DLNR pitches commercial development to Kihei community

KIHEI -- A 285-acre light industrial and commercial business park proposed by the state Department of Land and Natural Resources could rake in a couple million dollars a year and evolve into a business area like at Dairy Road with retail stores and warehouses, an administrator said.

The park would be situated on former sugar cane lands along Mokulele Highway, next to the Hawaii National Guard Armory and the Maui Raceway Park. The department presented plans for the project Wednesday to over a dozen residents at the Kihei Community Center.

"If we could get a couple million that would be great," said Russell Tsuji, administrator of DLNR Land Division, referring to income from tenant leases for the project.

Tsuji said the park would be the division's first major property development on Maui and help develop long-term lease revenue to help pay for various DLNR programs. The department's budget is $138.3 million for fiscal year 2017 -- or 1 percent of the state's $13.7 billion budget.

"We don't really compete with the other agencies," Tsuji said. "We don't get as much as (the University of Hawaii), which is $1.1 billion; (Department of Education), $2 billion. The bottom line is in order to help protect and preserve our environment, our division has to try our best to generate more revenue to help support our conservation programs."

The division funds many DLNR programs such as invasive species and flood control, lifeguard services and beach restoration. It also helped with the public acquisition of Lipoa Point in West Maui for $20 million in 2014 and acquired 10 acres for the Maui Veterans Cemetery expansion in Makawao.

The Pulehunui property will be divided into 66 lots: 18 small lots of half an acre to less than an acre; 25 medium lots of 1 acre to less than 3 acres; and 33 large lots of 3 to 5 acres. It allows for light industrial, commercial, nonprofit and public/quasi-public uses, along with infrastructure.

Tessa Munekiyo Ing, vice president for project planning consultant Munekiyo Hiraga, said the Division of Forestry and Wildlife plans to relocate its baseyard from 3 acres near Kahului Airport to 20 acres at Pulehunui. Now, the division is constrained by its small baseyard size and is located in a tsunami evacuation zone, she said.

A draft environmental impact statement is expected to be published this fall with the final document completed next year. Amendments to the state land use district boundary and community plan as well as a change in zoning would be completed in the following years.

The park could be open by 2022, Munekiyo Ing said.

Changes have been made to the project after consulting with residents and community groups concerned by the visual impact of the park, Munekiyo Ing said. Plans now call for a 100-foot buffer from the highway that includes a bike path.

Alexander & Baldwin still plans to use much of the surrounding land for agriculture and asked the department to make sure it adequately discloses its agricultural operations to potential tenants of the park, Tsuji said. Lessees need to be aware of pesticide use, heavy equipment and other farming operations.

The department's plans foresee that most of the park's use would be for light industrial business and only about 30 percent commercial. The project is next to two heavy industrial properties: Pulehunui Industrial Park, which is under construction, and the Central Maui Baseyard.

While the property would seem to favor industrial businesses, Tsuji admitted he does not know how the business space leasing markets would react once it opens. The project's light-industrial zoning gives the park flexibility, while the department waits for its market study.

"Initially, it may look like what I'm saying, but it could turn out like where Krispy Kreme is," he said. "That was all heavy industrial users, but what I'm hearing is lot of them were pushed out for the retail so that's why there's some thought that this area might be in demand. We're looking down the road, and we want to make sure we're covered in case the market shifts one way or the other. I don't want an empty plate. I don't want to do all this work and ask for state funding for infrastructure and end up with a vacant lot."

Residents at Wednesday's meeting were generally supportive of the project, but they asked if housing would be built in the area or if the department had a list of tenants. Tsuji said the area is not appropriate for housing, and there are no plans for it. He did not have a tenant list.

Robert Stoner, manager of Central Maui Baseyard, wondered if the property was too much to bring to the market and asked how state officials would fill it with businesses. He asked if businesses in Kahului are expected to relocate to the proposed park.

"It seems rather ambitious," Stoner said. "You're bringing a lot of property to market. If it's build and they will come, but where do they come from?"

Tsuji said the market study will address the demand for the project and that the park could be a mixture of new businesses and ones that relocate.

Tsuji said he believes the Maui park would be easier to manage, unlike smaller separated properties on the Big Island. He said Maui's only property generating revenue for DLNR is land leased to the Days Inn Maui Oceanfront in Kihei.

"I have to manage and handle 50 leases," he said. "It's a bear, rather than have one tenant or two major tenants and let them sublease and I don't have to worry about the small guys."

For more information on the park, visit dlnr.hawaii.gov/ld/proposed-dlnr-industrial-and-business-park-at-pulehunui-maui/.

* Chris Sugidono can be reached at csugidono@mauinews.com.