The Hawaii Community Development Authority on Friday voted to allow The Howard Hughes Corp. to lease Kewalo Basin Harbor for up to 45 years in a public-private partnership that could revitalize the small commercial boat harbor between Downtown Honolulu and Waikiki.
Under the lease approved Friday, The Howard Hughes Corp. (NYSE: HHC), the Dallas-based developer of the Ward Village master plan across the street from the harbor, will take over operations and management of Kewalo Basin Harbor for a term of up to 35 years, with a 10-year option to extend.
Under the terms, Howard Hughes Corp. will pay the state agency about $500,000 upon execution of the lease in August, and then a base rent until the developer recoups its initial improvement costs, which is estimated to take about 12 years, and HCDA spokeswoman said. After that, the developer will pay a percentage rent of 16.5 percent for the remainder of the initial 35-year term, with the rent rates opening for renegotiation for the 10-year extension period, she said. The developer is expected to pay a total of approximately $14.4 million in base and percentage rent during the first 30 years of the lease, the HCDA said.
Kewalo Basin currently has 144 boat slips in various states of disrepair and is in need of an overhaul, the HCDA, which assumed control of the harbor in 2009, said. The Howard Hughes Corp. has committed to spending millions of dollars to improve the harbor with security upgrades and dock renovations, to benefit the charter boat businesses, fishermen and other harbor users.
“Effective harbor renovations are never cheap or easy, and we recognize Ward Village for stepping up and investing in the future of Kewalo Basin Harbor,” Brian Lee, chairperson of the HCDA, said in a statement. “This lease agreement will allow us to share both the risks and the returns in revitalizing the harbor to serve the community. We will be working together to reconnect Kakaako and all of Honolulu with our waterfront.”
Nick Vanderboom, senior vice president of development for The Howard Hughes Corp., noted that Victoria Ward sold the fishery of Kukuluaeo to the territory of Hawaii on July 25, 1913.
“As we approach the 101st anniversary of that sale, Ward Village is honored to have the opportunity to revitalize Kewalo Basin Harbor and return the stewardship of a portion of the fishery to Victoria Ward,” Vanderboom said in a statement. “In addition to providing the harbor with much-needed improvements to its facilities, we will also seek to make it a best-in-class community amenity and recreational area for locals and visitors to enjoy, truly connecting Ward Village from mauka to makai.”
Janis L. Magin Managing Editor – Pacific Business News