Agreement clears way for Outrigger redevelopment

By Kelly Yamanouchi
Advertiser Staff Writer

Outrigger Enterprises Inc. has reached agreement with all five landowners where it plans to develop its $300 million Waikiki Beach Walk project, allowing it to avoid what had been a controversial move to use city condemnation of private property.

In the past several months, the company had reached final agreements with two of the landowners. Yesterday, Outrigger president and chief executive David Carey said the company has reached agreements in principal with the remaining landowners.

"We have reached agreement but it hasn't been formalized yet," Carey said. "I think we've got most of the details."

Carey said the company now has reached agreements in principal with Ohana Village Hotel owner Clarice Garrison, with a Lemmon sisters' trust that owns the Carl's Jr. restaurant, and with a Lemmon sisters' company that owns the Ohana Reef Lanai hotel.

Outrigger already had reached a final agreement to purchase the Andrade trust interest, and had signed an agreement with the Melinda Alison trust.

Carey declined to disclose details of the agreements, but said some of the owners have expressed interest in exchange properties which the company is trying to locate.

He said he hopes to get the final deals signed by the end of the month, allowing the company's Lewers Street retail, entertainment and hotel project to move forward in what would be the largest private redevelopment of Waikiki in years.

The company and landowners had been unable to reach agreement with the private landowners involved in the redevelopment and the City Council in January had approved a measure to begin condemnation proceedings of the private property if agreements could not be reached.

"Assuming that the agreements in principal in fact become definitive and in fact close as they should, there won't be any need to resort to condemnation," Outrigger chief operating officer Melvin Kaneshige said yesterday.

With the agreements, the company is moving ahead with permitting for the project and an Aug. 30 public hearing is scheduled with the city's Department of Permitting and Planning.

Carey said yesterday that the company's plans for development have slipped three months to four months behind schedule, as Outrigger had expected to reach City Council hearings earlier in the summer, but Carey said he did not expect that to affect the general timetable.

The company's project on 7.9 acres between Saratoga Road, Lewers Street and Kalia Road would raze six hotels and replace them with an outdoor retail and entertainment complex and hotel, with a pedestrian plaza and wider sidewalks.

The first phase of construction including the retail and entertainment complex was scheduled to begin next year and to be completed by 2005. The second phase to build a new hotel and upgrade three other hotels would be completed by 2010.

Carey said he is optimistic that the company can take the project to the capital market for financing after full City Council approval, which could come as early as mid- to late-November.

Carey said Outrigger has already presented the project to 50 to 60 potential investors, but "until we get our vote in the City Council, it's too early to get financial commitments."

Plans for the redevelopment have not significantly changed since the unveiling of plans last July, Carey said. However, he said Outrigger's marketing and development partnership with Fairfield Resorts Inc. announced last month has had the most impact on plans for the redevelopment.

"What's new is the potential addition of Fairfield as a time-share partner, which creates a potential new customer base as well as a new potential investor base," Carey said. "We will have a lot of prospective customers that will be filling the place, going to our restaurants, going to our shops. ... Fairfield guys are interested because having an entertainment plaza near their sales center makes eminent sense for them because that's what their customers are looking for."

Fairfield last month bought ownership resort Kona Hawaiian Village and hired Outrigger to manage the property. The partnership is working on opening a time-share sales center in Waikiki.

"We're optimistic that it'll be open by Dec. 1," Carey said. "They're itching to get going, because particularly with these acquisitions, they want to start selling in Hawai'i."

Reach Kelly Yamanouchi at 535-2470 or at kyamanouchi@honoluluadvertiser.com.