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The Honolulu Advertiser
Posted on: Friday, May 24, 2002

Outrigger project on track

By Katherine Nichols
Advertiser Staff Writer

Outrigger Enterprises expects to reach agreement in the next two months with all five landowners for property it wants in Waikiki, enabling the hotelier to move ahead with its $300 million redevelopment plan without using city condemnation of private property.

Outrigger has been trying to negotiate with five landowners on 7.9 acres of Lewers Street property that will be part of the company's Waikiki Beach Walk project, a mecca of retail and entertainment, upgraded hotel rooms and open space in the heart of Waikiki.

The company and landowners had been unable to reach agreement, and the City Council earlier this year approved a controversial measure to begin condemnation proceedings if voluntary agreements could not be reached.

But Outrigger Properties Chief Operating Officer Mel Kaneshige said yesterday at a meeting of the National Association of Industrial and Office Properties that a written agreement has been reached with one of the landowners, Andrade Trust; a "handshake deal" has been negotiated with two other landowners; and the company is "close" to agreements with the remaining two landowners.

The deals will mean that the first phase of the company's redevelopment project is still on track to begin next year. That phase includes the demolition of 436 hotel rooms and the addition of a two-story, 80,000-square-foot retail/entertainment complex.

Another 9,000-square-foot ballroom and 9,000 square feet of meeting space will also be built in Phase 1, said David Carey, president and chief executive officer of Outrigger Enterprises, the parent company of Outrigger Hotels & Resorts.

"We could use the meeting space yesterday," said Carey, who cited increasing demand from the sports market. Groups like the American Youth Soccer Organization, for instance, arrive en masse and often require mid-size meeting areas within walking distance of hotel rooms.

Other plans for the redevelopment include relieving traffic congestion on Lewers Street, pushing storefronts back from the street, and creating a gathering place decorated with tropical foliage and water features reminiscent of the 1950s and 1960s, when Outrigger first arrived on the scene.

"There should be a much better feeling of openness," said Kaneshige.

While Phase 1 will take about 18 months to complete, the $170 million second phase will take about 36 months to complete and will include construction of a 27-story, 890-room high-rise. Groundbreaking is tentatively scheduled for 2006.

"Phase 1 is a lot easier to execute than Phase 2 is," said Carey, who said it is still to early to talk about financing for the project until entitlements are in hand. After the land is acquired, the city still needs to approve the hotelier's development plans.

Debate had swirled around the issue of condemnation when it appeared that Outrigger would not be able to reach financial agreements with the landowners. Critics included Gov. Ben Cayetano, who responded by introducing a bill that would limit the counties' authority to acquire private property.

In February, the City Council voted 6-3 in favor of proceeding with condemnation, arguing that it was a unique chance to enhance Waikiki and invest in the visitor industry's future.

"There's no question that the condemnation was controversial," said Rick Egged, president of the Waikiki Improvement Association. "But it was clear that there was a public commitment to the redevelopment of this very mature portion of Waikiki."

Kaneshige said Waikiki occupies only 1/100,000th of the state's total land mass but is responsible for generating 50 percent of all visitor revenues, amounting to about $4.9 billion.