Several hundred residents attending the Laie Community Association meeting on March 6 in the Laie Elementary School cafeteria were surprised when LCA President Pane Meatoga read a letter from Hawaii Reserves, Inc. President & CEO R. Eric Beaver [pictured at right] that stated HRI "has decided to halt plans to facilitate a workforce housing project in the Malaekahana area, the majority of which was planned to be priced in the affordable category."

Meatoga later told Kaleo: Koolauloa News he first learned of HRI's decision when he met with Beaver two days earlier, "but it didn't sink in until I got the letter. I actually broke down and cried for a good five minutes, because a lot of people put a lot of hard work into this project," he said.

After pondering the news, Meatoga said he realized, "I need to pull this community together. We need to move forward with the community leading the way and not HRI"; but he admitted reading the letter at the meeting "was the hardest thing. I could feel their pain and anger, and I hope they understood what I tried to tell them."

Meatoga said he reminded the LCA members that the "last time I remember this community coming together 100% — it wasn't when we went in to fight for the sewer — was when the chapel burned down. The community came together and formed the Hukilau to raise money for the chapel."

"I told them that's the kind of spirit we need today, all of us pulling together."

Meatoga also said Beaver had told them HRI is open to new housing initiatives, "but it needs to be community-driven." He said LCA committees will study the options and hold more community meetings to discuss them.

While many may find HRI's decision surprising, Beaver explained the company has consistently said "building affordable housing is extremely challenging, at best. If you look around the entire state, affordable housing projects are really non-existent."

"It was a hard decision, because I know of the great need," he continued. "The government looks to the private sector to serve that need, but the private sector hasn't really responded because they're [affordable housing] just so hard to pencil: The economics are very, very difficult," he said. "We were in no different circumstances here with our projects."

"When you look at the costs of building a home, they're already prohibitive for most people earning an average median household income. That's the crisis in Hawai‘i. Most middle-class working families do not earn enough money to buy a home."

Beaver explained that preliminary cost estimates for the Malaekahana project came in as high as $220 million just for the infrastructure. "That doesn't include the cost of the land, the entitlements [permits and zoning] — which is a five-to-10-year process. You put all of those costs into a home, and you're looking at a number that's difficult for most people to pay."

Beaver said HRI tried to create a "leasehold model…but that didn't seem to get very much of a reception. We know the history of that in Hawai‘i." He added that residential population growth and rural development issues also played a factor in the decision.

Beaver said a decision by BYU-Hawaii to tear down faculty and staff housing on Moana St. in Laie and then double the number of units there did not make a difference in the decision. "They're our sister entity. We told them we would support them the best we can in the future, if there's something we can do to help."

However, he pointed to the presence of other developers in the area as a positive thing. "When we first entered this, there were really no other development plans on the horizon." Now, he added, new property owners such as Continental Pacific have plans to develop on the makai side of Kamehameha Hwy. and Malaekahana Hui West on the mauka side, plus the 50-acre Manager's Ridge parcel, "and then you have Turtle Bay on the end, which also has an affordable housing requirement."

"We share those concerns. We love the country and the character of this area, too," Beaver said. "Having said that, we think some moderate controlled growth to some point could be accommodated here, which would be appropriate and would help sustain and keep the economy out here vibrant."

"With these other third-party investors on the horizon, we look at that and say that's a good thing. By us pulling out, hopefully that will be a good thing for those other projects. We're supportive of them, as long as they're appropriate and they strike that sensitive balance between economic vibrancy, sustainability, and keeping the rural character of Koolauloa."

One of those third parties, Aaron Campbell, a partner in Malaekahana Hui West, which hopes to develop 455 mauka acres on the Kahuku end of Malaekahana, said HRI's pull-out "was a surprise to us all. Obviously, we were supportive of their efforts because any progress with affordable housing is helpful to our people out here."

"The fact that they withdrew is a testament to the difficulty of developing affordable housing. We hope to continue trying to grow support through our affordable housing coalition, our publishing of Kaleo: Koolauloa News to keep all of our efforts transparent, as well as working with people all across the Koolauloa moku to find a solution that fits their needs. That's going to require everyone's participation and active engagement," he said.

Moa Mahe, another partner, said the Malaekahana Hui West project "is on track. We're doing the necessary work to secure community support and communicate with them."

"In this economic climate, it has been very difficult to proceed," he added, "but we're still going to try to find viable, working options."

"I encourage people to work with these groups," Beaver responded. "This was the right decision for us. We feel strongly about that."

In regards to its plans to replace the existing Laie Inn, which is still open for business, Beaver said HRI is moving forward with the project. "It's going to be a great boon to this area, certainly to BYU-Hawaii and the Polynesian Cultural Center. It will also be a blessing to the economy of this area, providing more jobs and spending in the local economy."

Beaver said HRI is completing the draft assessment period of the hotel project, which will be followed by seeking a Special Management Area permit. "After that, there's architecture and engineering plans, so I would say we hope that by mid-to-fall 2009 we'll be in the dirt, starting construction. The hotel should take about a year to complete after that."

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