By Andrew Gomes
January 11, 2021
A state agency has sidestepped what could have been a costly halt in a long- running effort to have a private developer redevelop Aloha Stadium and surrounding state land in Halawa.
The state Department of Accounting and General Services is close to running out of money needed to finish work that includes soliciting bids from three recently selected preferred private development partners and negotiating a contract for a winning bidder to finance, build and maintain the new facility along with rights to redevelop surrounding state land possibly with housing, retail and other uses.
DAGS to date has spent close to $10 million paid to private consultants doing conceptual design, engineering, environmental, legal and other work on the project while also contributing its own work by staff under the agency’s budget.
But another $10 million that the agency estimates it needs to complete work that includes finishing an environmental study, issuing a request for proposals and handing off the project to a private developer can be tapped only by another state agency that Hawaii lawmakers selected two years ago to head the redevelopment project.
Lawmakers in 2019 selected the Hawaii Community Development Authority to lead the project because this agency has experience in master planning and soliciting private development proposals mainly to foster redevelopment of what had been the long-blighted industrial area of Kakaako into a modern urban community.
Last year lawmakers made an effort to transfer HCDA’s role to the Aloha Stadium Authority but failed to pass a bill needed to effect the change because of a concern that a small detail in the bill would allow HCDA to lease land for longer than currently allowed, or 99 years instead of 65 years.
Lawmakers intend to pass a bill this year to make the change, but HCDA essentially still holds the financial strings to a project from which it’s being divorced.
As a result, DAGS can’t access the next $10 million it will soon need to continue its work.
“Our work on the procurement phase would come to a very slow halt eventually as our funding runs out,” Chris Kinimaka, DAGS public works administrator, told HCDA’s board at a meeting last week. “We’re very close to using that entire (initial) $10 million.”
DAGS comptroller Curt Otaguro put the situation more bluntly: “We will be stuck.”
Otaguro added that if the agency’s work is delayed, then costs for the project will likely increase.
As a workaround, DAGS requested that HCDA ask Gov. David Ige to release the next $10 million previously appropriated by the Legislature and essentially pay contractor invoices DAGS submits to HCDA.
However, some HCDA board members were hesitant about the proposed arrangement over concerns that an already short-staffed HCDA would have to review and be responsible for the spending, which would take up time and detract from HCDA’s core work.
HCDA’s board unanimously agreed Wednesday to authorize its executive director to request the $10 million from Ige, who supports the stadium project, with a condition that DAGS ensure in a written agreement that HCDA isn’t burdened with oversight and fiduciary responsibility for paying the project’s bills.
DAGS agreed and generally promised that it would not overburden HCDA.
“We regret that we have to do this and have this interim type of agreement, because had our bill gone through in July, we wouldn’t be here today and we would have a much cleaner role for all of us at this point,” Kinimaka said.
Kinimaka said DAGS anticipates that it can sign a contract with a winning bidder by the end of this year or March 2022.
The Stadium Authority in December announced an indefinite suspension of future events in the stadium with a few exceptions because revenue has dried up during the pandemic and budget reserves were being sapped by maintenance expenses.
Aloha Stadium, which opened in 1975, has been plagued by exceedingly expensive maintenance issues including severe rust that prompted state leaders to deem it more prudent to replace the facility instead of repair and renovation.
State leaders would like to have a new stadium in time for a University of Hawaii football season opener against Stanford in September 2023.
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