Posted on: Friday, April 1, 2005

Aquarium spending increases to $1.5M

By Andrew Gomes
Advertiser Staff Writer

Spending on Ko Olina Resort & Marina's planned world-class aquarium financed by state tax credits increased last year to nearly $1.5 million of mostly planning and design work, though no tax credits can be claimed until next year.

The resort's master developer yesterday filed its second annual expenditure report disclosing spending that qualifies for 100 percent repayment in the form of tax credits up to $75 million.

West Honolulu Attractions LLC, an entity managed by Ko Olina master developer Jeff Stone, reported spending $716,008 on planning and design work, nearly half of all expenses.

Roughly one-third, or $451,672, of qualified expenses was for administrative overhead allowed by the Internal Revenue Service. Actual construction totaled $318,964, mainly for work on a marine science and mammal research facility.

Stone has anticipated starting primary construction on the aquarium by the end of the year.

Spending last year broke down to:

• $831,822 on the aquarium, including $391,345 for planning, $252,724 for administrative overhead and $187,752 for design.

• $468,394 on the marine science and mammal research facility, including $266,920 for construction, $142,308 for overhead, $43,862 for planning and $15,304 for design.

• $94,808 on other educational facilities developed or operated with the University of Hawai'i or other educational institutions. That included $52,044 for construction, $28,805 for overhead and $13,939 for planning.

• $91,620 on an international sports training complex, including $35,347 for planning, $28,437 for design and $27,836 for overhead.

The state Department of Business, Economic Development & Tourism is required to verify expenditures to ensure they are qualified costs under the law.

"We will be looking at the (contracts) themselves," said Tom Smyth, senior policy advisor with the department.

In the first reporting period between June 1, 2003 when the tax-credit law took effect and Dec. 31, 2003, West Honolulu Attractions disclosed spending about $345,000 on qualified costs.

The 2003 expenditures represented $293,600 for design and planning of the aquarium, $31,216 for an "interactive swim-through" portion of the attraction and $20,178 for design and planning work on an international sports training complex.

Administrative overhead was not broken down as a separate category for 2003 expenditures, but were included in the costs.

The sports training complex and educational facilities developed or operated with educational institutions are among "attraction and educational facilities" qualifying for the credit under the law.

Details of what kind of educational facilities are being built were not included in the report. Ko Olina representatives could not be reached for comment yesterday.

Much of the initial aquarium design and planning work has been conceptual, and involved a series of designs for the facility at different locations at the West O'ahu resort.

The latest plan was announced in January and involves incorporating a luxury hotel and time-share complex with 1,000 rooms and a commercial village around the aquarium fronting one of the resort's man-made coastal lagoons.

A temporary marine science and mammal research facility is being designed next to the boat marina. The sports training facility is planned for development near the Fairways townhomes.

Stone and Ko Olina have until 2009 to spend up to $75 million on the aquarium and other facilities to qualify for the tax credits, which can be redeemed over many years at no more than $7.5 million a year.

As part of the tax-credit package, Stone pledged to distribute $2.5 million in scholarship awards over six years primarily to Leeward O'ahu residents. As of January, more than $800,000 in awards have been made.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.