AOL's Case buys former Lihu'e Plantation land
By Jan TenBruggencate
Advertiser KauaÎi Bureau
PUHI, Kaua'i — Internet billionaire Steve Case, the Hawai'i-born chairman of AOL Time Warner, yesterday took a controlling position in the growth of Kaua'i with the purchase of 18,600 acres of former Lihu'e Plantation land.
While no detailed figures were released, Grove Farm Co. President David W. Pratt said Case paid about $25 million for the property, more than half of which is forested upland conservation land.
Case already controls much of the urban-zoned undeveloped land around Lihu'e through his purchase last year of Grove Farm Co. The addition of several hundred acres of urban-zoned land that has been part of Amfac's Lihu'e-Hanama'ulu Master Plan gives Case a firm grip on the future growth of the region.
No other landowner has significant holdings in the area.
Case has a family history on Kaua'i. His father was born here, and his grandfather handled the finances of Grove Farm Co. during much of the early part of the 1900s.
The Punahou graduate built a fortune estimated at between $1 billion and $2 billion with the development of Internet service provider America OnLine, now known simply as AOL. He started a string of land acquisitions in the Islands in 1999 with the purchase of a 41.2 percent interest in Maui Land & Pineapple Co. Last year, he bought Grove Farm's stock for roughly $26 million and assumed more than $60 million in debt.
Case's interest in the Amfac lands has been one of the Kaua'i's worst-kept secrets, although the principals never confirmed the rumor until after the transaction closed yesterday.
Amfac shut down its Lihu'e Plantation last year, turned back its leased cane land to the state and put its own land up for sale. A number of suitors lined up, but Case's bid, apparently a cash offer, was the one that went into escrow.
The purchase was done through a Virginia limited liability corporation, Visionary LLC, which will hold the property under the name Lihu'e Land Co., with Case as sole owner. Pratt said the former Amfac lands will be operated as a separate company but will be managed by the same team that runs Grove Farm.
Grove Farm's employees are familiar with the land. Its three most senior officers all once worked for Amfac at Lihu'e.
Michael Furukawa, a Grove Farm vice president and former manager of Lihu'e Plantation, said it is unlikely the former Amfac urban lands around the county seat will be developed in the immediate future. The urban-zoned lands along Ahukini Road and Kapule Highway lack infrastructure and would probably be targeted for action after development of some of Grove Farm's own urban lands between Puhi and Nawiliwili.
Mayor Maryanne Kusaka, who said she has not met Steve Case but is familiar with his plans for the land, said she is pleased the property will not be broken up and sold off.
"They will lease the parcels as is, and I'm delighted at that," she said. "I don't think there's risk of too-quick development. Apparently there's no hurry to do anything that's different here."
Jan TenBruggencate • The Honolulu Advertiser
Asked whether she has been informed of Case's long-term goals for the land, she said: "I think primarily it's land bank, to hold the land. It's a great investment."
Case's purchase of most of the former Lihu'e Plantation lands includes former sugar land and watershed stretching from the foreground to the mountains in the distance.
Pratt said the company's first goal will be to seek lessees for the agricultural acreage. The old sugar company irrigation system will be kept in working order to provide water for farming and ranching activities.
While small farmers and cattle owners are likely initial tenants, Pratt said Lihu'e Land Co. hopes to eventually find a longer-term crop that would make it more of a plantation once again.
"The hope is to find some new kind of crop that will take up substantial acreage," he said.
While there may be leases for tree crops in certain areas, the company does not want to tie up its most fertile land for longer periods in hopes it will be able to commit to a new plantation crop.
"One of the reasons we aren't planting the whole place in with trees is because that would be a longer-term commitment," said Allan Smith, the company's vice president and chief operating officer.
While a specific crop hasn't been identified yet, Smith said Alexander & Baldwin's move from sugar to coffee on more than 4,000 acres of its former McBryde Sugar lands is an example of the kind of alternate crop the Case companies would like to find.
The Lihu'e Land Co. acreage abuts that of Grove Farm for several miles from the Lihu'e-Puhi area east to the ridge between Mount Kawaikini and Mount Kahili. Kilohana Crater, mauka of Lihu'e, is split by the property line between Case's Grove Farm and Lihu'e Land Co. holdings.
(Tomorrow: Read about the future of Grove Farm land holdings at Maha'ulepu on Kaua'i in The Sunday Advertiser.)
You can reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.
