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The Honolulu Advertiser
Posted on: Saturday, April 17, 2010

UH nears deadline on campus project

by Andrew Gomes
Advertiser Staff Writer

The University of Hawai'i is getting uncomfortably close to a Dec. 31, 2011, deadline for construction to begin on instructional facilities at its much-delayed West O'ahu campus.

Failing to meet the deadline would prompt ownership of the land to revert to the James Campbell Co., formerly known as Campbell Estate, which gave the university 500 acres on the 'Ewa Plain with the condition that work begin on facilities serving at least 2,750 students by the end of next year.

In recent years the university had counted on selling a large portion of the property to a private developer to help finance part or all of the estimated $100 million construction budget for the campus.

But a second and now preferred option for UH is convincing legislators that floating bonds to finance part of the construction would be smarter.

The Legislature's state budget bill includes $48 million in bond financing for the campus, which would be enough to build two classroom buildings and a maintenance facility that UH said will satisfy the covenant with Campbell.

UH-West O'ahu Chancellor Gene Awakuni said bond money would reduce the amount of land the university has to sell to finish the school complex, and would leave the state with more land that it could sell at a higher price once the depressed real estate market rebounds.

"I don't want to sell any more acreage than we absolutely have to, because we will have more valuable real estate when the market goes up," Awakuni said.

Awakuni said present market value for the land is about $1 million an acre, down from about $1.7 million an acre at the market's peak a few years ago.

UH most recently had offered to sell 55 acres, and has two interested buyers with competitive bids. But Awakuni said that with $48 million in bond financing, UH could get by with selling just 15 acres for $15 million.

The $15 million, he said, could be used to pay debt service on $50 million in bond financing.

Awakuni said he thinks such a land sale could happen this summer. "We'd be in pretty good shape if we can get the $48 million," he said. "We're hopeful we're going to get that money."

The $48 million bond financing item was added to the House-originated budget bill by the Senate, and is now subject to House agreement.

If the House refuses, Awakuni said UH will have to move ahead with selling the 55-acre parcel and building the minimal increment of the campus. Full buildout would be dependent on selling more land or coming up with another source of financing.

Building all the school facilities which in addition to the two classroom buildings and maintenance plant include an administration building, library and student center together would create more jobs faster and help draw other development to the area.

Tokai University is interested in leasing part of the UH-West O'ahu campus land to develop a $40 million two-year community college to replace its present operations in a building on Kapi'olani Boulevard. Tokai would sell the building to help pay for the project. Another potential addition to the campus is a 250-bed dorm that Tokai would help pay for by committing to use 100 or more beds for its students.

Awakuni estimated that the wholesale development of the campus would create 300 construction jobs for two or three years.

"We're on the threshold of doing something that will probably never be done again in Hawai'i," he said. "It's as close as we've been in 34 years. We're so close."

The vision to create a separate four-year West O'ahu campus is grounded in providing better higher-education opportunities for the area receiving the vast majority of population growth.

But efforts to build the campus have dragged out over more than three decades in part because of various location decisions and unwillingness by the Legislature in past years to fund the project.

The school currently operates primarily out of wooden portable buildings next to Leeward Community College in Pearl City.

In 2005, UH believed it had found an answer to get the project built by selling 298 acres to Texas-based developer Hunt Cos. Hunt had planned to develop a college town with about 4,000 homes.

But a tentative sale agreement, which was signed in 2007 and would have brought UH $100 million, fell apart in 2008 after real estate and financial markets came unglued.

That dashed plans to start construction last year, but the university pushed ahead with an alternative plan to sell a 55-acre piece of the former Hunt site near the recently completed North-South Road now known as Kualaka'i Parkway.

Meanwhile, UH managed to obtain zoning approvals, and roads, water and sewer connections have been made to the campus site.

In another maneuver, the Legislature earlier this week approved a bill to exempt UH from a year-old state law that puts restraints on selling state land.

House Bill 2561 would allow UH to sell its West O'ahu land without first obtaining a two-thirds majority endorsement from the Legislature.

The bill effectively gives the university a little extra breathing room to meet the Campbell deadline if bond financing isn't approved, because any sale agreement for UH-West O'ahu land would need to be approved by the Legislature next year and could make starting construction by the end of the year difficult given various requirements in the law including appraisals and community outreach.

Gov. Linda Lingle hasn't indicated whether she is inclined to sign the measure into law, but she had sought an exemption for all nonceded state land.

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