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Notice #: 0000073083-01
Public Notices



Property Location: Waiakea, South Hilo, Island of Hawaii

The Department of Hawaiian Home Lands (“DHHL”) and Department of Land and Natural Resources (“DLNR”) are jointly seeking applications from qualified individuals or entities to enter into two (2) general lease agreements for the construction, operation and management of an industrial/commercial mixed-use development and related facilities on the subject properties described below.

As authorized by Section 204(a)(2), Hawaiian Homes Commission Act, 1920, as amended, and Section 171-59(a), Hawaii Revised Statutes, as amended, all parties interested in leasing the property herein described shall have 45 days from the date this “LEGAL PUBLIC NOTICE OF PROPOSED DISPOSITION BY NEGOTIATION” is first published, that date being Friday, October 3, 2008, in which to submit completed applications for joint DHHL/DLNR consideration.

Interested applicants may obtain a prospectus (“Information Packet”) beginning on Friday, October 3, 2008. All completed applications received by 4:00 p.m. (HST), Monday, November 17, 2008, shall be reviewed and those applicants that fully meet DHHL’s/DLNR’s initial objectives and qualification criteria shall be notified in writing as being eligible for further consideration.

Upon receipt of notice of eligibility applicants shall then be required to submit: (1) a detailed development plan for the Subject Properties; (2) a sealed rent bid proposal; and (3) an earnest money deposit to DHHL by no later than 4:00 p.m. (HST), Friday, January 16, 2009.

After a joint DHHL/DLNR evaluation committee reviews the detailed development plan information, those eligible applicants whose proposals meet DHHL’s/DNLR’s additional objectives and qualification criteria shall be deemed “qualified” to attend the opening of all qualifying sealed bids to be conducted at DHHL’s Kapolei Office located at 91-5420 Kapolei Parkway, Kapolei, Hawaii on Friday, February 6, 2009, at 10:00 a.m. (HST).

Information Packets containing an application form, property information and other requirements for completing the application process are available for pick up by prospective applicants during regular office hours at DHHL’s Kapolei Office located at 91-5420 Kapolei Parkway, or at the district offices located on the neighbor islands. The appraisal reports for the Subject Properties, which shall not be removed from DHHL’s offices, may be reviewed during regular office hours. Please call (808) 620-9456 (DHHL Kapolei Office) for the locations of DHHL neighbor island district offices and/or to make an appointment to review the appraisal report.

Subject Properties to be disposed: The subject properties consist of lands owned by DHHL and DLNR totaling approximately 25.4 acres. The lands (collectively referred to as the “Subject Properties”) are further described as follows (See Exhibits 1 and 2):

1. DHHL Parcel. The lands identified by Tax Map Key No. (3)2-1-12:70 is owned by DHHL and consists of 11.685 acres or 509,010 sq. ft. (the “DHHL Parcel”). DHHL has the authority to designate the applicable county zoning for its lands and has assigned the MCX zoning district designation for this parcel.

2. DLNR Parcels. The lands identified by Tax Map Key Nos. (3)2-1-12:41, :71(por.) and :149(por.) are owned by DLNR and consist of approximately 13.7 acres or 596,780 sq. ft. (the “DLNR Parcels”). These lands are zoned ML-20 (limited industrial) under the County of Hawaii’s zoning ordinances.

Although the Subject Properties may be developed as one master-planned project, two separate general leases will be issued, one for the DHHL Parcel and one for the DLNR Parcels.

The Subject Properties are contiguous and generally comprise a roughly triangular-shaped area with an irregularly shaped north eastern boundary. The Subject Properties are bordered directly by Kanoelehua Avenue to the west, the Foreign Trade Zone and NAS Swimming Pool to the east, the Hilo Airport Service Street to the north, and the Hilo Airport Operations Street to the south. The site has excellent street frontage along Kanoelehua Avenue and exposure to existing traffic patterns.

Purpose/Use: The Subject Properties are being offered for Industrial/Commercial Mixed Use development. Improvements and uses within the DHHL Parcel shall conform to those allowed in a MCX zoning district and all applicable permit requirements consistent therewith. Improvements and uses within the DLNR Parcels shall conform to those allowed in a ML-20 zoning district and all applicable permit requirements consistent therewith.

Lease Term: Flexible for both leases but with a minimum of twenty-five (25) years and not to exceed a maximum term of sixty-five (65) years.

Minimum Upset Rent: The minimum upset rents for the first twenty-five (25) years of each lease, as determined by independent appraisals, are as follows:

DHHL Parcel – TMK: (3) 2-1-12:70
Annual Rent Period Escalation Rate
$ 366,560.00/Per Annum Years 1-10 —
$ 469,234.00/Per Annum Years 11-15 1.2801
$ 530,891.00/Per Annum Years 16-20 1.1314
$ 600,650.00/Per Annum Years 21-25 1.1314

DLNR Parcels – TMK: (3) 2-1-12:70 TMK: (3) 2-1-12:41, :71 (por.), :149 (por.)
Annual Rent Period Escalation Rate
$ 207,350.00/Per Annum Years 1-10 —
$ 265,429.00/Per Annum Years 11-15 1.2801
$ 300,306.00/Per Annum Years 16-20 1.1314
$ 339,766.00/Per Annum Years 21-25 1.1314

The stepped-rent determinations are based on a constant escalation rate of approximately two and a half percent (2.5%) per year, on a compounded basis.

Sealed Rent Bids: This disposition will be conducted by sealed bid for the Subject Properties. Applicants must submit two lease rent bids, one for the DHHL Parcel and one for the DLNR Parcels. Each lease rent bid shall be for the first twenty-five (25) years of the lease, and must be in an amount equal to or greater than the minimum upset rents stated above. The two ground leases will be awarded to the applicant that submits the highest total bid for both leases.

Rent Reopening: If the term of the lease extends beyond 25 years, the rent shall be re-determined by an independent appraisal prior to commencement of the 26th, 36th, 46th and 56h years.

Earnest Money “Bid” Deposit: Eligible bidders shall, together with their detailed development plan and sealed rent proposal, remit a payment in the amount of one hundred forty-three thousand four hundred seventy-eight and no/dollars ($143,478.00) (equal to three (3) months of the Minimum Upset monthly rent) in the form of a cashier’s or certified check payable to the Department of Hawaiian Home Lands for assurance of selected applicant’s commitment to the project. Earnest money deposits shall be held uncashed by DHHL until the successful bidder has been determined. Earnest money deposits submitted by unsuccessful bidders shall be returned.

Utilities: All public utilities, including water, sewer and electricity are available to serve the Subject Properties along and within surrounding public roadways, but may or may not be adequate to serve the successful bidder’s proposed development project. The successful bidder shall be responsible for obtaining the necessary utility services for its development project, and any required upgrades, infrastructure, improvements, and connections shall be done at the successful bidder’s sole expense.

Telecommunication Service: DHHL and Sandwich Isles Communications, Inc. (“SIC”) have entered an agreement under which all telephone and broadband services available through SIC is required for all developments on DHHL lands. Accordingly, the successful bidder shall be required to use SIC for any telephone and broadband services on the DHHL Parcel. SIC’s telecommunication services may be used, but is not required for the DLNR Parcels.

Special Condition: The County of Hawaii currently recognizes the DLNR parcels as being portions of larger lots of record. Prior to issuance of the two general leases, the successful bidder shall, at its sole expense, process and obtain consolidation/re-subdivision approval from the County of Hawaii to create a legally subdivided lot or lots of record for the lands to be leased. DHHL or DLNR may, at its sole discretion, also require the consolidation/re-subdivision or any subsequent subdivision to realign/reconfigure the boundaries between the DHHL Parcel and the DLNR Parcels as may be necessary or desirable to avoid creating lots with multiple ownerships, while keeping DHHL’s and DLNR’s respective total acreage the same. The successful bidder shall consult with DHHL and DLNR prior to preparing any subdivision application(s) regarding the property boundaries.

Chapter 343, Environmental Assessment: A Final Environmental Assessment (“EA”) dated March 2008 has been filed with the Office of Environmental Quality Control and a Finding of No Significant Impact has been approved and issued by the Department of Hawaiian Home Lands, Hawaiian Homes Commission in April 2008. The successful bidder shall be responsible for any supplemental, amended, or additional EA that may be required for compliance with Chapter 343 of the Hawaii Revised Statutes, as amended, prior to the start of any demolition or construction activity on the site.
Cancellation of Disposition: DHHL/DLNR reserve the right to cancel or modify this disposition from time to time as to all or any of the items listed hereunder by public announcement to that effect by order of the Chairman of the Hawaiian Homes Commission, or Chairperson of the Board of Land and Natural Resources.

Joint Offering: The proposed disposition is a joint offering by DHHL and DLNR. DHHL will serve as the lead agency for this joint offering and all inquiries and communications regarding this joint offering should be addressed directly to DHHL. For additional information and/or inquiries, contact Peter “Kahana” Albinio, Jr., Property Development Agent, Department of Hawaiian Home Lands, Land Management Division, at (808) 620-9454 on Oahu or email

Date: Honolulu, Hawaii September 29, 2008

State of Hawaii
Micah A. Kane, Chairman
Hawaiian Homes Commission

State of Hawaii
Laura H. Thielen, Chairperson
Board of Land and Natural Resources
(SB73083 10/3/08)