WAILUKU – Six weeks after moving into her office, Teena Rasmussen, the county’s new economic development coordinator, said she is focusing on local events, enterprise zones and a made-on-Maui marketing campaign as top initiatives for her office.

Rasmussen said the county administration would make it a priority to facilitate the return of Halloween celebrations to Lahaina’s Front Street, and also wants to bring a Professional Windsurfers Association world tour event to Maui’s north shore. She also noted that the Planning and Public Works departments were looking for ways to make building permit requirements more business friendly.

“The mayor definitely wants to focus on jobs and businesses,” she said Monday. “He wants to tell Maui businesses that we want them to thrive.”

When she was appointed by Mayor Alan Arakawa, Rasmussen was known as the longtime co-owner of Paradise Flower Farm. She is also a member of the University of Hawaii Board of Regents and is a former chairwoman of the Maui Chamber of Commerce.

In an interview at her office in Wailuku’s One Main Plaza, Rasmussen said business leaders had made clear that they wanted the county to bring back a number of local events.

“These events not only bring people to the island,” she said. “They also bring people to these business areas.”

She said the county administration had been meeting with the LahainaTown Action Committee as well as other West Maui community groups to discuss how to bring Halloween back to Front Street.

The Cultural Resources Commission voted to revoke the LahainaTown Action Committee’s permit for the organized Halloween celebration in 2007, after a number of kupuna and Native Hawaiians spoke out against the event as being rowdy, risque and culturally insensitive.

Rasmussen said the administration hoped to address some of the commission’s concerns about the event.

“Our plan is to bring them into the process and work with them,” she said. “I think there’s a way we can work around some of their concerns.”

Rasmussen said she had proposed to Arakawa that the county set aside some funding to sponsor the event, along with the annual Fourth of July fireworks event in Lahaina. The latter show has recently been paid for through donations solicited by the Chamber of Commerce.

On the north shore, Rasmussen said her staff had been meeting with officials from the Professional Windsurfers Association to bring a championship event back to Maui in November.

“We’re very hopeful,” she said.

Looking at marketing efforts for made-in-Maui products and services, Rasmussen said her office was planning to organize a more coordinated effort. Made in Maui is a trademarked slogan of the Maui Chamber of Commerce.

With county property tax revenues expected to decline by another 15 percent this year, a number of the nonprofit organizations that receive grants through her office to promote local industries will likely see their grants cut, Rasmussen said. That makes it more important for them to get “bigger bang for the buck” and work together under one “Buy Maui First” umbrella.

“We’re going to ask them to come to the table and collaborate with us,” she said.

Other Office of Economic Development projects include:

* APEC summit. Rasmussen said the county officials and business leaders had already met with organizers of the summit that will bring together at least 19 heads of state in Honolulu in November, to see how Maui could capitalize on the event.

She said the APEC host committee had made it clear that it was highly unlikely President Barack Obama or any other world leaders would visit Maui due to the event’s extraordinary security requirements. However, she said the county could try to develop secondary tours and day-trips of local energy projects, ocean activities and other programs that could appeal to some of the many diplomats and officials also participating in the Honolulu summit.

“That’s the kind of person and group we think we can entice,” she said.

* Film. The county is monitoring proposed tax incentives and benefit packages being considered at the state Legislature, which could help entice Hollywood film production companies to Maui. One firm, Relativity Media, has already expressed interest in developing a film studio on Maui, Rasmussen said, but the project could depend on the state tax breaks.

* Enterprise zones. Rasmussen said her office is making a “concerted effort” to seek out eligible businesses and encourage them to enroll in enterprise zone programs, which can offer significant tax exemptions and incentives.

To qualify, businesses need to show that they are growing and hiring more workers – something many may be ready for now that the economy is on the rebound, Rasmussen said.

“We feel it’s a perfect time for companies now,” she said.

For more information, please see:

http://www.hawaiitourismauthority.org/documents_upload_path/tr_documents/December%202010%20Visitor%20Stats%20PR%20%28FINAL%29.pdf

See you on Maui !

Aloha,
Peter

Thanks for visiting my blog, and feel free to contact me regarding any of the blog articles.

Aloha,

Peter

Just like homeowners who fall behind on their mortgage payments sometimes “hand in the keys” and walk away, the investors who bought the Grand Wailea resort in 2007 are giving up their ownership.

The big Maui resort and seven others that were pledged for a huge loan have been taken over by the lenders, according to a report by Bloomberg News in New York.

The loan, originally for $1 billion, was coming due next month.

On Monday, Grand Wailea General Manager Matt Bailey said the change in ownership wouldn’t have any immediate effect on operations, which are under a long-term contract with Hilton.

The irony of the situation with the Grand Wailea is that it is reportedly doing pretty well considering the depressed state of the visitor industry. So well, in fact, that its old owner, Morgan Stanley Real Estate, was planning a $250 million, 310-room expansion.

That expansion is being contested, and a hearing is scheduled this morning at the Maui Planning Commission. Attorney Isaac Hall, who is representing hotel expansion opponents and an appeal by Shep Gordon over a beach parking arrangement being financed by the Grand Wailea, said the takeover adds an additional complication to an already complicated situation.

“The authority to pursue the whole thing is in Morgan Stanley,” he said. “We have a question right now about who does have the authority to process this application.”

In an e-mail, Wade Fischer, a vice president of Pyramid Project Management, which is handling the special management area application, said: “The application remains intact and will continue through the process. Our involvement remains the same.”

The Grand Wailea last changed hands in 2007, at the peak of the real estate boom, when Morgan Stanley Real Estate acquired part of CNL Hotels & Resorts Inc.

Morgan Stanley, the biggest real estate buyer of the day among Wall Street investment banks, paid $6.6 billion (including debt assumed) for eight premier properties, including the Grand Wailea.

At that time, Michael Franco, managing director of Morgan Stanley Real Estate, told Bloomberg: “This acquisition is a unique opportunity to acquire eight top-quality resort properties diversified across key U.S. travel destinations. We believe that these types of luxury hotels are extremely hard to replicate.”

At about the same time, Morgan Stanley was a lead investor in the purchase of the Makena Resort for $565 million.

Within a year or so, the recession beat down real estate values and operating income. The Makena deal resulted in foreclosure and a sale back to the lenders for $95 million last year.

The CNL acquisition was financed in several portions, and the Grand Wailea and the other seven top resorts were pledged for $600 million in corporate obligations, according to Bloomberg.

The lenders were Paulson & Co., Winthrop Realty Trust, Capital Trust Inc. and Morgan Stanley special property group (a separate part of Morgan Stanley).

At one time, the bonded debt was reported to have been $1 billion, and the collateral was valued by real estate tracker RealPoint at $1.4 billion in late 2009.

Morgan Stanley had already converted $200 million of these corporate bonds to equity, Bloomberg reported.

Although the parties involved are not speaking to reporters for attribution, apparently Morgan Stanley Real Estate was unable to refinance even its reduced debt. Maui Land & Pineapple Co., by contrast, recently refinanced and extended its debt falling due this spring at a lower rate of interest, according to a company filing with the U.S. Securities and Exchange Commission.

According to Bloomberg, as of last Thursday, the remaining bond debt for Morgan Stanley was restructured. The lenders wrote off $200 million and converted $400 million to equity. They thus took control of the eight resorts.

The seven others, not including the Grand Wailea, are La Quinta Resort & Club and PGA West in La Quinta, Calif.; the Arizona Biltmore Resort & Spa in Phoenix; Doral Golf Resort & Spa in Miami; the Ritz-Carlton Orlando and JW Marriott Orlando, both at the Grande Lake Resorts; the JW Marriott Desert Ridge Resort & Spa in Phoenix; and the Claremont Resort & Spa in Berkeley, Calif.

That does not mean, however, that the Paulson-led group picked up eight luxury resorts for an average of $50 million.

There was other debt, at least $1.5 billion, that was senior to the unsecured corporate bonds.

Barry Sullivan, a Honolulu lawyer who has negotiated restructurings of a billion dollars worth of Hawaii hotel debt, said he could not speak directly of the Grand Wailea debts, since he was not involved, but that in general lenders to distressed hotels are in a bind.

Because the debt arrangements are complex and multilayered, it is not usually a simple matter of foreclosing on the real estate.

And sometimes the parties among the lenders do not agree among themselves, he said. Some may want to write off a loss and move on, he said. Others, more optimistic, may want to hang on until operations improve and hope that cash returns improve.

Bloomberg reported that Morgan Stanley Real Estate lost about $4.4 billion in 2008 and 2009. It has previously turned the keys back to its lenders on some other commercial properties, in one case escaping a $2 billion obligation by giving up.

Most Hawaii resorts were sold or their owners took on debt around 2006, when tourism was expanding and interest rates were low. Few if any can now support those debts.

In 2007, when Morgan Stanley absorbed most of CNL (the less prestigious properties were sold to a Texas firm), Arthur de Haast, global chief executive officer of Jones Lang LaSalle Hotels, one of the biggest commercial real estate brokerages, told Bloomberg, “I’m sure Morgan Stanley has worked out a strategy to enhance the assets, restructure debt and eventually sell the assets in two to three years.”

Indeed, Morgan Stanley “flipped” its stake within a few years, but not the way investors had counted on.

Bailey estimated that as many as 80 percent of hotel owners worldwide borrowed against their properties in the 2006-07 peak period. They were counting on both appreciating prices and steady growth in tourism.

The financial crisis of October 2008 put a stop to that, and on Maui the bad news began five months earlier when Aloha Airlines and ATA Airlines folded.

Recently, many Hawaii resorts have been enjoying double-digit growth, but the bottom reached in 2009 was so low that even improved 2010 totals are not back to what they were before the downturn.

Bailey said the Grand Wailea is doing well with visitors known as free and independent travelers, but group business continues to languish.

Nevertheless, planning for an eventual rebound, the owners had applied for a big expansion of the resort, which has nearly 800 rooms.

On appeal, the 2nd Circuit Court nullified permits granted by the Maui Planning Commission because the court ruled applications to intervene should have been granted. Meanwhile, the Wailea Community Association had plans to pave and realign parking at the Wailea end of South Kihei Road. Grand Wailea contributed $100,000 to support that.

Hall opposed that, maintaining that the parking would be in part fulfillment of Grand Wailea’s conditions for the since-nullified special management area permit. Pyramid said since there was no permit, the money was a free gift, with no guarantees that the developer ever would, or could, ask for credits.

Second Circuit Judge Joel August held up the paving work. Hall’s client, Shep Gordon, a homeowner at Keawakapu, is appealing the special management area exemption that was given to the paving work. That is the issue on today’s Maui Planning Commission agenda.

Thank you for visiting my website, I look forward to hearing from you soon.

Mahalo,

Peter Slate
Realtor (s)

This story from Chris Hamilton at the Maui News.

WAILUKU – The 1,800-acre property formerly known as Makena Resort and the Maui Prince Hotel will be up for public auction April 29 in the lobby of the Wailuku courthouse.

The auction begins at 11 a.m. at 2125 Main St. and is believed to be the largest foreclosure sale in Maui County history.

The transaction is a fee-simple sale, with no minimum bid required, according to the notice of foreclosure that appeared on Page C8 of Wednesday’s Maui News.

Last month, 2nd Circuit Judge Shackley Raffetto appointed Honolulu real estate developer and broker Chris Lau to conduct the sale for what is now called the Makena Beach & Golf Resort. Bidders must register with Lau five days prior to the sale, and the winner must be able to provide a 10 percent down payment April 29.

The South Maui property stretches from Haleakala’s slopes, across dryland forests and over lava-rock expanses to beaches. The auction comes

after Maui developer Everett Dowling and Morgan Stanley Real Estate defaulted in August on $192.5 million in loans for the original purchase price of $565 million in 2007 from the Japanese firm, Seibu.

Dowling and Morgan Stanley lost their entire investment in the property, which is said to include millions for development planning, design, publicity, archaeological and engineering surveys, land preparation and permit-acquisition work.

On the other side, the lenders are owed an unspecified amount of accrued interest and fees.

Wells Fargo Bank is acting as trustee for the collection debts owed investors holding the resort’s commercial mortgage securities. The bank, which managed to come out of mortgage crisis relatively unscathed, is reportedly in the running itself to buy the Makena Beach & Golf Resort.

The buyer will need to have deep pockets and receive the approval of Raffetto, who’s been the property’s arbiter, landlord and watchdog for months now.

The auction is for the entire property. That includes 36 holes of golf, 18 of which need to be rehabilitated before reopening, a clubhouse, 2,500 square feet of retail space, 5,200 square feet of meeting rooms, three restaurants and bars, a swimming and wading pool and snack bar, seven outdoor areas for weddings and parties, jacuzzis and a lattice work of hiking and mountain-biking trails.

The real prize, aside from shoreline access points such as Makena Landing, is 1,300 acres of vacant land. That’s because Makena Beach & Golf resort also has an assortment of lucrative Maui County residential and commercial entitlements for further development, which County Council members approved at the end of 2008 to spur construction jobs that never materialized.

Dowling, who also has said he would like to regain ownership, had planned to build a luxury-home subdivision and spa, among other amenities, and rebuild the 310-room hotel – before the bottom fell out of the economy.

Without enough cash from pre-sales coming in, he lost the capital required to continue with a project estimated to be worth billions when hundreds of homes, time-share units and condominiums were finished after more than a decade of construction. Many county officials have said they are hopeful that once the economy rebounds, Makena Resort, and all the work and contract dollars it would provide to Mauians, will get back on track.

Prince Resorts Hawaii quit as the resort’s management in September, after operating the property since the early 1980s. The court-appointed receiver, Miles Furutani, replaced Prince Resorts with the Mainland company, Benchmark Hospitality International, to oversee the hotel, golf course and land until the resort is acquired by a new owner.

General Manager Kelly Lewis has said Benchmark has substantially improved the resort’s financial performance.

In the meantime, the management company also has been able to retain dozens of employees.

This article from Cris Hamilton at the Maui News.

WAILUKU With $53 million less in the county’s anticipated fiscal year 2011 budget revenues compared with last year, Mayor Charmaine Tavares on Monday proposed to increase or “adjust” the real property tax rates for several classifications.

While Tavares may have asked for real property tax increases, assessed home and land values have sunk so deeply in the global recession – even on Maui, where home values skyrocketed for years – it is estimated that the county’s largest source of revenue will still be down by eight digits.

In order to maintain and improve Maui County’s utilities, Tavares also said it will be necessary to make increases to some utility fees for at least a second year in a row.

Her proposed budget would make what she said she considers to be modest increases to wastewater treatment, water service, garbage pickup and vehicle registration fees.

Maui Bus, the county’s increasingly popular public transit system, likely will also see some fare hikes, as well as beginning to charge customers fares for routes that previously were free, she said.

Maui County had managed to survive the recession to this point without raising taxes. Over the past two years, elected officials instead have cut department budgets, imposed hiring freezes and reduced spending on overtime and travel.

“As we all know, the slowdown of the economy has had a serious effect on real estate, causing a reduction in assessed values,” Tavares said during a news conference Monday where she handed out her budget proposal. “If tax rates remain at the same level as the current year, it would mean a projected revenue decrease of $30 million to the county.”

This would lead to a drastic reduction in services, she said. So, Tavares is asking the County Council to adjust tax rates upward to generate $223 million in real property taxes, which still is actually $10 million less than the $233 million raised during fiscal year 2010.

Property taxes make up 41 percent of the county’s $563 million current fiscal year 2010 budget. It is Maui County’s largest funding source, with the hotel tax, or transient accommodations tax, a distant second with about $17 million generated this year.

Despite Tavares’ proposed property tax increases, Maui County will continue to have the lowest property taxes in the state, she said on Monday.

Here’s a breakdown of the proposed real property tax rates over the current fiscal year. The amounts are per $1,000 of net taxable assessed valuation:

* Time share: $14; no change.

* Improved residential: $5.80; plus 95 cents.

* Apartment: $5; plus 45 cents.

* Commercial: $6; plus 25 cents.

* Industrial: $6.50; no change.

* Agricultural: $5; plus 50 cents.

* Conservation: $5; plus 25 cents.

* Hotel & Resort: $8.75; plus 55 cents.

* Unimproved residential: $7.25; plus $1.90.

* Homeowner: $2.50; plus 50 cents.

* Commercial Residential: $6.25; new tax category.

The County Council still needs to work out its version of the budget during meetings over the next couple months. The fiscal year 2011 budget goes into effect July 1.

A few council members in recent weeks have suggested reducing the homeowners property tax exemption as a way to deal with the shortfall. But that was not an option proffered by the mayor on Monday.

The mayor and County Council were able to make it through the last budget cycle without touching real property taxes. But with fixed costs on the rise, such as fuel and health insurance, and maintenance always an imperative, utility rates will have to go up, as they have in past years, county officials said.

Tavares said the departments need the money in order to keep equipment operating safely and to stay in good standing with other government agencies that grant water-quality and other permits.

This is what Tavares proposed on Monday:

* The monthly base charge for wastewater service would increase by $1.50.

* Water rates will go up by $1.75 a month.

* Tipping fees at the landfill for solid waste will go from 2 cents to 3 cents per pound, or $3 per ton.

* Vehicle registration fees would go up 1 percent per pound of vehicle weight.

* Nearly all of the Maui Bus routes will remain $1 per trip. But commuter fares will double to $2 for the runs to and from Upcountry and East, South, Central and West Maui.

* The Wailuku-Kahului loop routes will no longer be free and cost $1.

Tavares said that the bus system is a subsidized program that costs $7 million a year to operate. She said it will continue to grow to match ridership, including a $1 million program this year to finally install much-anticipated bus shelters.

However, Maui Bus expenses break down to actually cost $4 per passenger ride, Tavares said.

“I recognize the value of our bus service to the community and believe that we can continue to support keeping bus fares at a portion of what it costs taxpayers to operate,” said Tavares, who has said that expanding the Maui Bus system is one of her top achievements during this, her first term as mayor.

Freddie Mac has a very similar program for its foreclosures called Home Step.

Please contact me for a list a Freddie Mac and Fannie Mae foreclosures in your area.

Aloha !

Peter