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Connect the Dots

Real estate, construction, politics and the development of Maui.

March 7, 2013
Susan Halas - Senior Contributing Writer ( , The Maui Weekly

In the years following WWII, Maui steadily lost population. But by the late 1960s, with the coming of jet airlines, the Valley Isle began to evolve as a glamorous--and as yet unspoiled--visitor destination. With this surge came the marriage of development, real estate, construction and the Democratic Party. The money poured in and so did the deals and the deal-makers.

When "Land and Power in Hawai'i - The Democratic Years" was published in 1985, it was dubbed "the gossip" book and rapidly became a local bestseller with juicy details of controversial real estate deals. It named the key players in the lucrative business of converting Hawai'i's raw agricultural land to urban resorts, condos, shopping centers and upscale homes. These actions were often accomplished by manipulating the land use process and not-so-subtle political string-pulling.

Though the book was primarily devoted to O'ahu, it was also packed with Maui references, including AMFAC, one of the original Ka'anapali Resort developers; Alexander & Baldwin, then and now Maui's largest land owner; Elmer Cravalho, the smart and powerful former Maui mayor; Seibu Group Enterprises, the Japanese firm that first eyed Wailea; and Maui Land and Pineapple Company Inc., owner of the property that eventually became Kapalua.

Article Photos

Masaru “Pundy” Yokouchi

Also included were local huis comprised of many who were residents since the plantation days. They pooled their money and invested in real estate.

Perhaps the most detailed sections of the book focused on politically influential Democrats who also held real estate licenses, including Maui's leading power broker of his day, Masaru "Pundy" Yokouchi, and his company, Valley Isle Realty.

Hemmeter Cuts a Wide Swath

The late 1970s and 1980s brought a different kind of dealmaker to Maui--most notably, Chris Hemmeter, whose 2003 obituary in the Honolulu Advertiser recalled that Hawai'i Business magazine named him its 1977 "Businessman of the Year." It observed that the developer with projects throughout the state "went on to build more creative hotels with eye-popping excess in architecture, art, boat shuttles, waterfalls, pools, animal collections and other features." Though Hemmeter was involved in many other projects, including a private aviation company, resorts were his forte. Of these, no property was more characteristic of his lavish style than the Hyatt Regency Maui, which opened in Ka'anapali in 1980.

Hemmeter came up through the ranks and was noted for his ability to persuade lenders to invest in what at the time were seen as risky, speculative, over-the-top ventures. Though his romance with Hawai'i was protracted, he eventually took a run at gambling when he moved his operations to Louisiana. But there his entrepreneurial luck ran out and his empire crashed.

In the islands, he was still remembered fondly, and like his predecessors, he kept in touch with his friends in high places. His final birthday party on O'ahu brought guests from all parts of the state, including three former Hawai'i governors.

Dowling Days

By the '90s, the Hemmeter flash was replaced by a lower-key style of developer--like Everett Dowling. The longtime Maui resident whose real estate development firm is based in Wailuku is best known for ambitious, large-scale projects aimed at high-end clientele. Like the dealmakers before him, Dowling had the right kind of friends and liked to think big.

He was the developer of Upcountry's Kulamalu, which included an intricate and successful maneuver to acquire land and have it designated for the future Maui campus of Kamehameha Schools. The Maui realtor and legislator who handled the transaction received a six-figure commission for his services. The disclosure of Dowling's private loan of $100,000 to a then sitting Maui County Council member proved that lawmaker's undoing.

Dowling followed up with even larger and even more controversial developments in South Maui--with primary focus on expanding Makena Resort (formerly the Maui Prince). He and partners purchased the property for $575 million in 2007. Though the 1,800-acre project had numerous conditions attached to it, opposition to its scale and scope never really ended.

Despite what looked like a go-ahead from the local politicos, it was a deal that collapsed under the external realities of financial crash of 2008-09. The property was sold at auction in 2010 for $190 million.

Going Global - New Players - Charles Sweeney & Friends

In early 2012, a posting on the Save Makena Website asked what was happening with the property formerly owned by the Morgan Stanley, Dowling and Goodfellow partnership. Public records show the new owners--ATC Makena--took charge of the former Maui Prince Hotel and Makena Golf Course at the end of August 2010.

ATC Makena is a joint venture whose partners include O'ahu-based developer Stanford Carr; Trinity Investments, headed by hotel developer Charles Sweeney; and as controlling partner, New York investment group AREA Property Partners (formerly Apollo Real Estate Advisors), which specialize in distressed properties.

Of these new players, informed sources identified Trinity's Sweeney as the one to watch.

According to the firm's Website, Sweeney and Jon Miho first formed Trinity Investment Trust LLC in 1997. The company is "a continuation of the principals' primary objective of pursuing investments in global real estate and hotel assets in an entrepreneurial investment and management approach." It has offices in New York, Honolulu and Tokyo.

The Makena project is only one of its many current and past deals in Hawai'i. Locally, they are or have been associated with Wailea 670, Kea Lani Resort and Embassy Suites Ka'anapali. The company also has extensive holdings on the U.S. Mainland, Europe and Japan. How their venture at Makena will unfold remains to be seen.

Billionaires Murdock and Ellison

The signature of the "old boy" network was inside access to political influence that gave local interests leverage and cash flow in the process of converting raw land to urban use. The hallmark of the Hawai'i's new high rollers is personal wealth (and/or fame) so vast that insider political pull becomes almost incidental to the equation.

Larry Ellison is the most recent example of this breed. Ellison is the founder and head of software giant Oracle Corporation. In 2012--the same year he purchased a 97 percent interest in the island of Lana'i--he was the third-wealthiest American, with an estimated worth of $41 billion. Though the island's exact purchase price has yet to be disclosed, it is a number frequently rumored to have been north of $500 million.

Lana'i has been owned by the ambitious, rich and powerful since the time of the Hawaiian monarchy, including Ellison's predecessor, fellow billionaire David Murdock, whose tenure lasted from 1985 to 2012.

Murdock's massive infusion of cash succeeded in turning Lana'i into a deluxe resort area that included two lavish hotels. These were envisioned as a loss leader for ultra-high-end residential real estate development. But last year, when Murdock exited the venture after more than 25 years, he had yet to see a positive return. He sold the land to Ellison, but retained the rights to energy development.

What Ellison really plans to do with Lana'i is still unknown, but there is no doubt that both the Maui mayor and the state governor have extended a warm (some think servile) welcome to the newest high roller.

All this and Oprah, Too

The "Billionaire Boys Club" went co-ed when entertainment billionaire Oprah Winfrey took an interest in Maui property and invested in Valley Isle real estate.

A June 2012 real estate blog claims the TV celebrity currently owns 31 parcels totaling more than 700 acres. Winfrey's transactions here have been notable not so much for their size or value as for the perks that great wealth can confer.

For example, Maui residents and visitors who want to travel from Upcountry to the South Maui shore below follow an old and circuitous downhill route; but not Oprah. She laid her own private driveway down the slopes of Haleakala for easy and private access that is not available to the less affluent.

Deal Breakers

Though women have seldom been deal makers on Maui, several have been very effective deal breakers.

One is Dana Naone Hall, who, over three decades with her husband, Attorney Isaac Hall, have taken on and beaten back development interests in multiple encounters.

The Halls were active in the successful opposition to Kapalua's construction of the Ritz-Carlton hotel on top of a Hawaiian burial ground. Isaac also represented Maui Tomorrow and the Kahului Harbor Coalition in the legal battles to stop the Hawai'i Superferry. That action resulted in a 2007 court decision that found the interisland ferry service had not followed correct environmental and legal procedures in their haste to forge ahead.

Another notable deal breaker is Maui Tomorrow Executive Director Irene Bowie, the organization's only paid staffer. Bowie is Maui's best known and most effective foe of those who seek evade Hawai'i's environmental and land use laws or short circuit the public review process.

This year, Maui Tomorrow, with Bowie at the helm, came up twice on the winning end of a local land use dispute. In that case, the state Land Use Commission (LUC) found the owners of Kihei commercial property in violation of some of the original terms its 1995 decision. The action brought by Maui Tomorrow and others community groups put $200 million in new construction on hold.

The point of contention for Bowie and friends was not was the project's popularity, but that it did not follow the rules. The LUC will soon decide whether the property, now a pricey piece of urban real estate which last changed hands at $20 million, should revert back to its original raw land status.

Old vs. New

Today, whether the public roots for the deal makers or the deal breakers is almost irrelevant, as few deals are orchestrated or financed locally and even fewer have any tangible or substantive long-term benefits to the local residents. Whatever the perceived flaws of the "old boys," at least some of the residents of Maui got rich and some incidental benefits went to many others as land values steadily increased for three decades.

But that does not hold true today. The present script reinvents plantation days where a few powerful interests have a massive financial edge and the residents of Maui are viewed more or less as chattel, merely incidental to the underlying ambitions of the big players.

The benefits to local residents--a park here or a school there--are seldom, if ever, commensurate with the value of entitlements received. As a recent article in Maui Time pointed out, few of the thousands of agreements made between developers and the public have been enforced and even fewer of the intended public benefits have actually been delivered.

The current scenario brings to mind the beads and trinkets used by the Dutch long ago to acquire another island--Manhattan. Global money is increasingly attracted to Maui and its goal is to monetize the underlying land assets. Connecting the dots and doing the math, it is easy to see that the tangible real benefits that have actually come to Maui continue to dwindle, especially when compared to the billions of dollars in increased value that result from entitlements that have been so freely dispensed.



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