WAILUKU - A proposal to redevelop Makena Beach & Golf Resort cleared a major hurdle Tuesday as the Maui Planning Commission voted to grant owner ATC Makena Holdings LLC a special management area use permit for the proposed project.
Resort owners said redeveloping the existing 310-room hotel into 46 apartment units and adding a new 76-room hotel, 12 multifamily condominium units, five spa hale and nine beach cottages, will help make the hotel economically viable.
"The hotel in its current form is actually losing money. It's not economically sustainable," said Ed Divita, senior development and construction manager of Discovery Land Co., which has partnered with ATC Makena to develop the proposed project.
Cultural practitioner Kimokeo Kapahulehua listens intently Tuesday to plans to redevelop the Makena Beach & Golf Resort.
The Maui News / EILEEN CHAO photo
"The losses are around or in excess of $20 million since ATC has taken control of the property (in 2010)," Divita told commissioners Tuesday. "In the proposed form, the project will be economically sustainable both in the construction period as well as during the operations period."
Divita added that daily room rates at the new 76-room hotel would be priced higher than current rates to be comparable to the luxury Wailea hotels. He added that residential units would range from $1.9 million to $6 million per unit.
The developers have said that the proposed $230 million redevelopment project would create 270 new construction jobs over the three-year construction period from 2015 to 2018, and once the project is completed, provide 285 full-time equivalent jobs, compared to the 256 full-time equivalent jobs today. There are currently 221 full-time employees and 71 part-time employees. After the project is completed, there will be 248 full-time employees and 74 part-time workers, developers said.
Trinity Investments LLC Chairman Charles Sweeney admitted that there would be a period of time during construction when some employees likely would be "displaced," though management is working to mitigate some of the anticipated effects, including talks about maintaining health benefits to ease workers into and through the temporary unemployment period and "an augmented severance program which would be in excess of what union requirements are."
"It's still going to be a union operation. People can choose to take their severance at this point, but we guarantee their positions and their seniority. That has been my discussion with the union," Sweeney said.
He and others added that they intend to hire construction workers locally, even bringing Maui laborers home from temporary stints on Oahu.
"Our intent is to have the construction employment come from local resources as much as possible. . . . Many Maui residents are temporarily residing on Oahu, so they (contractors) are excited about bringing the crews back home," Divita said.
Maui resident Bruce Uu, who is also a coordinator with the Hawaii Regional Council of Carpenters, said the proposed project would be "a huge benefit" for local workers, especially graduating students entering the workforce.
"Every year, my office gets flooded with applications, and they all looking for jobs. It gets so bad to where the parents call you instead of the kid. There's not enough jobs or demand for me where I can hire and put (their) son through trade," Uu said in testimony Tuesday.
"A project like this gives us the opportunity to hire. It's an incredible opportunity for our kids in the islands to get hired into an apprenticeship program."
Commissioner Wayne Hedani asked Uu, who is also a member of the Maui Planning Commission and a Native Hawaiian, if he thought the proposed project was pono.
"It's already existing so when it's existing and entitled and zoned, from my perspective as a professional on the planning commission, yeah, I think it has been pono," Uu said. "This project, more than others, has been pono by bringing in the right groups. My first thing as a Hawaiian is you ask your neighbors how you doing, and they (developers) have been talking to the neighbors, which to me is pono."
South Maui residents lauded Discovery Land Co. for engaging and listening to the community in a series of meetings spanning the last several months. A consultant for the project said the developer has either formed or met with numerous South Maui groups, including a Makena Cultural Focus Group, Makena Community Advisory Group, Makena Neighborhood Committee, Makena Homeowner's Association, and hotel and construction unions.
"The community advisory group that Discovery Land was a part of, that was one of the best community groups (I've ever been a part of)," said retired Maui Community College (previous name for UH-Maui College) professor Dick Mayer, who has been involved in planning issues on Maui for more than 40 years. "They really did a good job trying to talk to neighbors and individuals interested in islandwide issues."
Maui Planning Division Supervisor Ann Cua said ATC Makena went "above and beyond in terms of public outreach."
"We're really happy they've done this much outreach. We believe it's really made a difference in this project," Cua said.
She added that the developers have adapted their plans to meet community concerns, such as designing the building to blend in more seamlessly to the existing landscape in Makena, integrating green and renewable energy, and maintaining public access to Maluaka Beach.
Cua said her department received one letter from the Makena Homeowners Association in support of the project and none in opposition.
The Planning Department attached 22 conditions to the SMA permit approval, including two that Cua added in response to testimony and comments at Tuesday's meeting. One added condition requires the developer to provide 10 public beach parking stalls and to maintain public beach access during daylight hours. The second condition requires the developer to provide periodic shuttle service for beach users from the parking stalls, slated to be located along Makena Alanui Road, through the resort complex and to the beach.
The developers had agreed to fulfill both conditions during their presentation earlier in the meeting.
Commissioners recognized that the developers did their due diligence in engaging the community earlier rather than later.
"I feel the applicant has done a pretty tremendous job preparing and covering all their bases," commissioner Max Tsai said. "With the change going on in our economy, I think that's the direction hotels are heading, Andaz sold some of its units as well, just to survive. That's kind of what you have to do to make it in this economy."
Commissioner Jack Freitas said the proposal was "one of the cleanest projects we've had."
Six commissioners voted in favor of granting the SMA application. One commissioner, Sandra Duvauchelle, recused herself from the vote. Commission Chairman Ivan Lay was absent.
ATC Makena Holdings LLC is a consortium involving AREA Property Partners of New York, Trinity Investments out of Honolulu, and Maui native Stanford Carr's development firm. They purchased the property, formerly known as the Maui Prince Hotel, after it went into foreclosure.
Carr told The Maui News on Tuesday afternoon that he "look(s) forward to proceeding with our designs while continuing our collaboration with the community."
Tuesday's Planning Commission meeting will be broadcast beginning at 6 p.m. today on Akaku Channel 53.
* Eileen Chao can be reached at firstname.lastname@example.org.