More than 1,000 acres of former Kauaʻi plantation land owned by a billionaire tech entrepreneur are in the sights of the state’s Agribusiness Development Corp. as part of the effort to help Hawaiʻi achieve its local food production goals.

The deal’s outcome depends on the Legislature, which will decide later this month whether to approve $39 million in the Senate’s draft of the state budget bill for a piece of a more-than 6,000-acre prime Grove Farm property, owned by America Online co-founder Steve Case.

Although some Kaua‘i residents and farmers have raised concerns about the price tag, they are approaching the deal with cautious optimism. Keeping the land in agricultural production would alleviate longstanding fears that it could end up being developed.

The ADC has banked more than 22,000 acres of former agricultural lands over the past 30 years, but the 1,040-acre Grove Farm acquisition would represent its largest land purchase in more than a decade.

Purchasing the land, which is being farmed by more than 20 tenants, could help the ADC satisfy the demand from farmers who applied for ADC farm licenses after the state corporation opened its portfolio to food producers 18 months ago. The just over 3,000 acres made available is being quickly snapped up.

ADC Executive Director Wendy Gady said the land, which Grove Farm offered more than two years ago, will help provide land for some new farmers while ensuring the current tenants — among the islandʻs most productive — have the best lease conditions possible.

“They know what they’re doing, and they have markets,” Gady said. “They need long licenses, they need water, they need security. And that’s what we do.”

A Gamble Paying Off

Grove Farm, which Case purchased for $26 million, currently includes 38,000 acres of land formerly used for ranching and sugarcane production.

Some residents have been concerned about what might happen to the land if the tech entrepreneur further trims his land portfolio, worried it could end up in the wrong ownersʻ hands and become dilapidated or developed for housing.

Case took on Grove Farm’s approximately $64 million in debt when he bought the company in 2000, along with an “immediate need to spend millions more for critical needs,” according to a 2006 Honolulu Advertiser story.

Grove Farm shareholders accused Case of insider trading at the time, believing it was a sweetheart deal. Former Grove Farm Director Warren Haruki said Case was taking a gamble on a farm that was in “dire financial straits,” according to the story.

The company has since become a mostly behind-the-scenes positive force in the community, having donated land to the private Island School in Puhi, running a farmers market for its tenants and managing the land.

“I think what they are doing here is cleaning up their portfolio,” said Ray Maki, former Hawaiʻi Farmersʻ Union Kauaʻi chapter president, referring to the proposal to sell off property to ADC.

Grove Farm Vice President Shawn Shimabukuro said the organization “does not comment on the details of pending land transactions.”

“We are supportive of the State’s mission to acquire and manage high-value lands for agricultural use,” he said in an email.

The land sale would break down to about $39,000 per acre, which is not an exorbitant cost, according to Hawaiʻi Farm Bureau Executive Director Brian Miyamoto.

“Iʻm not going to sit here and say itʻs not a lot of money,” Miyamoto said. “I had sticker shock, but I believe itʻs a fair price. Iʻm sure there will be some scrutiny to make sure.”

ʻYou Donʻt Need To Speculateʻ

Farming advocates are somewhat satisfied with the ADC taking over the land, particularly because the state is unlikely — based on the ADCʻs mandate — to convert it to housing or sell it later purely as profit.

The price, Maki said, still seemed to be “quite a bit” to spend.

The $39 million price tag is “a scary number,” Gady said, but the landʻs condition and central location just outside Lihu’e make it an agricultural unicorn.

Former plantation lands are often unkempt, overrun with invasive trees and home to dilapidated infrastructure that can require costly repairs. Preparing that land for agriculture can be cost-prohibitive for Hawaiʻiʻs generally small and disadvantaged farmers.

“What’s exceptional about this land is you don’t need to speculate,” Gady said. “It’s already in production, and people have spent thousands of dollars in putting in irrigation infrastructure. Itʻs already there.”

That is especially important considering the water infrastructure that streaks across the island’s former plantation lands, according to Yoshi LʻHote, director of the ʻAina Ho’okupu O Kīlauea food and agriculture hub.

“Itʻs not just a piece of land, itʻs a responsibility,” LʻHote said, one that is lost on many off-island buyers. The state, he said, was more aware of that responsibility.

Capital Improvements

The Senate included the money as part of its draft capital improvement projects budget released in late March. That overall budget will be negotiated with the House in conference committee hearings over the next two weeks and finalized in late April or early May.

On top of the $39 million, the Senate included more than $70 million in capital improvement projects for the ADC.

Those projects include a small animal slaughter facility for Central Oʻahu, land acquisition in Waimea on Kauaʻi, infrastructure improvements and a network that expands on the Central Oʻahu Food Hub project, championed by Senate Ways and Means Chair Donovan Dela Cruz.

Gady said the Legislature appeared supportive of the work that the ADC is doing, as it continues to consider various bills and capital improvements that the agency could oversee after this yearʻs legislative session concludes.

“Itʻs a desirable piece of land,” Gady said. “Itʻs not just going to stay on the shelf.”

“Hawai‘i Grown” is funded in part by grants from the Stupski Foundation, Ulupono Fund at the Hawai‘i Community Foundation and the Frost Family Foundation.