Japanese center may have to leave Mo'ili'ili

By Rod Ohira
Advertiser Staff Writer

Although it is an "extreme option," the Japanese Cultural Center of Hawai'i might consider selling its land and two buildings and moving from its Mo'ili'ili location as it struggles to pay off $8 million in debt by the end of the year.

Susan Kodani, the center's president, said she has been working since July 1 with a newly elected board of directors to come up with a plan for restructuring the center's operations and settling its debt with Central Pacific Bank, First Hawaiian Bank, Bank of Hawai'i and City Bank.

"My sense is whatever the resolution is, we will continue to have a cultural center in some form," Kodani said. "While the building is important, the cultural center can exist without the building."

The commitment of the board is to resolve the financial debt problem and ensure the future of the cultural center whether or not it remains on South Beretania Street, Kodani said.

"We know that we cannot stay the same," she said. "There wasn't an understanding of the business end of nonprofits by people who started this center. A nonprofit needs several revenue sources other than contributions. These are things we are looking at in our strategic plan."

The Honolulu Japanese Chamber of Commerce developed the plan for a cultural center in 1986 and gave its leasehold interest of 57,000 square feet of property to a nonprofit organization established as the Japanese Cultural Center of Hawai'i, which was granted tax-exempt status in December of 1987. The center agreed to purchase the property from Bishop Estate in 1989.

Money for purchase and construction came from private donations and government appropriations.

Local contributions totaled $10 million, according to the center's data.

The center's debt stems from the plan to put up a second building on the property, only 11 months after construction of the $4 million first-phase office building was completed in August 1991. Work on the second-phase building for the historical gallery, resource center, banquet hall and 250 parking stalls began in July 1992 and was completed in late April 1994 at a cost of $10.8 million.

The four banks financed the second-phase project. The mortgage loan was amortized over a 20-year period, according to the center.

"It was like buying a house you can't afford," Kodani said. "Before the second phase opened, the center had a huge debt, and it has never been able to generate enough income to pay off the loans.

"Since I've been here, the banks have been extraordinarily patient, helpful and attentive to bring this long-standing situation to a close," Kodani said.

The state Legislature this year approved an $8 million appropriation inserted into the budget by Senate Ways and Means Committee chairman Brian Taniguchi, D-11th (McCully, Manoa, Mo'ili'ili). Taniguchi said he made the move after learning the nonprofit center was having problems making its mortgage payments. The center did not directly ask for the money, Kodani said.

Gov. Ben Cayetano vetoed the appropriation, he said, because of "response from the public and in particular Japanese Americans who have contacted me and told me that they thought that the way it was done was not right."

While the center's leadership is exploring options to resolve the debt, it does not involve asking the public for donations, Kodani said.

"We're going to take care of the debt problem as best we can," she added. "In the future, we're hopeful that instead of everyone focusing on the debt problem, they'll say what can the cultural center do for new programs."

As for the future, Kodani said she doesn't know where the center will find a home.

"There are many conversations going on, many things being explained and worked out," she said. "We really don't see what the resolution will be."