dream about and work for it. There is no simple answer here. It’s going to take both government and business to identify those things, for government to set certain kind of rules that will enforce some kind of things that we collectively identify. I was going to make a crack when Andy was saying about this and then and I said, “Andy, I’ve lived like that, too,” but you’re the guy with resources, and Jerry ,I want to be friends with Andy. I think Hawaii is the most beautiful place on God’s given Earth. But that don’t take away from the simple fact that we have a quarter of a million people here on this island for whom survival is day to day. And your answer is absolute: because a person buys a toy for a kid or has beer in the weekend or whatever whenever. You just haven’t been there.

Anderson: I haven’t been there?

Kim: You haven’t had that kind of mentality.

Anderson: You know what? I was going to do a project in Waianae last year. Somebody called me and there was five or six acres right on the road, in the kiawe, and I went out and I stopped my car and I walked it and I looked at it and then I went next door and there were a bunch of units for sale with signs. I called the Realtor because they were cheap, $100,000 and some odd thousands. You (Kane) were doing the great Hawaiian Homes project and nobody could qualify and then, typical Andy Anderson, as I drove down I came back and there was seven Hawaiian bike people sitting in the park at 1 o’clock in the afternoon, 22 years old, 25 years old, so I parked my car, jumped the fence, and went and sat with them because they know who I was, working with Fasi. Why aren’t you working? “Andy, I got a bad neck.” “Andy, I don’t want to work. I got a sore hip.” Everybody around that mat on the grass was healthier than I was, I think, and they just chose not to want to work. I mean our lifestyle – I’m not knocking but they’re living in the park they didn’t want to work. They aren’t motivated to have a house. They were happy in a tent, so it’s more than economics, I think. It’s a mentality problem.

Yukimura: It’s education.

Anderson: But we have the problem there. We can’t go back and take this 26-year-old guy and reeducate him totally. It’s going to take a lot of time and money to do it. I agree with you.

Yukimura: But we’re spending a lot of time and money educating first, second, third, fourth, fifth graders up to 12th grade. We can prevent more 22-year-olds who are sitting on the beach but what we’re doing…

Anderson: You’re talking the next generation problem. You have one of the biggest community college enrollments. One of the largest community college enrollments we have here in Hawaii because the kids who graduate from 12th grade aren’t qualified for college so they go there for remedial programs.

Yukimura: That’s correct. Something’s wrong that’s happening.

Hawaii Business Editor Steve Petranik: You folks are all invited back to our education forum (laughter). I wanted to ask you about there’s a small development proposed up in Laie. The Mormon church wants to build it and they say they want to build it for their people who live up there, and that particular community is pretty crowded. But then on the other hand, it’s outside this urban core that Jan outlined. Anybody have thoughts on that kind of development where it does not seem like it’s aimed at rich people from the Mainland to buy a second home, but it is outside where we want to concentrate our development.

Anderson: It’s somewhat contiguous to their community.

Yukimura: Is it worker housing?

Anderson: It’s worker, student, faculty. It’s an expansion of Laie as a Mormon community.

Yukimura: Well, the key would be whether there is a buyback class in perpetuity, because otherwise by the second sale it will be second homes. On Kauai in the last three or four years or maybe more, almost half of our growth in new construction was second homes. The world is the market for Hawaiian and Kauai real estate and if you don’t insulate our homes from the market, you’ll have a humungous homeless problem into the future. In places like resorts, if you don’t do some controls people will be commuting four hours from outlying areas to work and that’s no good for worker. The Big Island already has these long commutes that are just heartbreaking. They never see their kids at night because they are home too late and it’s just crazy to live that way or work that way or have a community that doesn’t work.

Kim: That is not an exaggeration. The people in Kona and Hilo – (they ride) our free bus, the county bus – these people spend approximately 5 hours a day on the road.

Anderson: And that’s because there is no housing in Kona for them.

Yukimura: That’s right. No housing around the workplaces.

Anderson: Well, why? Where have we failed?

Yukimura: Because the land prices tend to be very expensive around resorts, which is why when Kukuiula came in, we required them to put some housing in.

Anderson: We have a great Waikoloa project. Why hasn’t it happened there.

Kim: It will happen.

Anderson: Yeah, but it has been six years.

Kim: These people lived in Puna before job loss became a problem. Remember we lost 100 percent of our sugar.

Yukimura: Many of them would move if there was decent, affordable housing close to work.

Kim: And that’s what we’re trying to get them.

Anderson: But again, the point I’m making, I can’t do it as a new developer, a big developer can’t do it by himself, but we’ve got the mayor of a county with free land at Waikoloa and it’s taken six years, and it’s not off the ground yet.

Kim: First of all, UniDev was sought out to develop a community and a type of community where you got to make it public housing and the slowness was not because of permitting process, the slowness was in regards to financing from the private sector. Our contribution was land and $40 million. That was a total commitment.

Burris: That’s a big commitment.

Yokota: Let me just make one clarification. I wasn’t saying that all the growth should be in the urban core. Just where there is sufficient existing infrastructure. I just wanted to clarify that.

Anderson: Jerry, I didn’t know where to get this in, but Allan touched on it a couple of times. He was talking about the economy and we’re going be in this situation for the next three or five or six years, I mean who knows, but I think we have a one in a million opportunity as a government and governance to sit together Legislature, Councils, etc., and rethink where we’re going as a state and the counties. We have a great opportunity like never before to resize our government, government employees, the size of it, salaries, numbers, I mean you have on the table an opportunity to bring Hawaii back to some reasonable level and if we miss this opportunity, I think we’re crazy.

Burris: There is some of that going on. The Legislature has an interim committee looking at that.

Anderson: I mean is this governor-Legislature deal? I mean you can’t have this hooky-hooky going all the time. The mayors got to get involved with the counties, but there’s an opportunity here if we take it. Try to go back to where we were, I think that’s crazy.

Hawaii Business senior writer Dennis Hollier: We keep talking about government’s role in this. I’m wondering if there’s actually going to be some rethinking of development in Hawaii, what are other good examples elsewhere in the country that we can look at for smart development that doesn’t have the problems of gentrifications and any other things that are sometimes associated with it? Can we look to what examples elsewhere?

Yukimura: Yes, there are many examples elsewhere and I think they’re in Portland, they’re in Connecticut, they’re all over ,and you can see them all at the Smart Growth Conference, which is in February in Seattle. They hold those conferences and they bring together people who are doing this work. They are marvelous examples, just livable prosperous, a huge economic opportunity going on.

Hollier: But are they suitable for Hawaii? Hawaii is a lot of unique features to it.

Yukimura: Yes. I don’t think Hawaii is that unique. I mean a dollar is a dollar and…

Hollier: Well, here a dollar is about 75 cents (laughter).

Yukimura: But the question is why? When you start to look at the causes, when you look at how much money we spend on H-3 and used up all the matching state monies for 10 years for highways, then you begin to see the choices we’ve made either consciously or unconsciously in terms of planning our communities and how we used our dollars and what we could have done with those dollars used in another way. We could’ve had a transit system.

Hollier: So what is the planning process from the government perspective? What kind of planning format are you looking at to have a serious planning approach in Hawaii? What does that look like?

Yukimura: Wow, you’re asking the million-dollar question. I would go to places like Oregon, where they’ve done good planning and there they haven’t let the Legislature do the planning. They let the OCDC, the Oregon Conservation Development Commission, do it according to planning principles, not who lives in my neighborhood and who wants what.

Petranik: We have two level of government that are involved in planning here, both the state and the counties. Are the counties mature enough now so that the state should take up no role or a lesser role on land-use planning? Should the state drop the land board. You have two layers now that you’ve got to go through, which certainly has got to add to the cost.

Anderson: Too much duplication. I’m a strong believer in home rule. Actually, we have 3 governments on Oahu, you have the state, the county, and HCDA (Hawaii Community Development Authority). You’ve got a government within a government. I think the counties are sophisticated enough and I think the mayors and the councils on the Neighbor Islands should be responsible for their growth and their direction. I can see some state direction and participation where you want the finished product to be contiguous and you want it to complement one another. But for the discussions of home rule, I think the counties are sophisticated enough.

Yukimura: I’d say if you went to Hawaii County during Mayor Kim’s time, I’d say you had an extremely sophisticated planning department and excellent planning leadership. I cannot say that was the same thing on Kauai even today. I think there are appropriate levels of oversight for the state to take on but it’s not for the (state) Land Use Commission to do another level of zoning. That doesn’t make sense. But if you look at the model in Oregon, I think you have some statewide goals and some clarity about what their job is. For example, they said every – and California has done this too – OK all the counties, you have to have urban growth boundaries and then they let the counties do it. They approved the urban growth boundaries to make sure that they had followed certain principles of planning but they didn’t try to come down to Lihue and do the urban growth boundary. They let the counties do it, but they made the counties do it, because that was an important thing for preserving ag land in the Willamette Valley. You didn’t want the sprawl beyond the town, so there’re proper levels, but right now we haven’t structured it right.

Kim: The present system of the LUC (Land Use Commission) was created back then historically by the Big Five in the protection of a certain kind of land. Anyone who has tried to go through the LUC will tell of the cost and the time to do that. It’s not only the structure with the county, within state, within the feds, with what is there, we can do it if there is a will to really evaluate the problems of each and fix it within. You don’t have to throw out, as they say, the sink. I had my frustration with the LUC and sometimes I think, “Jeez, if my land was zoned conservation, not through my own decision, it’s a nightmare to even build an outhouse. All those things need rezoning. And it costs time and it costs money. And those things need to be evaluated and I thank JoAnn on the compliment on my planning department, but all of us at the county department know it’s a matter of will. When Micah had come into my office years ago telling me what his dreams were, I committed myself to help Micah, but it could have been the other way.

Hollier: Let’s back track one more time. Another thing that keeps coming up is the idea of redeveloping existing developments and making them denser and that sort of thing. If we’re going to do areas, setting aside Kakaako because of the legal issues, but if we are going to do areas like Moiliili and places like that, what has to change mechanically for that to happen? Is it just a question of zoning or there are other issues that need changing?

Anderson: Are you talking about condemning all the little individual people?

Hollier: Either condemning them or allowing the owners of those properties to redevelop themselves.

Anderson: You would have to consolidate them.

Yukimura: It would take I think more details than I know because you could do it with a mix of incentives. You’d have to do an inventory of the infrastructure, I mean, you would have to know what you need to do in order to get to the goal you have of a redeveloped area. It would be a major planning effort and the main thing you would have to have I think are really good planners and really good inclusion of the community and the stakeholders.

Doane: I think on that example in particular, my reference was more toward the single family homes and this real imbalance between the land value and these old homes. Trying to create incentives, so people can say “You know what? Okay, I’ll knock it down. It’s $200,000 but I’ll get it back in time and it’ll be better.” On the commercial side, for those of us who know that area pretty well, there’re some little gems in Kaimuki and the only thing you’re missing there are a few consolidations and some parking areas. People like to go there and you get people from all different areas that go down Waialae Avenue on either side there. There’s no solution for everything but there is probably a different solution if you were able to find several sites and then you would require some public support in order to consolidate it, get parking, and then what that would do is it would free up maybe two-, three- or four-block area for lots of very small little community-based things.

Anderson: I do have an issue with that.

Doane: Well, the former is fairly simple. That’s got to be a tax credit issue.

Anderson: And if you see government doing the initiating …

Doane: Yeah, the latter, you’re going to have big problems. Any kind of land consolidation where you’re buying people out is going to be a problem especially for parking lots in the long term. You’ve got some real social equity.

Anderson: That was true for Outrigger along the area you were talking about (Beach Walk). It was very difficult to condemn those landowners.

Doane: There’s no single solution for any of the issues we’re facing but lots of solutions.

Kane: I think the point that needs to be driven home is that there are opportunities. There is opportunity in the entitled lands that the state and city have designated. There’re opportunities within the redevelopment of existing communities. We need to understand where they are pukas and it’s not difficult. It’s not difficult at all; they’ll surface pretty easily. People like Mr. Doane know where some of them are. Those of us who have been dealing with some of the major infrastructure know exactly what the impediments are.

Anderson: You know what makes planning in Hawaii interesting and difficult in my opinion? It is the single-member districts. It’s politics on the table but you have 51 single-member districts on Oahu, you have nine council-member districts. No one politician has the opportunity to think big and to think broad beyond his or her little district and you go to Kapahulu and try to do some of this, we would have the councilman and the House of Representatives person and that senator on our back in two minutes. Because the public would probably uproar before they got educated. Our government structure is a problem. I’m pretty sure we would re-educate this legislator from worrying about changing fences and tennis courts in the school for re-election if we could broaden the geographic districts. Salt Lake would never have been considered for the rail because it made common sense to go to the airport but politics came into play. And Kauai, you were talking about a little while ago, is not as you want it because of politics.

Yukimura: Well, we don’t have single-member districts. But I agree with you because single-member districts force people to look at their district and, on two-year terms, they just do whatever they can for their district. Nobody is looking at the whole island and that’s a severe detriment and then they’re on two-year terms and very short-sighted decisions come out of the framework like that.

Burris: Thank you. You’re excused.

Anderson: I haven’t had so much fun in a long time.