The Office of Hawaiian Affairs has committed, but not necessarily spent, at least $7 million in the last decade on what have so far been fruitless attempts to redevelop 30 acres in Kakaako Makai received as part of a land settlement with the state in 2012.

Budget documents from last year show OHA has either spent or committed $4 million for Kakaako Makai operations, including master planning and activities at the site of the old Fisherman’s Wharf restaurant.

Correction: An earlier version of this story incorrectly said that OHA has spent those funds on outreach efforts and consultant work. Also, those funds included those encumbered, but not necessarily spent yet.

OHA plans to ask lawmakers again to repeal a ban on residential development on its Kakaako Makai parcels, an area the office recently renamed Hakuone. Past attempts to repeal the ban that’s been on the books since 2006 have been unsuccessful. OHA’s trustees and administrators are hoping that the resources they’ve poured into this renewed effort to redevelop lands in Kakaako and possibly build residential towers of up to 400 feet may pay off.

Those lands were valued at about $200 million in 2012, but OHA argues that it’s never been able to make full use of them because of the residential development ban. Revenue would be used to benefit organizations that bolster the well-being of thousands of Native Hawaiians.

OHA wants to redevelop some of its industrial lots with retail space and other uses. David Croxford/Civil Beat/2022

“What’s good for Hawaiians is good for Hawaii,” said newly elected OHA trustee Brickwood Galuteria, a former state senator who championed efforts to develop Kakaako Makai.

OHA’s newest plans show promenades, parks, shops, restaurants and residential buildings.

Spearheading the effort for OHA this time is a consultant called Kuilei LLC, which just formed in 2021 and is led by Veto Baker. Kuilei and other entities have held workshops to gather input on OHA’s lots, held regular food truck events on the old site of the Fisherman’s Wharf restaurant and run social media and public relations campaigns — all intended to bolster support for OHA’s eventual development efforts.

However, the spending comes as a recent audit called into question OHA’s spending on past consultant contracts for Kakaako Makai, noting that about $3 million may have been open to waste, fraud or abuse.

OHA officials say that changes were implemented to increase oversight of contracts following that report.

OHA’s bill to repeal the development ban is expected to meet opposition from at least some state lawmakers and community groups that have blocked development in Kakaako Makai in the past.

‘Not Tourist Garbage’

The Legislature banned residential development and the sale of state lands makai of Ala Moana Boulevard since 2006 after mass community opposition to proposals from Alexander & Baldwin to construct high-rise, luxury condominiums on the waterfront.

In 2011, a state consultant with the help of community groups developed a master plan for Kakaako Makai with recommendations to keep the park space intact and build shops, restaurants, a cultural arts center, a museum and a performing arts center in the area around Kewalo Basin.

“There were stores to sell sustainable ag products from Maui and the other islands. It had a Hawaiian cultural village that was for traditional practices, not tourist garbage,” Michelle Matson, who was part of the Kakaako Makai community planning council, said.

The plan notes that people in the community expressed “vehement opposition” to any sort of residential housing in Kakaako Makai. The plan recommended against building any housing.

But in 2012, then-Gov. Neil Abercrombie struck a deal to transfer 30 acres in Kakaako Makai to OHA to settle a decades-long dispute over payments to OHA generated by lands formerly held by the Hawaiian Kingdom.

This maps highlights the parcels of land OHA owns in Kakaako. Courtesy: OHA

The office now says it’s essentially been hamstrung by the ban on residential buildings and isn’t able to make full use of the land.

OHA undertook several master planning projects to envision what the area might look like and simultaneously pushed the Legislature to repeal the development ban and allow the agency to develop residential towers up to 400 feet tall. Lawmakers refused to pass bills that would do that between 2014 and 2021. And many of the groups that opposed the A&B development came out against OHA’s bills, too.

But one area where OHA and the community might find some agreement is preventing Kakaako Makai from becoming another tourist trap.

“That’s part of our vision when we went after this,” Baker said. “You have distant developers that build things and after the fact say ‘We’re in Hawaii. Let’s plant some plumerias here, hibiscus here.’ We wanted this to be Hawaiian in concept, Hawaiian from the ground up.”

Who’s Connected To The New Firm?

Baker, the CEO of OHA’s current consultant Kuilei, said that the entity was formed for the sole purpose of working on a Kakaako Makai contract for OHA.

State business records show Baker registered Kuilei Consulting LLC in April 2021, three months before a request for proposals went out for an “In House Development Consultant” for OHA.

The RFP called for a company with eight years of experience navigating processes in the Hawaii Community Development Authority and the City and County of Honolulu as well as 10 years negotiating complex real estate agreements.

Karl Veto Baker
Kumu Hula and Kuilei CEO Veto Baker said the organization was created specifically to help OHA with its Kakaako Makai lots. Ethan Chang

Baker spent much of his professional career selling mortgages, according to clips from local newspapers. He is also a kumu hula and Nā Hōkū Hanohano award winner.

Carmen Hulu Lindsey, chairwoman of the OHA Board of Trustees, says that Kuilei includes members who meet all the requirements of the RFP.

Baker declined to say what entities or organizations are involved in Kuilei.

“I’m not sure if I can say their names,” he said. “Sometimes these people like to be in the background. I’d hate to say something and somebody get’s upset at me.”

Some Kuilei staff are listed in meeting minutes for the OHA Board of Trustees. They include Peter Gilpatric, who according to his LinkedIn profile is a real estate advisor. They also include Michael Yee, a Hawaii real estate consultant, and Linda Schatz, who also does consulting work for developers and is U.S. Sen. Brian Schatz’s wife.

The firm Kaiwi‘ula Strategies has also done social media under a subcontract for Kuilei. State Senate spokesman Jacob Aki is a part owner of Kaiwi‘ula but said in an interview earlier this year that his business partner is handling work on that contract.

Lobbyist Ann Chung, who counts e-cigarette companies among her clients, was also registered to lobby for Kuilei. Baker said the firm has not weighed in on any bills.

OHA chairwoman Lindsey said the full nine-member board acted as the evaluation committee for the consultant contract. OHA CEO Sylvia Hussey said that standard OHA and state procurement rules were followed.

Similar Contracts Flagged For Abuse

OHA’s prior consulting contracts for Kakaako Makai raised concerns.

An audit released by OHA in November flagged two Kakaako Makai contracts totaling about $3 million between 2012 and 2016 for potential fraud, waste or abuse.

The first was $50,000 paid to the Kalaimoku Group for public relations related to Kakaako Makai between December 2011 and June 2012.

The Kalaimoku Group was formed the same year the contract was executed, and the report states that it appeared to have been created for the sole purpose of getting the contract.

Former OHA CEO Clyde Namu‘o and Kalaimoku Group owner John Aeto appeared to have worked out the contract details before it was awarded through a process that exempted it from competitive bidding.

The report notes that contract deliverables were incomplete and called the Kalaimoku Group’s billing practices “arbitrary,” in part because it did not provide supporting details for its invoices.

The report by Plante Moran also cited a $2.9 million contract to WCIT Architecture for work on a conceptual master plan between 2014 and 2016. WCIT was part of a conglomerate working on Kakaako Makai that included DTL, the Edith Kanakaole Foundation and PBR Hawaii.

There were questions about former OHA trustee Peter Apo’s work on the contract while he served on OHA’s board.

The report noted that WCIT did not complete all of its work assignments on time.

“Ultimately, WCIT developed plans that are still unused to this day, due to OHA’s actions. It is unclear if those plans are still viable, and, until utilized, are considered waste,” the report said.

A New Direction?

Hussey and Lindsey say that OHA has tightened up its internal monitoring of contracts and improved oversight in areas flagged in the Plante Moran report and other audits.

Lindsey said that the trustees plan to decide in January whether to forward those audit findings to state and federal authorities for further investigation and possible criminal prosecution.

Regarding Kakaako Makai, Lindsey said she was surprised to hear at a recent community outreach event that some of the attendees did not know what the office had planned for those parcels. She said that OHA did not do a great job of reaching out to various communities before it tried to introduce Kakaako Makai bills to the Legislature in past sessions.

She hopes that things have changed. Besides outreach to the community, OHA has also tried to drum up support from the various Hawaiian civic clubs and also opened dialogue with lawmakers, including Senate Vice President Michelle Kidani and House Speaker Scott Saiki.

Many of the Kakaako Makai lots are empty or have industrial uses. David Croxford/Civil Beat/2022

Kidani is interested in introducing OHA’s bill but wants to get input from the Legislature’s Native Hawaiian caucus first, a Senate spokesman said.

Saiki said that he does not recall OHA formally asking for a bill, and without such a proposal, it would be hard to form an opinion. But, he noted that community groups have advocated for open spaces in the area and ensuring that any sort of development in Kakaako is affordable.

“Kakaako has seen an influx of luxury units and there is a need for more affordable units,” he said.

Kuilei’s work on a new master plan for OHA’s parcels have been put on hold until the end of the legislative session. If the residential ban is repealed, that work will continue. If not, “It’s back to the drawing board,” Baker said.

It’s a big ask and comes with another request for millions of dollars in infrastructure improvements in the area that was once a landfill.

Galuteria, the new trustee and former state lawmaker, is hoping for a positive outcome but said it’s unlikely OHA will get all that it’s asking for.

“If you’re going to walk into the Legislature and get everything you ask for, that’s a hell of a good day,” Galuteria said. “I think it’s unwise for us to think it’s all or nothing.”

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