Ko Olina to keep trying for tax credits
By Andrew Gomes
Advertiser Staff Writer
Ko Olina Resort & Marina strategists, disappointed yesterday after Gov. Ben Cayetano vetoed a controversial bill that would have provided $75 million in tax credits to build an aquarium and marine science center at the West O'ahu resort, said they will try again under a new governor.
"I think we're just going to continue focusing on the bill and developing the resort," said John Toner, vice president of the Ko Olina Resort Association. "Hopefully we can get this thing passed at next year's Legislature. We're not going to let up on it."
Toner said the resort's development partners, which agreed to build a hotel, time-share and other amenities at Ko Olina if the tax-credit bill became law, remain committed to the proposed 10-year development plan that he said is now delayed by six months to a year.
"It does not affect any plans we have there," said Stephen Forgacs, corporate communications director for Intrawest Corp., a Canadian firm that agreed to co-develop a 200-plus-room vacation club condominium, commercial village and expanded marina at Ko Olina.
Meanwhile, House and Senate Republicans called for the Legislature to override Cayetano's vetoes of the Ko Olina measure and other bills they said would have stimulated the economy. They said the Ko Olina measure would have created more jobs and helped pull up the economy.
It's not clear whether Democratic lawmakers would support an override. The bill passed the House 41-10, and 22-3 in the Senate.
The Ko Olina measure would have helped private developers build the aquarium and marine science facility on land owned by the nonprofit Harry & Jeanette Weinberg Foundation, in conjunction with Intrawest's project and a Hilton hotel.
Ko Olina developer Jeff Stone estimated the "marine village" project would create roughly 10,000 construction jobs, 2,000 permanent jobs and $186 million in state tax revenue over 10 years, after which the Weinberg Foundation would give the state a half-interest in the aquarium.
Cayetano argued that it would be wrong to target tax credits specifically for one area and a group of developers, especially when there are other available incentives such as a 10 percent state tax credit for hotel construction, city tax credits and low interest rates.
He criticized the measure as poorly drafted, unclear and not thought out: "The Ko Olina idea on its face seems like a bold idea. If it's a bold idea today it will be a bold idea next session and maybe what they can do is take a look and read my veto message and try to clear up some of the things that we felt were not in the state's interest, and if they want to try again, try again."
Toner said resort officials do not anticipate making changes to the bill next year, leaving it up to whoever wins the November gubernatorial election to approve or reject the bill if resurrected.
No one at the state Legislative Reference Bureau or Senate and House clerk offices could recall a bill signed into law one year after being vetoed by an outgoing Hawai'i governor.
Among the four leading candidates for Cayetano's job, two strongly support the bill, one opposes it and the other says it needs more study.
D.G. "Andy" Anderson, a businessman and former Republican leader running as a Democrat, said he would have signed the bill. "While I understand the governor's position, we're going through a period now, and I think for the next two or three years, where we have to do things a little different."
In Anderson's view, the bill's economic stimulus for people working on the island is more important than favoring development in one area.
Republican front-runner Linda Lingle issued a statement calling the veto a missed opportunity to partner with business, labor, and the nonprofit community to dramatically improve the lives of Leeward Coast residents where unemployment is chronic. "This kind of collaboration is essential to the state's economic recovery," she said.
State Rep. Ed Case, D-23rd (Manoa), voted against the bill in the House because he didn't believe a 100 percent tax credit targeted to a specific project at a specific location without evidence the project couldn't be built without the tax break was sound public policy.
He said he would have supported a broader bill that didn't restrict the project to one area, because O'ahu's North Shore, the east side of the Big Island and some other areas are no less deserving of the same economic support.
"Frankly, I would rather take $75 million in future lost revenue and apply it across the board to a general excise tax reduction to help all businesses in the state," Case said.
Lt. Gov. Mazie Hirono said she leaned in favor of the bill, but stopped short of saying she would have signed it. Instead, she said she would have asked the University of Hawai'i to assess the benefits of the proposal, adding, "We're going to have a chance to take a look at it next year."
Short of the bill coming up again next year, Ko Olina developers continue to seek hotel and resort amenity operators to invest in the largely undeveloped 650-acre property with or without an aquarium, Toner said.
The resort was envisioned by developer Herbert Horita as a $3 billion self-contained resort/residential community in the late 1980s, but the grandiose project stalled in the early 1990s.
In 1998, Ko Olina Co., headed by Stone, stepped in and acquired much of the property. Alone or with partners, Stone's company bought the J.W. Marriott Ihilani Resort & Spa hotel and golf course.
Advertiser staff writer Lynda Arakawa contributed to this report.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
