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Lanai residents’ anxiety is mounting and Maui County officials are scrambling for information after months of rumors and a recent announcement that Lanai’s billionaire owner, David Murdock, has put the island up for sale.
“The anxiety level is quite high because nobody can give any assurance that anything good is going to come out of this,” said Pat Reilly, a retired school counselor and longtime Lanai resident.
Murdock has propped up the island’s economy for more than two decades. But he may be pulling out in the face of bitter opposition over Big Wind – a project that could bring in millions of dollars for Murdock’s Castle & Cooke, the development company that manages the Lanai operation. Supporters of the project, particularly the unions, argue that Big Wind is critical to Lanai’s economy because it would stop the company’s financial hemhorraging and create jobs.
Last month, a Castle & Cooke official told lawmakers visiting Lanai that Murdock had put the island up for sale. But what a sale could mean has raised more questions than answers, leaving residents to fret over whether Lanai will be getting a new owner — or owners, if the island were to be broken up and sold off in parcels.
Not everyone is convinced that it’s sellable. And with Castle & Cooke losing $20 million to $40 million annually on its Lanai properties, some fear that the company might just shut down its operations.
“There seems to be this fantasy going on that someone like Murdock will come buy it,” Alberta de Jetley, the publisher of the island’s monthly newspaper, told Civil Beat last month. “There’s no one like Murdock. Why would anyone want to buy an island that takes $20 million to keep afloat?”
Castle & Cooke owns 98 percent of the island, including the majority of land, hotels, commercial property and the Lanai Water Co., according to Chris Lovvorn, director of alternative energy for the company. It employs 700 people.
While census data places the population at 3,100, locals say this number has dwindled as the poor economy has led to layoffs and people have left the island to find work.
The economic downturn and residents’ dependency on Castle & Cooke for jobs has locals fearing for their future.
“If the wind farm doesn’t go through, the fear is that Mr. Murdock may just close up the doors and say I don’t want to lose millions of dollars every year,” said Stephen West, the business agent for Maui County’s International Longshore & Warehouse Union, Local 142. “People are tense – people are definitely tense.”
Amid growing concerns about the island’s future, Castle & Cooke officials aren’t talking.
David Murdock’s secretary in Los Angeles said that he couldn’t be available for an interview. Neither Castle & Cooke’s president Steve Bumbar or vice president Harry Saunders, both headquartered in Honolulu, returned Civil Beat’s phone calls. Company spokesman Carleton Ching would only say that the company is “always looking for opportunities.” Beyond that, he said he had no comment.
Lanai’s sale is worrying Maui County officials, too. They don’t want a repeat of what happened on neighboring Molokai.
Molokai Ranch, which owns about 40 percent of the island, shut down operations in 2008 after a planned 200-home development at Laau failed to progress in the face of local opposition and permitting delays.
The ranch, also known as Molokai Properties, shuttered its existing 22-room lodge, 40 bungalows at Kaupoa Beach Village and the island’s only 18-hole golf course. It also closed the island’s movie theater and the only gas station in west Molokai. The ranch planned to end water and sewage services to the west side, but state regulators intervened and stopped the action. More than 120 people lost their jobs.
Some fear that Lanai could be headed for a similar fate.
“I know that the population on Lanai has been dwindling since the days of pineapple, but there are still 2,000 people there and we want to make sure everything is OK,” said Rod Antone, the county’s communications director.
He said the county had various contracts with Castle & Cooke for Lanai’s water and wastewater facilities, harbors, and police and fire stations. The county is gathering information about the possible repercussions of a sale for its facilities and the people of Lanai, Antone said.
Murdock is known for rarely granting interviews, but he sat with de Jetley, the local newspaper publisher, in August. She’s known Murdock for two decades and previously worked for Castle & Cooke producing its community newsletter.
The story she told, which was echoed by company officials, is that Murdock did not have a happy visit to Lanai last summer. The animosity toward him, stemming from the proposed wind farm, wasn’t appreciated. Big Wind would plant 56 windmills on the northwest tip of the island and bring it to Oahu through an undersea cable.
“This is the poorest financial investment I’ve made in my life!” de Jetley quoted him as saying in Lanai Today. “I’ve made not one dollar of any kind, but everybody gets to cash their paychecks.”
De Jetley reported that Murdock said he had three options: “I can stay and sustain the animosity; I can sell off parts of the island, although it may not be easy to do; or, I can close it all down and leave.”
West, the union leader who also met with Murdock in August, said that he was very adamant about leaving, but that union officials were pushing for a chance to turn things around.
“The [Big Wind] opposition group has made their challenge to him very personal and very adversarial, versus an approach that lets us find common ground and try to exploit that,” he said.
If Murdock leaves, he said, it could be devastating for local jobs and also “catastrophic to the nonprofits” that would have to try and pick up the slack.
Murdock was born in the small town of Wayne, Ohio in 1923, to a father who worked as a traveling salesman and a mother who took in laundry to make ends meet, according to a recent New York Times profile. He struggled with dyslexia and dropped out of school in the ninth grade. He would later become a voracious reader.
After a stint in the Army, he found himself broke at the age of 22, and sleeping in a Detroit park, according to a story that he often recounts. In a fateful encounter, he met a man who worked at a loan office who lent him $1,200 to buy a diner. He fixed it up and sold it a year and a half later for $1,900.
It was the start of a precipitous rise to becoming one of the country’s most successful businessmen. Forbes ranks him at number 139 on its list of the 400 wealthiest Americans, with a net worth of $2.7 billion.
After selling the diner, he spent 17 years in Arizona where he capitalized on buying cheap land and constructing affordable housing.
“I was building as fast as I could break ground,” he told the New York Times. “Bang, bang, bang: I could hardly get a house finished before it was sold.”
From real estate he branched out into other areas. He acquired control of International Mining in 1978 and became the largest shareholder in Occidental Petroleum in the 1980s.
He entered the Hawaii market in 1985 when he took over the Hawaii firm Castle & Cooke, known as one of the “Big Five” landowners in the state. Included in the company’s assets was the island of Lanai.
Castle & Cooke Inc., now headquartered in Los Angeles, has numerous subsidiaries. The company’s real estate portfolio includes residential, commercial and land holdings throughout Hawaii, Arizona, California, Illinois, Florida, Oklahoma and North Carolina, according to the company’s website. The company has master-planned residential communities underway in many of the states, including Hawaii, where it’s one of the state’s largest homebuilders.
Financially, Lanai has not been one of Murdock’s successes.
At the time he acquired the island, Lanai’s economy relied almost exclusively on pineapple exports. With global competition, local prices couldn’t compete and the island’s last plantation closed in 1992.
So Murdock transformed the “pineapple isle” into a private island of elite hotels, vacation rentals and luxury homes for the wealthy and well-heeled retirees.
Adjacent to the hotels, now managed by Four Seasons, he built luxury homes.
The Residences at Manele Bay on the south side of the island is promoted as a “new way of life.” A 460-acre coastal community, it’s designed to accommodate more than 400 homes.
“From misty morning hikes along verdant mountain paths, to leisurely afternoons on the sparkling sands of Hulopoe Bay, Lanai promises a lifestyle you may have never dreamed possible,” according to the resort’s web site.
Upcountry of Manele is the Koele residences, several hundred units built around The Experience at Koele Golf Course. Spanning 240-acres, it includes luxury townhomes nestled into a private enclave, as well as custom, single-family homes built along Puulani Ridge.
High-end homeowners have access to a range of resort amenities through membership in the Island Club, including the golf courses, tennis courts, swimming pool, fitness centers, equestrian center and spa services. Visitors to the Koele villa can buy memberships in the club for $400 a week.
The resorts and the money they have pumped into the economy have created hundreds of local jobs.
Murdock is a health nut, who has maintained a strict diet and work-out routine throughout his years He told the New York Times that he plans to live to the age of 125. Exuding a youthful energy, he looks years younger than 88.
But robust health or not, most would say that he’s in the twilight of his life, and whether Lanai is sold off, or he passes away first, the is land’s economy is expected to undergo major, and potentially wrenching, changes.
“I would say we are in the throes of a major transition,” said Reilly, the Lanai resident. He struggles to envision a strong economic future for Lanai and doubts that the wind farm would provide much of a boost for the local economy.
While Lanai faces an uncertain future, local company executives still seem to be trying to maintain normal operations on the island. At a recent community meeting Castle & Cooke president Steve Bumbar told residents that while no large company investments in Lanai could be expected, it was moving ahead in trying to increase real estate sales and tourism, and looking into building a sound stage to attract film production. The company has also submitted its 2012 budget and proposals to its Los Angeles headquarters, he said at the meeting.
For now, anxious residents continue to wait for word of their fate and a potential visit from Murdock, who is rumored to be coming to the island yet this month. He often shows up around the Christmas holidays, locals say.
Whether he’ll bring good news remains to be seen.
“We’re like a flea on the back of an elephant,” said Reilly.