Developer shelves Ko Olina expansion plan
By Andrew Gomes
Advertiser Staff Writer
Bold expansion plans for the West O'ahu resort area of Ko Olina have been called off as instability in Hawai'i's tourism industry has shaken the confidence of investors and developers in the projects.
Plans for a second hotel at the Ko Olina Resort & Marina, a nearby master-planned community with 3,000 homes, a golf course and commercial center have been shelved, Hawai'i developer Jeff Stone said yesterday.
The project, Seaside at Kapolei, was to be a $500 million development Stone had hoped to begin by June 2003. Yesterday, Stone said he had notified Campbell Estate that he would not be able to complete the purchase of the land for the project, which was in escrow, because investment and development partnerships had fallen apart following the tourism slowdown created by the Sept. 11 attacks.
"Today, the financial market won't support that type of project," said Stone, who has been coordinating a revival in the area over the past three years and added that he would reconsider pursuing the projects when the state economy recovers.
The indefinite setbacks are a significant blow to the resort and appear to have sapped some development momentum that would have helped propel Kapolei closer to its billing as O'ahu's "second city," rivaling Honolulu.
Stone announced in June that he had agreed to buy about 325 acres of Campbell Estate land between Kapolei and Ko Olina to build 2,900 homes, an 18-hole golf course, a park and a 33-acre commercial center over 10 years.
The hotel deal, which had not been announced, was to have been a 340-unit condominium hotel operated by Outrigger Hotels & Resorts. Outrigger officials could not be reached yesterday, but Stone said that the estimated $50 million project next to the marina unraveled for similar reasons.
"It's a big hit, there's no question," he said. "It was huge. This is over a half-billion dollars for the city of Kapolei."
An official with Kapolei master developer Campbell Estate, however, was confident there would be new interest in the estate's property.
"Kapolei has gained considerable momentum over the years," said Donna Goth, director of Hawai'i properties for the estate. "This means that if a project does not proceed as planned, we know that there will be considerable interest from other developers in those 325 acres ... It presents an opportunity to explore other exciting ideas."
Stone said the drastic falloff in visitors to Hawai'i will likely affect home and time-share projects under construction at Ko Olina as owners wait to see what happens during the main resort-residential real estate season that starts next month with the arrival of snowbirds who typically look to buy winter homes and vacation property.
"We don't know what's going to happen next," he said. "We haven't seen the real effect of the global conditions. Clearly, there is no short-end recovery in sight."
Ko Olina had been on a roll since 1998 when an investment partnership led by Stone first acquired much of what had been a mostly undeveloped resort project with the aim of turning it into the "Wailea of O'ahu."
The partnership, alone or with others, bought the J.W. Marriott Ihilani Resort & Spa hotel and golf course, built a 270-slip marina, and attracted other developers who are building the first phases of 270 townhouses, 750 time-share units as well as an oceanfront restaurant, athletic club and meeting facility.
"Brick by brick it was coming up," Stone said. "You're building your blocks — and all of a sudden your foundation begins to shake. It's unfortunate."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
