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The Honolulu Advertiser
Posted on: Saturday, April 19, 2008

TURTLE BAY
Support sought on resort's purchase

By Derrick DePledge
Advertiser Government Writer

With a deal for the state to acquire Turtle Bay Resort unlikely to happen before the legislative session ends, Gov. Linda Lingle has asked state lawmakers to approve a resolution backing the preservation of the resort's undeveloped land.

A working group she convened is negotiating with private investors on the sale of the hotel, golf courses and other developed portions of the 880-acre North Shore resort. Private investors may also be speaking with Oaktree Capital Management, the Los Angeles-based private equity firm that owns the resort.

The working group hopes the sale of developed land at the resort may help offset the state's cost to acquire and preserve open space at Kawela Bay and Kahuku Point. The state does not expect to own or operate the resort property.

A bill authorizing the state to acquire Turtle Bay is still alive but lawmakers likely will leave blank any specific commitment of state money, both because of the lack of detail about a potential state purchase and as a negotiating strategy.

Lawmakers and the Lingle administration do not want to reveal how much the state might be willing to invest in general obligation bond financing and publicly tip their hand during negotiations. Lingle is requesting, however, that lawmakers approve $250,000 toward purchase negotiations.

The resolution would urge the Lingle administration to complete negotiations for the Turtle Bay purchase. After a deal is finalized, the House and Senate would commit to a "good faith review" of the terms.

"Our sense is that sooner, rather than later, because the international and national atmosphere is such that the sooner we act as a state the better, we think, the price," Linda Smith, the governor's senior policy adviser, said of a potential deal.

Smith said the administration and lawmakers agree it is premature to discuss how much the state is willing to spend.

"We're on the same page. They understand why a number can't be inserted at this point, and wouldn't be advantageous to be inserted at this point, and the resolution reaffirms their willingness that once we get the negotiation completed, that they'll look at it."

State lawmakers have been supportive of the concept of the state purchasing Turtle Bay but skeptical about the potential cost given the slowing of the state's economy. Lingle provided no details when she announced the idea during her State of the State speech in January, which led to speculation about whether she was serious or was trying to earn political capital in the environmental community.

State Sen. Clayton Hee, D-23rd (Kane'ohe, Kahuku), chairman of the Senate Water and Land Committee, said lawmakers are willing to support the governor's initiative. He said the resolution would restate their support in case there is any doubt among private investors or Oaktree.

"People have questioned whether the governor was serious, whether the Legislature was serious in its support for her, and whether she meant business when she said publicly that she would finish it off," Hee said. "There's nothing to suggest that any of those three scenarios have changed.

"I fully expect, frankly, that the governor means what she says and says what she means and someday Kawela Bay and Kahuku Point will be public lands that people can enjoy with their families."

U.S. Sen. Daniel K. Inouye, D-Hawai'i, scolded Lingle in a letter Tuesday for not discussing potential federal money for Turtle Bay with him in February after the governor briefed U.S. Department of the Interior Secretary Dirk Kempthorne.

Inouye said that by the time he heard from Lingle in April it was too late to submit requests for the interior spending bill for next fiscal year. Inouye, a leading member of the Senate Appropriations Committee, said he would need a detailed financial plan from the state regarding the purchase as well as information about Kempthorne's commitments before taking any action.

Inouye also warned Lingle that she may have exposed the state to liability by accelerating the foreclosure of the resort without having a "defensive financial acquisition plan in place."

U.S. Rep. Neil Abercrombie, D-Hawai'i, and U.S. Rep. Mazie Hirono, D-Hawai'i, wrote Lingle Thursday to say that the House Appropriations Committee has a long-standing prohibition against earmarking federal money for state land acquisition projects. They suggested, however, that the state consider applying for money from several grant programs.

U.S. Sen. Daniel Akaka, D-Hawai'i, in a letter to Lingle yesterday, was more gentle than Inouye but made similar points about the lack of detail and consultation.

"I know the Hawai'i congressional delegation and the people of Hawai'i would appreciate receiving specific details on your administration's land acquisition proposal," Akaka wrote. "It is crucial that the delegation and vested parties have a clear understanding of what lands, under what conditions, and at what cost these lands will be acquired.

"A comprehensive financial plan and detailed information about the resources partners may be able to contribute should also be shared. In addition, I am particularly interested to know how your proposal will take into account the ongoing mortgage foreclosure litigation."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.