Negotiating Haleiwa's Future

Trying to maintain traditions while transforming the North Shore town

(page 3 of 3)

Strategic Plan

KS’s North Shore Master Plan represents a dramatic change in how it manages its assets. For nearly 100 years, the trust had been a hands-off landlord; it’s now becoming a highly engaged developer. According to Neil Hannahs, that transition from passive to active land manager can be traced back more than two decades to the slow demise of Big Sugar, and to Kamehameha Schools’ own painful crisis surrounding Bishop Estate and the Broken Trust scandals in the late 1990s. Prior to these changes, Hannahs says, KS didn’t need a plan for its North Shore assets. “The plan was simple: Collect Waialua Sugar’s rent.”

Of course, when Waialua Sugar died, that plan no longer worked. At more or less the same time, KS was undergoing an internal transformation that would change how decisions were made. For example, one result of the Broken Trust scandals was a restructuring of KS’s governance, moving from a trustee-dominated organization to a more CEO-based structure. That helped create a more rational, objective policy-making process. But the most transformative outcome from the scandal was a court order requiring KS to develop a strategic plan that directly linked financial and educational objectives.

Through this strategic planning process, KS developed seven goals to guide its actions. Given the court directive to consider both financial and educational objectives, some goals were inevitable: to provide “a wide range of integrated, quality educational programs”, and to optimize the value of both “financial and nonfinancial resources.” Clearly, these goals help clarify KS’s objectives and responsibilities on the North Shore. But those objectives and responsibilities are also shaped by goals that direct the trust to “cultivate, nurture, perpetuate and practice … Hawaiian culture,” and to practice “ethical, prudent and culturally appropriate stewardship of lands and resources.”

These goals fundamentally changed how KS looked at land assets. “Rather than just seeking economic maximization, we were to seek an optimal balance of economic, cultural, environmental and community returns,” Hannahs says.

Local Perspective

Because the neighborhood board gave the Haleiwa Commer-cial Redevelopment Project unanimous support, it’s tempting to think it’s uncontroversial. But even those who strongly support the plan still have reservations about its details. For example, Antya Miller believes there’s a strong demand for more commercial space in Haleiwa. For many years, though, she ran Haleiwa Main Street, a program that emphasized preserving the historic character of the town. For Miller, then, one of the biggest concerns has been the potential destruction of the buildings housing Aoki’s and Iwa Gallery.

“From the neighborhood board’s point of view,” she says, “and from having been here and trying to implement the Main Street Program, obviously we’re very concerned about the fact they’re going to have to demolish a couple of historic buildings that are on the inventory.”

She’s not particularly sympathetic to KS’s protestations that the buildings are too run down to save. “Part of the problem,” Miller says, “is that the historic buildings that are owned by Kamehameha Schools are on month-to-month leases. Obviously, if you’re month-to-month, you’re not going to invest in keeping the building up. That’s part of the reason the historic buildings are falling down.” Despite her equivocations, though, Miller remains a supporter of the project.

Another community member who expresses qualified support is neighborhood board chair Mike Lyons. He hopes the Haleiwa Commercial Redevelopment Pro-ject will reverse what he sees as the town’s slow dissolution. “I looked at it as kind of bringing back old Haleiwa,” he says.

Even so, his support for the project is still provisional. “I’m definitely interested,” Lyons says. “But I want to see the final plans, because any little thing could change it. Access alone could change the whole perspective of the project – if we don’t have the right ingress and egress to the project. If the sewage plan isn’t up to par that could throw everything out the window, so to speak. If we don’t have adequate distance from the road, as we don’t right now, that could change things.”

Other North Shore residents and business leaders appear ready to give the school the benefit of the doubt for now. But it’s important to understand that many community members must be careful about criticizing KS or its development plans. Most businesses are KS tenants, often on month-to-month leases. KS also has been a generous funder of many area nonprofits; they fear that criticism might endanger future support.

That’s not to say KS has threatened anyone with retaliation for opposing its North Shore Plan. Quite the contrary, even those who are against any development in the area – in our informal polling, most are equivocal – admit that KS has scrupulously sought public comment and has altered its plans to accommodate many suggestions. Nevertheless, there’s an undercurrent of cynicism about how much support the plan actually enjoys. As more than one Haleiwa resident pointed out, given the choice, most community members would prefer no change at all.


That’s the undercurrent of the conversation when you talk to the tenants. KS has made a point of saying they want to keep their current tenants, and that they plan to fill the new development with local businesses, not big national companies or chains. The real question is: Can the current tenants afford to stay?

Cathy Aoki says business is brisk at the family’s new store,
across the street from its shave ice shop. However, she
says, the family fears the shave ice shop may not survive
the redevelopment.
Photo: David Croxford

Although neither side would comment on negotiations, it’s widely believed that the current lessees – particularly the shave ice stores, who are viewed as “anchor tenants” for the new development – will be offered favorable rates. KS says it plans to charge “prevailing market rates” – $3 per square foot, more or less – for the new development, which current tenants describe as a substantial increase in rents. In addition, under the new leases, tenants will likely be responsible for additional costs, such as common area maintenance fees, property insurance and property tax. These new costs enter into their calculations as they try to decide whether to be part of the project. KS claims to have letters of agreement for seven or eight of the 20 spaces in the new development, but neither of the shave ice stores is a sure bet yet.

For Cathy Aoki, who, with her father, Michael, runs Aoki’s Shave Ice, and Noriko Matsumoto, who owns Matsumoto General Store with her husband, Stanley, the challenges of joining the new development are clear. Both worry whether their small stores will be able to generate enough income to cover the higher costs. Although they hope the project will attract additional customers, they also expect new competition.
“Right now,” Aoki says, “when a family of four pulls into the parking lot, all four come into the store and get a shave ice. Once the development is together, is it just going to be the two kids getting a shave ice, and mom getting a latte, and dad getting a smoothie? Or a beer? The new variety will be great for some people, but it might not be so great for some of us who are already here.”

Another concern is that, in order to afford higher rents, the shave ice stores will have to increase prices, which they fear will drive away local customers. And locals, Aoki says, are key to their survival.

Matsumoto also worries that a price increase could threaten her family’s business model. “We want to sell shave ice cheap,” she says. “Not only for tourists, but for local customers. We don’t want to charge high prices; we want them to come everyday.”

These are existential questions for a small business. “For us, as a mom and pops business,” Aoki says, “we’ve had family discussions about: Are we ready to maybe not be a mom and pops anymore, but maybe more of a big business. Our shave ice store is so small. We’re not like multilevel management and stuff; it’s just me and my father and our workers. But, when this project comes up, we’re going to need to change our procedures.”

“My accountant says we might going to be bankrupt,” says Matsumoto a little more succinctly. “So, we’re still negotiating.”
KS has already said it’s keeping the Matsumoto building, and that the family business doesn’t have to move out for renovations. So, for Matsumoto, the decision to sign the new, 15-year lease might be a little easier. But, as Noriko points out, her husband is already 60 years old. “He’ll be 75 when the lease is over,” she says.

Of course, the situation is even more nerve-wracking for the Aoki family. The demolition of their old storefront will mean essentially starting over. Cathy Aoki points out that her family has been in business in Haleiwa for over 100 years, but she’s still not sure the shave ice operation can weather the coming changes. To hedge their bets, the family has bought the building across the street and opened a new business there.

“It was to guarantee that we survive, I guess,” says Cathy Aoki. “If our old mom and pops is gone, at least we have our new mom and pops.”

She smiles wanly at the prospect of starting over before adding, “Maybe that will keep us going another 100 years.”

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Add your comment:


Don't Miss an Issue!
Hawaii Business,July