The state’s plan to conserve 665 acres at Turtle Bay Resort may be in jeopardy after House lawmakers raised questions about a bill to extend the funding deadline for the $48.5 million agreement, which would require $40 million in state funds.
House Speaker Joseph Souki revived the bill Monday by re-referring it to the Water and Land Committee and Finance Committee after advocates lobbied for the measure.
But although the bill is back on track, unanswered questions about the deal mean that the fate of the North Shore land is up in the air.
Former Gov. Neil Abercrombie negotiated the conservation easement last year after decades of dispute over whether Turtle Bay Resort should be allowed to expand significantly. While the easement still allows the hotel to expand to a certain extent, it does conserve a significant amount of land in perpetuity.
But Mike McCartney, Gov. David Ige’s chief of staff and former director of the Hawaii Tourism Authority, said the state still needs to resolve two fundamental questions about the easement: what are the terms and conditions, and are we paying a fair price for it?
“Those questions needs to be answered before anyone spends money on behalf of the state,” McCartney said.
“The deal was painstakingly crafted between our company and the previous administration, but that doesn’t mean the current administration has to love it.” — Drew Stotesbury, CEO of Turtle Bay Resort
He said he’s not surprised or concerned by House lawmakers’ reticence to support the proposal.
“If we don’t have the details, it’s unfair to ask them to support a conservation easement purchase,” McCartney said, adding, “We have to focus this year on spelling out the terms … and then I think we can have a discussion with the Legislature on how to fund it.”
House Majority Leader Scott Saiki said that House leadership decided Monday to revive the measure to keep it alive — “for now.”
Saiki is concerned about whether using revenue from the state’s hotel tax is the right way to fund the deal, and thinks general obligation bonds might be more appropriate.
That’s how Abercrombie originally wanted to pay for the easement, but Ige reconfigured the funding to use revenue from the transient accommodations tax.
The agreement was important to both of their political campaigns as they faced off in the primary last August and sought to endear themselves to voters, particularly environmental groups.
Saiki also suggested that the city, which pledged $5 million toward the deal, may need to cough up more money to make it happen.
“It may be prudent to ask the city up the ante only because the Legislature is basically bailing out the city,” Saiki said. “It’s the city zoning that enables the development on those parcels.”
He also said the state may need to choose another agency to conduct an appraisal of the land, because the Hawaii Tourism Authority hasn’t been able to complete it.
Despite his concerns, Saiki said he’s confident that the bill will pass the House and end up in conference committee, the last part of session where lawmakers work out the details of bills behind closed doors.
But Saiki said he’s not sure what will happen to the measure once it gets there. Conference committee is a common place for controversial proposals to die with little accountability.
Lea Hong, director of the Trust for Public Land, which is contributing $3.5 million to purchase the easement, said the chances are low that the negotiations could be completed before funding expires in July.
“A lot of state staff time and money have been invested in moving forward in good faith,” she said. “It’s really unlikely to get done if we don’t get a little more additional time.”
Douglas Cole, executive director of the North Shore Community Land Trust who is also taking part in negotiations, said he’s confident that they could be completed by the end of 2015.
Both Hong and Cole are concerned about the deal falling apart if the Legislature doesn’t pass the bill.
“If it’s not moving at the end of this session, then I think the landowner is moving in a different direction,” Cole said. “I think the opportunity is here before us now, and hopefully we can work fast and make sure that there are suitable answers to the questions that legislators and members of the administration might still have.”
Turtle Bay Resort recently settled two lawsuits challenging its expansion, but the settlements are contingent upon the conservation easement being established by September 1.
Drew Stotesbury, CEO of Turtle Bay Resort, said the conservation easement is at risk if the Legislature doesn’t extend the financing because “businesses need to constantly re-evaluate their options and go with what the sure thing is.”
“It’s really unlikely to get done if we don’t get a little more additional time.” — Lea Hong from Trust for Public Land on the conservation easement
“If you’re looking at it from a business perspective, to spend a year and a lot of money advancing to a completion date that is now somewhat iffy, you have to wonder if it’s a good use of your resources,” he said. “We’re really committed to seeing this through, and beyond the September deadline we’ll have to really take stock. That’s not a criticism, that’s just business.”
Among other factors, the switch from the Abercrombie to the Ige administration has contributed to the delay in finalizing the easement.
“We now have people working on a transaction that they don’t have familiarity with or ownership of and it’s going to take time to try to resolve,” Stotesbury said. “The deal was painstakingly crafted between our company and the previous administration, but that doesn’t mean the current administration has to love it.”
McCartney said that the governor is committed to preserving the property but that he needs to ensure the state is paying a fair price. But McCartney disagreed with the suggestion that Ige is re-evaluating the $40 million agreement that Abercrombie reached last year.
“It’s not re-evaluating, it’s making sure we do our part as a state,” he said.
He declined to estimate how long it would take to work out the details of the deal.
“Until we can answer that question about what are we buying, what are the terms and conditions … any funding is going to be in jeopardy because there are many, many priorities in the state,” McCartney said.