Hotel to join Aloha Tower
By Andrew Gomes
Advertiser Staff Writer
A startup company that last year floated a proposal to operate a commuter ferry service in Hawai'i has broadened its plan into a $200 million project that would include a hotel and office building next to Aloha Tower Marketplace.
Rainbow Pier Development LLC is proposing to develop a ferry terminal and operate interisland and intra-island service with a sister startup firm, Rainbow Island Express, that would help create demand for a hotel and office complex just diamondhead of the marketplace.
The proposed development project, which includes roughly 1,500 parking stalls, would alleviate a chronic parking shortage for the financially troubled retail center and help fulfill the state's original vision for creating a critical mass of activity surrounding Aloha Tower.
"We really think we can help Aloha Tower (Marketplace)," said Peter Maher, Rainbow Pier's president. "They need critical mass; they need more foot traffic and more parking. The residents of Hawai'i need another reason to go there."
Rainbow Pier is seeking a lease at Honolulu Harbor Piers 5 and 6 from the Aloha Tower Development Corp., the state agency overseeing redevelopment of the area.
Agency executive director Ron Hirano said Rainbow Pier representatives are scheduled to make a presentation to the agency's board next week.
Maher said the company, which is headed by Nevada resident W.E. Matt Dillon, has been working on plans for three years. He declined to talk about project details, saying negotiations are sensitive.
It was not clear yesterday whether Rainbow Pier's development proposal might be contingent upon a state Department of Transportation contract to operate a ferry service. A department official was not immediately available for comment.
Maher said the company has lined up $150 million in financing and it could use another $44.5 million in revenue bonds that were authorized last year for issuance by the Transportation Department.
Early last year — following the state's yearlong Wiki-Wiki commuter ferry experiment between Leeward O'ahu and downtown Honolulu — Dillon pitched a ferry-service plan to legislators, who authorized using revenue bonds to improve pier space for Dillon's proposed operation.
Maher said the company is considering various craft for the service, including initial use of two $12 million to $15 million Boeing jetfoils, which can travel 40 to 45 mph carrying 250 people. The number of vessels would be increased as service expands.
Interisland service between O'ahu, Maui, Moloka'i and the Big Island would be provided along with West O'ahu-Honolulu service, according to Maher, who said interisland travel would cost 30 percent less than air service.
"Our goal is to provide an enjoyable, convenient and affordable transportation experience for the Hawaiian visitor as well as the residents," he said.
If built, the Rainbow Pier project would draw more people to the Aloha Tower area, but the plan by Rainbow Pier is not the only interest in developing the harborfront.
Hirano said another developer has talked to the agency about building a residential condominium and office building at Piers 5 and 6, but those talks stalled late last year.
Local real estate executive Scott McCormack has also talked with the agency recently about ideas to develop an office building at Piers 5 and 6, according to Hirano.
McCormack was out of town yesterday and unreachable for immediate comment.
Hirano said the agency is in the process of hiring a consultant to help analyze Rainbow Pier's proposal and any others.
Aloha Tower was built in 1994 at a cost of $100 million. It was supposed to be the first phase in a $700 million, five-phase project stretching from Piers 5 to 14. The original plan included the marketplace, which represents just 6 to 8 percent of development authorized for the area, as well as a hotel, condominiums and an office building.
But developer Aloha Tower Associates ran short of money, could not complete additional phases and fell behind in lease rent payments to the state agency.
Aloha Tower LP, a partnership of investors including Trinity Investment Trust LLP, acquired Aloha Tower Marketplace in 1998 out of foreclosure, but the partnership filed for Chapter 11 bankruptcy last month. The festival marketplace with about 120 shops and restaurants continues to operate.
Meanwhile, Aloha Tower Development Corp., which regained development rights for the areas surrounding the marketplace two years ago, hopes to find a developer or developers to finish the master plan.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
