It’s not every day the governor of Hawaii sends out a personalized welcome note to a new landowner.
That’s usually a task reserved for the realtors who get a cut from selling the property, or the friends and family who want a spot on the housewarming party list.
But on Wednesday, Gov. Neil Abercrombie issued a special aloha to Larry Ellison, the billionaire co-founder and CEO of Oracle.
Ellison is in the midst of purchasing Lanai — one of eight major Hawaiian isles — from fellow billionaire David Murdock, whose company Castle & Cooke owns about 97 percent of the Maui County island.
Civil Beat first reported Murdock’s interest in selling the island in December.
It’s unknown what Ellison has planned for his new 140-square-mile island. Abercrombie was briefed on the sale last week but if he knows he’s not saying.
“It is my understanding that Mr. Ellison has had a long standing interest in Lana’i,” Abercrombie said in his statement. “His passion for nature, particularly the ocean is well known specifically in the realm of America’s Cup sailing. He is also a businessman whose record of community involvement in medical research and education causes is equally notable.
“We look forward to welcoming Mr. Ellison in the near future.”
Maui Mayor’s Alan Arakawa issued an equally arms-length statement about the sale, one that thanked Murdock for his “compassion for the people of Lana’i.”
“In terms of the new buyer we can only say that we look forward to meeting Mr. Ellison and hope that by working together with him and the state that we may be able to do good things for Lana’i and its people.”
Arakawa’s press release also noted that Maui County owns 196 acres on Lanai that’s assessed at $7.9 million, and leases another 21 acres from Castle & Cooke with an assessed value of $7.8 million.
Some 3,000 people inhabit Lanai. It has a publicly funded school, library and hospital in addition to roads, an airport and harbors that are maintained by the government.
Yet hundreds of jobs for those residents come from the resort hotels on Lanai that are now owned by Castle & Cooke. The company also controls the water, sewer and transportation utilities that also serve those developments.
This gives Ellison, who’s 67 and worth $36 billion, according to Forbes.com, a lot of sway in deciding the fate of the island.
The state and county aren’t powerless, however. Land use regulations and permitting are still required for certain activities. And the Hawaii Public Utilities Commission is still keeping tabs on the water, sewer and transportation companies there.
But there’s still something to be said about whether Ellison plays well with others.
“If you’re going to buy it, hopefully you’re buying it with the best interest of the island, and you’re not just turning it into your own private getaway,” said Josh Strickler, the chief of policy and research for the Hawaii PUC. “You’re buying an island with people on it. You’re buying a community, really. So you have to be real careful with that.”
Ellison likes new land, and according to a profile in the Wall Street Journal, he’ll do almost anything to get it even if it’s not on the market. He also tends to snatch up surrounding properties, something that won’t be much of an issue on Lanai since he’ll already own almost all of it.
The billionaire can also be picky about his homes. In yet another Wall Street Journal piece, Ellison got into a fight with his neighbors over his view.
According to the report, the neighbors had some trees that were blocking his view. To remedy the problem, he offered to buy the home for more than twice the purchase price. When that didn’t work he sued.
The hope for Lanai residents is that Ellison is a good neighbor and landlord.
Robin Kaye, of Friends of Lanai, said he’s optimistic Ellison will continue to be a good steward. But he also noted the imbalance of power, saying that nearly every business on the island leases land from Castle & Cooke.
“It’s absolutely medieval to have one man own an island with 3,000 people on it. It’s unique and bizarre,” Kaye said. “If I wanted to have a business on Lanai I would have to rent space from the owner. There’s no land for sale that I could use for a storage facility or barbershop. It really is a medieval fiefdom.”
Perhaps Kaye’s largest concern, though, is what’s going to happen with Big Wind, Murdock’s plan to build a large wind farm on Lanai to help pay for his expenses of operating the island.
In a press release, Castle & Cooke notes a commitment to the project, saying Murdock will keep both his home on Lanai as well as his “rights to develop a potential wind farm” on the far northwestern part of the island. That release also paints Ellison as a good next owner of the island.
“The right time and the right buyer have been key components in my decision making process,” Murdock said. “Paramount to this process was to ensure that a new owner would have the right enthusiasm, commitment and respect for the island and its people, and be a positive part of the island community in the years to come. I believe that Larry Ellison will bring a new and fresh perspective to the island and its people.”
Not everyone has been as enthusiastic about the land deal, which some have estimated to be worth as much as $600 million.
In fact, state Senate President Shan Tsutsui sent a letter to Abercrombie urging him to block the deal by buying up the land first.
“The continued private ownership of Lanai may prove detrimental to the people of Lanai and the State, as a private owner is not subject to public, community, or government input in making decisions that can and will affect such parties … The island could become a major asset to the State and, if managed properly, could be utilized to promote significant state initiatives, including diversified agriculture or cultivating renewable energy resources.”
While he admits that buying the island “may not prove to be the most prudent or feasible course of action,” Tsutsui said he believes the state should at least evaluate its options “while the opportunity exists.”
Tsutsui has an ally in state Sen. Donovan Dela Cruz, who heads the Water, Land and Housing Committee.
Dela Cruz said it’s “scary” that a single person can own an entire island. He also believes the state should reevaluate the land ownership system in Hawaii and develop a mechanism that will give back some control to the government.
For him, this involves developing a comprehensive development plan that addresses issues, such as sustainable agriculture and energy security.
“I don’t like the fact that large landowners are liquidating their assets and then we’re having to react,” Dela Cruz said. “It’s not just Lanai. We’re talking Central Oahu, Kauai, Maui and much of the Big Island … The state has to be involved to make sure the right investments are being made and the right incentives are there so we truly have a sustainable economy on the island and protect the families that work here.”