Growth and Sustainability

Kauai's Grove Farm proves the two concepts are not mutually exclusive

August, 2006

It’s funny, but lately, Grove Farm President and CEO Warren Haruki has been sounding an awful lot like counterpart David Cole, who runs the other Steve Case-owned company, Maui Land & Pineapple Co. Over the course of our most recent interview with Haruki, he talked a lot about “building communities” and taking care of the locals. He discussed reforestation and other conservation projects the Kauai-based firm has in the works. He even mentioned the S-word, sustainability. Anyone who’s ever heard Cole speak, or read any of the countless print interviews he’s done knows that he practically owns the local rights to the use of the word “sustainability.”

But Haruki says any similarities to Cole and his MLP mantras are by and large coincidental. “I’d say our business philosophies are very similar, but it’s not by intense collaboration,” he says. “Grove Farm’s emphasis has been, and will continue to be to satisfy the various needs of the local housing markets and pushing forward on projects that promote smart growth.”

So what has changed? The real estate market, for one. In the late ’80s, when Grove Farm began work on a massive 600-acre, mixed-use project in Puhi, the market had never been hotter and the company stood to make a nice chunk of change. But a taxing county requirement to sell 60 percent of its units at “affordable” rates, combined with the market crash in the mid- to late- ’90s changed all of that, and nearly bankrupted the company. By the time Steve Case came in and rescued the revenue bleeding company in 2001, by purchasing it for $26 million, the company was $60 million in debt.

Over the past few years, however, things have taken a big turn for the better for Grove Farm. Last year, the company cracked the Top 250 for the first time, posting 2004 sales of $21.7 million. This year, the company jumped almost 100 spots up the list, from 232 to 136, thanks to a 190.3 percent increase in sales — the highest of any Top 250 company.

But forget about numbers and dollar signs for a moment. Let’s get back to Grove Farm’s commitment to the community and this concept of sustainability. “We don’t want to just sell real estate. We want to build communities that the local people can live in and be proud of,” explains Haruki. “We’re also trying to focus heavily on Kauai residents. For example, we’ve put shared appreciation clauses into our real estate sales, so that if the buyer chooses to sell within the first three years, he has to share the appreciation with us 50/50. That’s in order to prevent and deter speculation.”Haruki says the frenzied tempo of Kauai’s real estate market last year was the main reason for the whopping increase in sales. In 2005, Grove Farm sold one big parcel to Schuler Homes, 88 residential lots in Puhi and a handful of commercial lots near the island’s first Home Depot, and closed the year with $63 million in revenues. He expects the sales growth to continue through this year, albeit at a more tempered pace.

So far, so good. According to Haruki, roughly 95 percent of Grove Farm’s real estate has been sold to Kauai residents.

In addition to its residential and commercial projects, the company has several community projects in the works as well. Grove Farm has been working with nonprofit organizations to reforest some of its agricultural land with koa wood and other Native Hawaiian plants. The company also recently built nene goose habitats surrounding a water purification plant it installed near Wailua Falls.

One of its biggest community initiatives has been the creation of a 5-acre taro farm operation on the mauka side of its Mahaulepu lands. “The amount of taro being grown in the state has been diminishing and Mahaulepu is pretty fertile ground for growing taro,” says Haruki. “So we’re trying to attract long-time taro farmers to take over and further expand the taro production, hopefully to about 20 acres by the end of the year. There are so many products that can be made from the taro, so, in a small way, for Kauai, it’s a step toward — and I use this term loosely — sustainability.”


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Jacy L. Youn