go! Airline Exits Hawaii Market

go! Airline will be exiting the Hawaii market this evening after serving the islands for the last eight years.  While the airline provided low costs flights between the islands, many Hawaii residents blamed go! for the bankruptcy of popular Aloha Airlines and felt that go! Airline put Aloha out of business.  President of the company, Chris Pappaioanou stated, "We always want every opportunity we pursue to succeed.  So in that respect it's unfortunate. But we made the decision (to leave) in pursuit of tremendous growth opportunities that are on the mainland with our code-share partners."  Pappaioanou added that the majority of their Hawaii-based employees would be relocated to the mainland and work for Mesa Airline, the parent company.

Source: Honolulu Star Advertiser, 3-31-2014, www.staradvertiser.com
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Hawaiian Airline Still Aggressively Adding International Routes

Since November 2010, Hawaiian Airlines has created nine new international routes, and will start a new nonstop service to Beijing, China on April 16, 2014.  According to Mark Dunkerley, the CEO of Hawaiian Airlines, it costs approximately $100 million to launch a new route, but he is also not afraid to cancel a service if it is not performing as well as expected.  Within the past year, Dunkerley has canceled three routes to Taipei, Taiwan, to Fukuoka, Japan and to Manila, Philippines.

Mike Boyd, an aviation consultant, stated that Dunkerley and Hawaiian Airlines are doing the right thing for canceling routes that aren't meeting expectations, despite the high start up costs. Boyd commented, "This is positive stuff.  If it doesn't work, leave. There's not a hard source of data that will tell you if there's enough disposable dollars in Taiwan to support nonstop service to Hawaii. On the surface there is. But they found out they can use their resources elsewhere for a better return. That's just solid planning."  Bob Mann, another aviation consultant agrees and added, "Hawaiian had a lot of new capacity (aircraft) to deploy (and) judged those the highest and best opportunities. Not all pan out as expected. Better to pull the plug sooner than tote up more losses."

Mike Dunkerley commented, "For us to say that we made a mistake expanding (to Taipei and Fukuoka) would lead us to question whether we made a mistake expanding internationally, and we clearly haven't made any mistakes with that approach.  We always know that as a for-risk business that we make decisions about new markets, and not all of them are going to come up trumps. Some of them are not going to work out. Unfortunately, Taipei and Fukuoka didn't work out for us. But if you look at the success of some of our other routes in our international expansion, we couldn't be more pleased.  A scheduled flight between China and Hawaii has long been an aspiration of Hawaiian and the travel industry in our state, and as the barriers to visitor travel from China to the United States slowly come down, we believe there will be significant demand for a Hawaii vacation and Hawaiian Airlines."

Source: Honolulu Star Advertiser, 3-30-2014, www.staradvertiser.com
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Abercrombie Receives Significant Contributions from Contractors, Developers and Landowners of Kakaako

According to research conducted by members of the Star Advertiser newspaper staff, contractors, developers and landowners who are directly affiliated with the new construction projects in Kakaako have donated a total of $680,000 to Governor Neil Abercrombie's campaigns over the last two years.  The Star Advertiser notes that all the donations do comply with Hawaii's campaign regulations, but add that critics of the Kakaako redevelopment are concerned by how quickly the Hawaii Community Development Authority is approving the new projects.  Four of the nine board members on the HCDA are also members of Abercrombie's Cabinet.  The other five members were appointed by Governor Abercrombie.

Bill Kaneko, Abercrombie's campaign manager, defended the governor and stated, "Governor Abercrombie's goal is reducing urban sprawl, creating pedestrian-friendly open space and keeping the country country. Building responsibly in urban core areas like Kakaako is the way to do that. Under the Abercrombie administration, we have seen workforce and affordable housing increase substantially. These priorities are driven by the governor's vision and values for smart and sustainable growth.  Those who support his vision support him. That has been true through 34 elections over 44 years, a record of campaign integrity by any measure."

Source: Honolulu Star Advertiser, 3-30-2014, www.staradvertiser.com
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801 South Street - 500 Buyers in Lottery for Second Tower

According to Downtown Capital LLC, the developer for the 801 South Street condominium, there a total of 500 prospective buyers who have signed up for the lottery to purchase a unit in the second tower.  Plans for Tower B shows that there will be a total of 410 units in one bedroom, two bedroom and three bedroom configurations, priced between $352,000 and $699,000.  Both towers are being developed as "workforce housing" which means that they are reserved for households earning no more than 140 percent of Honolulu's median income.  This equates to $84,574 for a single person, $96,656 for a couple, or $120,820 for a family of four.  

Downtown Capital stated that they will be reserving at least 75 percent of the units in Tower B for "work force housing" buyers.  Construction is expected to begin by the end of this summer.

Source: Honolulu Star Advertiser, 3-29-2014, www.staradvertiser.com
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801 South Street - Legal Update

The association of apartment owners at Royal Capital Plaza, have filed a lawsuit against the Hawaii Community Development Authority, and are hoping that a judge prevents any construction of the second tower at 801 South Street until an appeal to the permit issued by the HCDA is heard.  Tower B of 801 South Street would significantly impact the views of some of the residents living in Royal Capital Plaza.  According to the suit, the HCDA issued the permit unlawfully.  Officials of the Hawaii Community Development Authority stated that the permit approval complied with all of their rules.

Source: Honolulu Star Advertiser, 3-29-2014, www.staradvertiser.com
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BYU-Hawaii to End All Intercollegiate Sports in 3 Years

Officials of the Brigham Young-Hawaii campus have announced that they will be phasing out its athletic program over the next three years.  According to the University, the resources being spent on athletics would be better used to help increase enrollment.  The school stated that the athletic department has an operating budget of approximately $1.2 million, and that money would be used to help grow the school to 3,200 students from its current 2,700 students.  The school will honor its current athletic scholarships through 2016.

Source: Honolulu Star Advertiser, 3-29-2014, www.staradvertiser.com
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4.3 Percent Fewer Visitor Arrivals in February 2014

According to the Hawaii Tourism Authority, there were 4.3 percent fewer visitors arriving in February 2014 as compared to the same month a year prior.  These 646,759 visitors spent $1.2 billion, or 0.6 percent less than February 2013.  President and CEO of the Hawaii Tourism Authority, Mike McCartney, stated, "In the first 59 days of this year, we experienced a plateauing or leveling off of arrivals and expenditures.   Right now what I see happening is everyone is going after (his or her) piece of the pie.  But how many of the people do you know that are baking pies? We've got to start baking pies. If we don't, we are in trouble. We have to work together collectively and collaboratively. In 2014 we've got to put together the team, reset and get to work."

McCartney added that the Hawaii Tourism Authority will focus their attentions on growing arrivals from international markets like South Korea, China and Taiwan.  McCartney commented, "Our pivot to further develop international markets will help sustain Hawaii's tourism economy for the long term. We see tremendous potential and are committed to diversifying our global portfolio as well as increasing the meetings, conventions and incentives market segment and first-time visitors.  It is important that we offer our visitors greater ease of access to all of our Hawaiian Islands and need to secure additional airlift so that international visitors are able to experience all of the unique attributes of our Hawaiian Islands, beyond Waikiki. We will continue to work towards re-establishing Kona as a second international port of entry, as well as increasing more neighbor island connections during peak international arrival times on Oahu."

Source: Honolulu Star Advertiser, 3-28-2014, www.staradvertiser.com
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University of Hawaii Economic Research Organization Posts Latest Forecasts

The University of Hawaii Economic Research Organization (UHERO) has issued their latest forecast for the state of Hawaii.  UHERO predicts that construction spending thanks primarily to the Honolulu Rail Project and the high-rise condominiums in Kakaako, will increase by 8.4 percent to $8.2 billion in 2014 and by 16.9 percent to $9.6 billion in 2015. The report stated, "The Hawaii construction industry continues to expand.  Rail, housing, public infrastructure and commercial construction will combine to drive this robust expansion."  Furthermore, the economists predict that median single family home prices on Oahu will rise to $710,500 in 2014 and to $773,800 in 2015.

Source: Honolulu Star Advertiser, 3-28-2014, www.staradvertiser.com
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Hawaii Unemployment Rate Was 4.6 Percent in February 2014

According to a report issued by the state Department of Labor and Industrial Relations, the state of Hawaii had a seasonally adjusted unemployment rate of 4.6 percent in February 2014. According to the state Department of Business, Economic Development and Tourism, Hawaii's job market is expected to continue to improve in 2014 and 2015. DBEDT forecasts that the average unemployment rate will be 4.2 percent in 2014 and will decrease to 4 percent in 2015. As a point of comparison, the nation as a whole had an unemployment rate of 6.7 percent in February.

Source: Honolulu Star Advertiser, 3-28-2014, www.staradvertiser.com
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Proposal Being Made to Make Waikiki More Accessible for Pedestrians and Bicycle Traffic

The City and County of Honolulu is investigating the possibility of adding a total of six pedestrian/bicycle bridges in Waikiki to make the neighborhood more accessible and reduce growing conflicts with vehicles.  According to the initial proposal, four of the bridges would go over the Ala Wai Canal and help connect Waikiki with Moiliili.  By adding the bridges it would mean that pedestrians and bicyclists would not have to travel out of their way and could avoid dodging traffic or long waits at busy intersections.  Stanley Chang, the city councilman who represents Waikiki, stated, "It would improve access and make transportation better.  Waikiki doesn't have enough access points, yet it is home to so many residents and visitors and it's the center of our economy and world's premier beach resort."

Rick Egged, the president of the Waikiki Association, agreed that the city should make Waikiki safer for pedestrians and bicyclists.  Egged stated, "We have so many pedestrians and they are mixing with the traffic, that's only going to get worse as more people adopt the trend of getting places without getting into a motor vehicle. We want people walking around Waikiki so it has to offer a great pedestrian environment."

Source: Honolulu Star Advertiser, 3-27-2014, www.staradvertiser.com
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Personal Income Increases by 2.8 Percent in Hawaii in 2013

According to the U.S. Bureau of Economic Analysis, personal incomes in the state of Hawaii increased by 2.8 percent in 2013.  While this percentage was higher then the national average of 2.6 percent, it was significantly lower than the 3.7 percent the state increased in 2012, and the 5.6 percent growth seen in 2011.  Personal income defined by the Bureau of Economic Analysis as the sum of all compensation received by an individual including salaries, wages, dividends, rental receipts, government payments and distribution from investments. Per person, this equated to $45,652, and meant that the state as a whole earned $64.1 billion.

Source: Honolulu Star Advertiser, 3-26-2014, www.staradvertiser.com
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BYU Hawaii Considering Eliminating Intercollegiate Athletics

Members of the Brigham Young-Hawaii administration are discussing whether or not the university will continue to offer intercollegiate athletics in the future.  BYU-Hawaii is operated by the Church of Jesus Christ of Latter-day Saints and currently has approximately 2,500 students on their Laie campus on the North Shore of Oahu.  The school features 11 different sports teams and have been quite successful over the years.  However, church officials note that BYU-Idaho, another school that is operated by the Latter-day Saints, had eliminated their intercollegiate athletic program and focused solely on academics.  Since making that decision, BYU-Idaho had achieved tremendous growth in enrollment.

Source: Honolulu Star Advertiser, 3-25-2014, www.staradvertiser.com
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Federally Subsidized Flood Insurance Polices to Increase

Homeowners who have flood insurance that is subsidized by the National Flood Insurance Program can expect to see their rates increase as the government agency hopes to reduce a $24 billion deficit.  The massive deficit was created after Hurricane Katrina and Superstorm Sandy swept through the East Coast of the United States several years ago. Under the new bill that was signed into law by President Barack Obama, as many as 1.1 million policyholders across the country would be affected.  It is estimated that 14,000 Hawaii residences will see rate increases.  As a point of comparison, someone who lives on an ocean front property and who is currently paying $1,200 per year for flood insurance would end up paying $3,600 per year in five years and approximately $11,000 per year in 10 years.  Percentage of rate increases will depend on the particular flood zoning for an individuals property.

Source: Honolulu Star Advertiser, 3-24-2014, www.staradvertiser.com
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Permits for The Collection Project in Kakaako Still Valid per HCDA

In August 3013, the Honolulu Community Development Authority granted local developer Alexander & Baldwin the right to build a 43-story condominium tower project in Kakaako called The Collection at 600 Ala Moana.  In September 2013, members of the condominium owners association of One Waterfront Towers, a neighboring building, and nonprofit organization Kakaako United filed an appeal with the HCDA to make the permit invalid.  On Wednesday, the HCDA has decided that they will not consider the appeal at all and that the permits are still valid, due to the fact agency rules and state law won't allow the agency to entertain an appeal of a development permit after public hearings and a board decision.

The petitioners stated that they may now appeal the case to Circuit Court.

Source: Honolulu Star Advertiser, 3-22-2014, www.staradvertiser.com
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Bill Proposed to Allow Retaining Walls to Be Built On Shoreline Properties

Honolulu City Council Bill 17, which would allow for shoreline property owners to put up retaining walls and other structures, has been approved by the Council Zoning and Planning Committee.  However, committee members stated that they would like additional information to insure that no unintended negative environmental consequences occur because of the walls and structures.  Ernie Martin, the Council Chairman who proposed the bill, stated that he wanted to help shoreline properties on coastal zones that were struggling to control the erosion of their properties.  Martin stated that landowners are currently required to go through a lengthy and expensive environmental review process to obtain a variance from the Department of Planning and Permitting.  Bill 17 would cut through some of that red tape, provided that the retaining walls or other minor shoreline structures are deemed to have no environmental impact.

Source: Honolulu Star Advertiser, 3-21-2014, www.staradvertiser.com
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Keauhou Lane Project Update

The Keaukou Lane project in Kakaako has moved through the initial public hearing stage without any real challenges or problems.  Developer Stanford Carr stated that the project will feature a 43-story condominium tower with 388 units.  There will also be a mid-rise town home complex featuring 35 town homes and several other mid-rise buildings that will have a total of 209 rental apartments.  All in all, there will be 632 residential units, parking for 1,038 cars, and 39,000 sq ft of restaurant and retail space.  The 4.2 acre block is bordered by South St., Pohukaina St., Helekauwila St., and Keawe St.

There will be two additional public meeting on April 12th and April 15th.  The Honolulu Community Development Authority is scheduled to make a final decision on April 30th.

Source: Honolulu Star Advertiser, 3-20-2014, www.staradvertiser.com
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Former CEO of Aloha Feels Vindicated that go! Airlines is Closing

David Banmiller, the former CEO of Aloha Airlines, stated that he felt vindicated that go! Airlines has announced that they will be closing their Hawaii operation.  Banmiller commented, "I personally don't think they ever belonged in Hawaii.  It was a decision that I never thought was in the best interest of their shareholders, and has now a few years later proven to be true. Unfortunately, their provocative and misguided entrance into the marketplace, as we predicted, led to the unfortunate demise of Aloha Airlines. Our pleas to both government officials and the media fell on deaf ears."

According to Banmiller, there were 8.5 million passengers taking interisland flights back in 2008 when Aloha Airlines was around.  Now, there are 6.5 million passengers. Banmiller added, "Two million passengers disappeared because they couldn't afford the trip. Everything we predicted years ago has come to fruition. We said go! would ultimately leave, fares would dramatically increase and people wouldn't be able to afford to fly. And everybody we talked to just nodded and listened and unfortunately did nothing to assist us.  Yes, I do feel vindicated, although it is of little comfort to all those terrific employees, many with Aloha for their entire adult life."

go! Airlines will cease their operations in Hawaii on April 1, 2014.

Source: Honolulu Star Advertiser, 3-19-2014, www.staradvertiser.com
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go! Airlines to Cease Operations

go! Airlines has announced that they will be exiting the Hawaii market and ceasing all operations as of April 1, 2014.  go! came to Hawaii eight years ago and had hoped to compete directly against Hawaiian Airline on all interisland routes.  However, during that period of time, they had captured only 6.8 percent of the market share as compared to Hawaiian Airlines 85.2 percent market share.  Chris Pappaioanou, the president of go! airline, stated that while the company had profited occasionally, on an annual basis it was unprofitable.  Pappaioanou added, "At the time we entered it made perfect sense.  If fuel prices had not doubled we would have been significantly profitable today. But losing money in business for any reason is never a good thing."

Jonathan Ornstein, the chairman and CEO of Mesa Air Group, which ran the operations of go!, stated, "While this was an extremely difficult decision to reach, we believe it is in the best interest of Mesa's long-term strategic objectives.  We are redeploying the go! aircraft to support our existing mainland operations. An additional factor that we accounted for was the long-term increase in the cost of fuel, which has more than doubled since go! began service and has caused sustained profitability to be elusive.  I think it would be fair to say that we wouldn't have gone into Hawaii had we known that we would have a $52 million settlement hole to dig our way out of.  But once that happens, what's done is done. It's an operation that makes sense; we've carved out a nice niche and put a lot of people to work, and I think over time it will be a good investment for us."

Many residents in Hawaii still blame go! for putting Aloha Airlines out of business on March 31, 2008.  Peter Forman, a local aviation historian, stated, "The demise of go! in Hawaii was a foregone conclusion for two reasons.  First, people of Hawaii remembered go!'s involvement in the destruction of Aloha (Airlines in 2008). And secondly, go!'s 50-seat passenger jets have too high of a cost structure to compete effectively in this market.  I think you could actually, in a few years, see the interisland market be more competitive than it is now from the standpoint that Island Air will become a more robust carrier now that it's a two-airline race rather than three. Island Air will need to seize the opportunity, or some third party will come in and join the competition."

Source: Honolulu Star Advertiser, 3-18-2014, www.staradvertiser.com
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go! Airlines' Departure Predicted to Not Hurt Neighbor Island Tourism Too Much

Tourism experts are predicting that the recent announcement by go! Airlines stating that they will be leaving the Hawaii market will not hurt neighbor island tourism too much.  go! Airlines took up only 6.8 percent of the interisland market share, as compared to Hawaiian Airlines which currently controls 85.2 percent of the market share.  Hawaii Tourism Authority's vice president of brand management, David Uchiyama, commented, "(Go! was) flying a pretty minimal schedule. There will be an impact, but not as great as if they were flying six aircraft like they were before. They were down to two aircraft."  Uchiyama noted that Hawaiian Airlines, Mokulele Airlines and Island Air should sufficiently be able to absorb all of go! Airlines flights.

Source: Honolulu Star Advertiser, 3-18-2014, www.staradvertiser.com
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Waikiki Parc Hotel Will Close in Fall of 2016 for 16-Month Renovation Project

Waikiki Parc Hotel has announced that they will be closing their doors for approximately 16-months in the fall of 2016 so that they can undergo a complete renovation of their property. According to their plan, Waikiki Parc Hotel would reduce the hotel's room count from its current 297 studios to approximately 200 one-bedroom and two-bedroom units. The hotel would also add a new eighth-floor pool, create an improved outdoor gathering area with a stage, and build a rooftop terrace with a trellis and a lounge.  Rick Egged, the president of the Waikiki Improvement Association, stated, "The revitalization of Wai­kiki has increased the number of higher-end rooms available. It's part of Hawaii's strategic tourism plan. We have fewer rooms today than at our peak, so we need to attract higher-yielding tourists so that we can get the most out of every room that we can."

President and CEO of Hospitality Advisors LLC, Joseph Toy, commented, "Everybody has raised their game in Wai­kiki over the past six or seven years. There's a lot of upside value to properties that have not yet undergone renovations during this latest cycle."

Source: Honolulu Star Advertiser, 3-18-2014, www.staradvertiser.com
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More People Employed in Hawaii Than Ever Before

The state of Hawaii posted an unemployment rate of 4.6 percent in January 2014, a decrease of 0.1 percent from the month before.  However, the state Department of Labor and Industrial Relations are quick to point out that there were 625,643 people employed in January, which sets a new record for the most number of people employed ever.  The previous record was posed in January 2007 when 625,345 people were employed.  Hawaii Pacific University professor of economics and finance, Leroy Laney, stated, "It's a positive sign, no doubt about that. I think the number of people employed probably is affected by a growing labor force. As the population grows, the labor force grows, so the number of employed doesn't totally reflect an improving economy, but I suspect some of that does."  Eugene Tian, the economic research administrator for the state Department of Business, Economic Development and Tourism, added, "Labor data shows that Hawaii's labor market continues to improve with unemployment rate among the lowest in the nation. It is encouraging to see that the labor force is approaching the 2011 level."

In January 2014, Honolulu posted an unemployment rate of 4.2 percent.  Maui County had a 5 percent unemployment rate.  Kauai County had a 5.4 percent unemployment rate. Hawaii (Big Island of Hawaii) County posted a 6.1 percent unemployment rate.  County data is not seasonally adjusted.  Nationally, the unemployment rate was 6.6 percent in January.

Source: Honolulu Star Advertiser, 3-18-2014, www.staradvertiser.com
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Waikiki Landing Construction to Begin in May 2014

Developer Honey Bee USA has announced that their Waikiki Landing project, located at the Ala Wai Small Boat Harbor, will begin construction on May 2014.  The $31 million complex will feature 44,153 sq feet of retail space and a 17,000 sq ft boat repair dock facility.  Among the tenants that have been announced are a fine-dining steak house called Luna Kai, a Japanese owned seafood restaurant called Pier Thirty Group, a boat repair and marine supply store, and a local brewery company.  Two wedding companies will also have locations at Waikiki Landing, and there will be numerous activity providers such as Roberts Hawaii and Hawaiian Surf Adventures.

Source: Honolulu Star Advertiser, 3-17-2014, www.staradvertiser.com
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Proposed Defense Department's 2015 Budget Request Would Affect Hawaii

The United States government has ordered the Defense Department to significantly reduce their overall budget, so it was no surprise that Hawaii's military bases were affected when the 2015 budget request was released by the Defense Department.  Under the proposal, the Marine Corp Base Hawaii would hold off on building a headquarters/operations center, a bachelor enlisted quarters, upgrading the airfield electrical systems, and improving the Osprey landing zone for 2015, which equates to $238 million in construction projects.  The Space Surveillance System on Maui also had its budget cut from $26.3 million to $14 million and improvements requested for Saddle Road on the Big Island of Hawaii was postponed.

The entire Defense Department will be going through a 10-year, $487 billion cut in spending, which started in the 2012 fiscal year.

Source: Honolulu Star Advertiser, 3-17-2014, www.staradvertiser.com
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Only One Bill About Kakaako Remains Before Legislature

At the start of the legislative session in January, there were a total of 17 bills that want to stop, slow down, or limit the amount of high-rise development in Kakaako.  Many of the bills were aimed at the Hawaii Community Development Authority, which is the state agency which governs development of the Kakaako neighborhood.  However, mid-way through the legislative session, there is now only one bill still up for debate.

The lone bill that has made it this far would still have major implications for the HCDA and would limit its budget, alter the makeup of its board, put development applications online for more convenient public viewing and maintain Kakaako's 400-foot building height limit. Specifically house bill 1866 would redefine who serves on the agency's board, require that the HCDA put development applications online and notify all residents within 300 feet of the proposed project, and make Kakaako's 400-foot height limit a law, thereby preventing the HCDA from ever increasing the limit to 650 feet as has been suggested for a couple of sites near the Honolulu Rail Project rail line.  The HCDA's operating budget would also zero out in the 2015 fiscal year and would require legislative approval for the agency to spend money in its revolving fund.

Kakaako resident, Michael Korman, submitted written testimony which stated, "There is a growing wall of concrete in Kakaako, and new buildings should have stricter limits on height and density. Currently planned housing projects will negatively influence the quality of the air, the open space and the quiet atmosphere that led current residents to select this neighborhood as home. Kakaako citizens feel helpless with personal well-being and quality of life in jeopardy."

Source: Honolulu Star Advertiser, 3-16-2014, www.staradvertiser.com
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Sales for 801 South St Building B to Begin

Developer Downtown Capital LLC has announced that that they will beginning sales for the second tower of their 801 South St. project.  According to their press release, the sales office will open on Saturday, March 15, 2014 and prospective buyers will be selected by lottery. There will be a total of two lotteries.  The first lottery will be on March 29, and interested parties must submit their names and information by March 28. The second lottery would be held on April 12. For the first 60 days, only buyers earning no more than 140 percent of Honolulu's median income would be able to purchase at 801 South Street Building B.  This equates to $84,574 for a single person, $96,656 for a couple, or $120,820 for a family of four.  However, after 60 days, if there are still units available, buyers and investors regardless of income are allowed to purchase units.

Building B will feature a total of 410 units with prices ranging from $352,000 to $699,000 for one-bedroom, two-bedroom and three-bedroom units.  The units in Building B will be larger and priced slightly higher than the units in Building A, which featured studios, one-bedroom and two-bedroom sizes priced between $250,000 to $500,000.  However, they still fall under the Hawaii Community Development Authority's definition of "workforce housing".  Marshall Hung, the principal of Downtown Capital, stated, "We have grown increasingly concerned that too much housing now being built can only be purchased by upper-income households and by wealthy out-of-state individuals and that very few new projects are being built for the working middle-class families in our community."

Not everyone is happy with these two towers being built at 801 South Street.  Residents from Royal Capital Plaza, a neighboring condominium tower, filed a lawsuit stating that Building B is too close to their property and the prices are too high to be considered affordable.

Construction for Tower B is expected to begin this summer.

Source: Honolulu Star Advertiser, 3-14-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
Global Executive Realty, LLC
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Height Increase Approved for the Second Tower of the Ritz-Carlton Waikiki

The Honolulu City Council gave a 9-0 approval for the height increase requested by developer PACREP2 LLC for the second tower of the Ritz-Carlton Waikiki project.  The property, located at 2139 Kuhio Avenue, is now allowed to be 350 feet tall, instead of the standard 300 feet that was allowed under the Waikiki Special Design District. PACREP2 will be forced to make some additional concessions including building the second tower no closer than 75 feet from the first tower.  The second tower will still need to obtain a Waikiki Special District use permit from the Department of Planning and Permitting before it is allowed to proceed.

Source: Honolulu Star Advertiser, 3-13-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
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Possible Property Tax Increases for Transient Vacation Units and Bed-and-Breakfast Homes in Honolulu

The Honolulu City Council is considering a bill which would increase the property tax rate for all transient vacation units(TVU) and bed-and-breakfast (B&B) homes on Oahu. Currently, both endeavors are taxed at a residential property tax rate which is $3.50 per $1,000 of assessed value.  In comparison, hotel/resort owners pay $12.40 for every $1,000 of assessed value. Under Bill 23, argues that transient vacation units and bed-and-breakfast homes are business activities, and would be fall somewhere in between residential properties and hotel/resort properties.

Bill 23 will also include legislation to help crack down illegal vacation rental homes as well as a new process for people interested in legally turning their property into a transient vacation rental or bed-and-breakfast to be able to do so.  According to the city Department of Planning and Permitting, there are currently only 48 legal B&Bs and 810 TVUs in Honolulu.  However, it is estimated that there are probably triple that amount of illegal operators.  For information on Honolulu's current rules go to: http://www.honoluludpp.org/ReportsNotices/tabid/85/aid/5/Default.aspx

Source: Honolulu Star Advertiser, 3-12-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
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Zero Tax Revenue Growth Predicted for State of Hawaii

The state of Hawaii's Council on Revenues has announced that they are predicting zero revenue growth for this fiscal year and a 5.5 percent growth for the 2015 fiscal year.  This is significantly lower than the Council's January prediction of a 3.3 percent forecast for the 2014 fiscal year and the 7.4 percent fiscal growth for the 2015 fiscal year.  In terms of dollar amounts, this prediction means $180 million less revenue for this year and approximately $300 million less than anticipated for next year.  Kurt Kawafuchi, the Council on Revenues' chairman, stated, "The growth rate is starting to flatten. It's becoming a lot more modest at this point." Economists note that the state tax collections have decreased by 1.1 percent through February, mostly due to a decline in visitor spending.

This report may have significant impact on Governor Neil Abercrombie's state budget proposal, as state legislatures may be forced to make cuts to the governor's requests. Abercrombie commented that his budget and six-year financial plan remains sound and stated, "Our budget and financial plan replenishes and builds state reserves, pays down unfunded liabilities and modernizes state technology. Hawaii's economy is running at a sustainable level and contributing to the state's strong fiscal condition. The administration looks forward to working together with the Legislature to continue to build reserves and fund necessary public services and key initiatives, while ensuring our long-term fiscal stability."

However, not everyone agrees with the governor and some are much more cautious in their statements.  State budget director, Kalbert Young, commented, "If the COR forecast is accurate, tax revenue collections would be flat compared to last year. However, as the council also recognized, there are a number of individual statistics in the larger universe of statewide economic data that suggests the overall state economy (and tax revenues) are at a peak level, and a decline from a peak, or, a judgment as to the ending of an economic cycle, is not yet clear."

Source: Honolulu Star Advertiser, 3-12-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
Global Executive Realty, LLC
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H&M Clothing Store Coming to Waikiki

H&M Clothing store will be opening its first location in the state of Hawaii on March 27, 2014 with a location within the Waikiki Business Plaza at 2270 Kalakaua Avenue.  The store, located on the corner of Kalakaua and Seaside Avenue, will feature a total of 31,000 sq ft of retail space and will be open daily from 10:00 AM to 11:00 PM.  Daniel Kulle, H&M's North American President, stated that he hopes that this location will be the first of many in Hawaii.  Kulle added that aside from catering to local buyers the Waikiki location is perfect for the strong tourist market.  "Japanese consumers are very up on fashion, and we have now mainland Chinese visitors with purchasing power. H&M should be here."


Source: Honolulu Star Advertiser, 3-12-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
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Billionaire Larry Ellison Would Like to Host America's Cup in Hawaii

Billionaire Larry Ellison, who currently owns 98 percent of the island of Lanai, has stated that he would like to see if he can arrange for the America's Cup yacht race to be held in Hawaii in 2017.  Hosting the America's Cup could be extremely profitable for the islands.  Last year, the regatta generated between $365 million and $550 million for the Bay Area, where the race was held.  While the numbers may not be quite as high if the event is held in the Hawaiian Islands, it would still be substantial.  In comparison, the Honolulu Marathon generated $101 million in visitor spending in 2013 and the Pro Bowl football game generated $26 million. Honolulu Mayor Kirk Caldwell stated, "We look forward to working with Mr. Ellison and America's Cup officials and the state to see what we can do to make this vision a reality. We are excited about the idea of holding the America's Cup in Honolulu because we have some of the most challenging and varied sailing conditions in the world, and there's no more beautiful backdrop than sailing off Honolulu, Wai­kiki and Diamond Head."

Jerry Agrusa, Hawaii Pacific University's College of Business professor, cautioned that the economic impact may not be as high as one would expect, especially since Oahu hotels are currently near capacity.  Agrusa estimates that the races would generate about $43 million in economic impact and $1.95 million in taxes. He added, "The big challenge was the America's Cup made the people pay (last year). The taxpayers paid to fix the harbors, then they expected all these people were coming to watch the race, but not all these people showed up. Our harbors aren't set for these types of boats. We don't need to build infrastructure for yachts that will stay here for three months and then go away. We shouldn't use Hawaii tax dollars at a time when our infrastructure in Hawaii is crumbling."

Source: Honolulu Star Advertiser, 3-11-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
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Second Ritz-Carlton Waikiki Tower Granted Height Exemption

The Honolulu City Council Zoning Committee has approved the 350 feet height exemption for the second Ritz-Carlton Waikiki tower, but added stipulations that would increase the amount of space between the two building and add open space and other amenities.  Under the amendment, the minimum distance between the two towers would be 75 feet, an increase from 50 feet.  Furthermore, the developer would have to create additional open space and landscaping as well as traffic, pedestrian and sewer line improvements.  Developer PACREP2 LLC has stated that they would not object to the concessions that they would have to make to increase the building height to 350 feet.

Residents of Waikiki and the Wai­kiki Neighborhood Board are still extremely unhappy with this decision and feel that PACREP has been deceiving the general public and government officials through a practice called "segmentation".  Segmentation is when a developer purposely splitting up the project to gain approvals separately so decision makers don't see the whole scope of a project at once.  Opponents also noted that there have been recent large political contributions made by PACREP employees, family members and affiliated companies to Honolulu Councilman Ikaika Anderson, Councilman Stanley Chang and Mayor Kirk Caldwell. All three politicians have denied the contributions have had any effect on their decision-making process.

Source: Honolulu Star Advertiser, 3-10-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
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Hotel Sales Reach $1.97 Billion in 2013

According to a report issued by Hospitality Advisors, a hotel consulting firm, there were a total of $1.97 billion of hotel real estate sales in 2013.  Furthermore, 2014 is off to a great start with an estimated $500 million in hotel transactions closing within the first two months.  President of Hospitality Advisors, Joseph Toy, commented, "There's still an unbelievable amount of activity going on. We've also seen a shift in players with a lot of new investment coming from private equity funds and a lot of new brands coming into Hawaii. Ultimately, they'll refresh the properties that they've purchased and the destination."

Mark Bratton, the international vice president for Colliers International, a commercial real estate company, stated that most of the buyers are from the New York financial market, but there are also buyers from Hawaii, Canada, Japan, China, Singapore and Australia.  Low interest rates and low inventory have helped to drive up the prices, but the main motivating factor have been the strong hotel performances, the diverse visitor base and growing airline. Bratton commented, "Waikiki and Oahu/Hono­­lulu economy is what everyone has been chasing and believes will continue to increase at a healthy pace."

Source: Honolulu Star Advertiser, 3-10-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
Global Executive Realty, LLC
www.myhawaiihomesearch.com
www.myhawaiicondo.com
www.myhawaiidreamhome.com