The Cowboy Way

The only way to preserve Waimea’s rural landscape and lifestyle is to change them

November, 2006

When Parker Ranch president and CEO Chris Kanazawa first spoke to his cowboys during an informal talk story session two years ago, he had to speak to a lot of backs and tops of heads. The ranch’s 30 or so cowboys were a solitary and sometimes shy lot. But Kanazawa realized later that they were listening and listening closely.

If Parker’s ranch hands were reticent, it was understandable. After all, Kanazawa was a city slicker from Honolulu, who didn’t even know how to ride a horse. The new head man had an extensive background in real estate sales and development, not in livestock production. Kanazawa had developed large parcels of land all the Islands, including Waikele, a planned community on Oahu. With its golf course, large outlet mall and wide, manicured, tree-lined streets, the development was probably an anathema to everything his employees knew and loved.

But little did anyone know at the time the big-city real estate developer was discovering his inner cowboy.

“When I came here, I knew about Parker Ranch, but I didn’t realize how deep the passion is for this place,” says Kanazawa. “When you talk about Parker Ranch, you don’t have people who are gray about it. Either they love the thing to death, or they have issues with how things are run. Either way, it’s a passionate response.”

With its vast land holdings (more than 150,000 acres at last count) stretching beyond the horizon and halfway up Mauna Kea, the 159-year-old Parker Ranch is one of the three largest landowners in Waimea. (The State of Hawaii and the Department of Hawaiian Homelands also hold titles to large tracts of land.) In addition to its seemingly infinite open range, the ranch also owns 329 acres within Waimea proper, which comprise the majority of the downtown area.

On Sept. 10, 1992, Richard Smart, a sixth-generation member of the Parker family, created the Parker Ranch Foundation Trust, which received nearly all of his personal assets upon his death just three months later. The beneficiaries of the trust include the North Hawaii Community Hospital, Parker School Trust Corp. Hawaii Preparatory Academy and the Hawaii Community Foundation. What is good for the ranch is good for Waimea, and visa versa.

When Kanazawa arrived in Waimea in July 2004, the land-rich but cash-poor trust was just finding its financial footing. A decade-long effort had streamlined cattle operations, enabling the ranch to weather the fluctuations of the commodities market. The livestock work force was reduced from 79 in 1991 to 29 in 2003, while overall employee numbers decreased from 112 in 1991 to approximately 55 today.

Under Kanazawa, Parker Ranch has moved from financial stability to profitability. In December 2005, it sold its flagship shopping center, the Parker Ranch Center, to a Chicago-based commercial real estate firm for $31.3 million. Last summer, it sold 24,000 acres of rangeland to the U.S. Army, which needed to expand its Pohakuloa Training Area to accommodate its new Stryker Brigade. The sale price was $31.5 million.

In 2006, Parker Trust distributed $8.2 million to its beneficiaries, more money than in the previous eight years combined.

“From just those two transactions [Parker Ranch Center sale and U.S. Army sale], we were able to take an investment portfolio of $10 million to $15 million in 2004 to $65 million to $70 million in 2006,” says Kanazawa. “We were able to improve the financial position of the company and take a long look at where we go from here.”

That direction may be back to the future. Kanazawa says that the ranch will continue to fulfill its mission to provide meaningful support to its beneficiaries, but, at the same time it will make a renewed effort to preserve the lifestyle of the paniolo, the history of the ranch and the integrity of the landscape, which are signatures of Waimea. This new mission statement was one of the reasons the ranch sold its shopping center last year and why it won’t be selling many more acres of land or expanding its visitor operations, which have been good performers as of late.

The Enemy Is Us

At first glance, Parker Ranch’s step into the past may be coming at a time when Waimea needs cutting-edge urban planning and 21st-century leadership. Traffic is bad in Waimea, a town originally built with horses in mind, not cars. During “rush hour,” which usually coincides with the beginning and end of the school day, the town’s two main arteries can grind to a halt. It is not uncommon for a journey of two miles to take as long as a half-hour.

It was a commonly held belief that most of the cars and trucks rumbling up and down Mamalahoa Highway and Kawaihae Road belonged to East Hawaii residents, who were traveling to their jobs and job sites in Kona and along the Kohala Coast. This assumption seemed to explain away Waimea’s daily traffic tie-ups, which occur during the early mornings and then again in the early afternoons.

But a long-awaited traffic study released in June told a slightly different story: Approximately 60 percent of all vehicular traffic in Waimea is local. The study found that the average vehicle trip on one of Waimea’s roads is just two miles—mainly short little jaunts, picking up and dropping off kids at school or going from one mini-mall parking lot to another.

“We have found the enemy and the enemy is us. It’s my new mantra,” says Bob Hunter, patent consultant and Waimea community activist. “It’s a fact that was hard to swallow, and I think many people are still trying to digest it.”

As this summer’s traffic study made clear, Waimea is growing fast, faster than its 20th-century infrastructure and 19th -century urban planning can accommodate. The South Kohala District, which includes Waimea, Waikoloa and Kawaihae, is booming. In the past five years, the number of building permits issued in South Kohala has more than doubled, from 420 in 2000 to 854 in 2005. The value of permits more than quadrupled over the same time period, from $79.9 million to $338.2 million. Meanwhile, the South Kohala unemployment rate, which was a respectable 4 percent in 2000, dropped to a miniscule 1.4 percent in 2005.

According to the 2005 study, “Waimea, Facing Future,” written by Nino Walker, then a master candidate in landscape architecture at the University of California, Berkeley, in 1970, the sleepy town was home to just 756 people. By 2005, the population increased nearly ten-fold, to more than 7,000 residents, making it the largest and most populous settlement in North Hawaii. Waimea won’t be relinquishing that distinction any time soon. According to Walker, based on existing land entitlements and district projections, Waimea’s population could grow as much as 85 percent by 2020, to 13,000 residents.

Meanwhile, the town’s Dodge City configuration, basically a long, continuous strand of homes, businesses and small agricultural operations, has remained essentially the same since the 1800s.

To their credit, some Waimea residents saw the writing on the wall more than 30 years ago, as new residents, many of them Oahu refugees, discovered the area’s big-sky country and relatively cheap land prices. Plans to alleviate traffic congestion with bypass and connector roads and efforts to preserve the town’s rural character with pedestrian walkways and nature and equestrian trails have been on the drawing board in one form or another for years. But those proposals have risen and fallen with the political and economic tides.

Recently, plans for a bypass road, which had been languishing for nearly 40 years, have been going forward. The 12- to 15-mile road will consist of two highways that are being planned and will be constructed separately. The Waimea Bypass will run mauka to makai, skirting the edge of the Waimea Airport. It is slated for completion in 2014. The Kawaihae Bypass, which will loop around Laumilo Farm Road, is scheduled to be finished in 2019. Where the two highways will be linked has yet to be determined.

In light of the findings of the traffic study, Walker and Hunter point out that while the bypass road will redirect much of the intra-island traffic around the town, by the time it is completed, Waimea will have grown so large that the local traffic alone will overwhelm its roads.

“The key is to try and create a Waimea that doesn’t require so much driving to get around. That town would have a denser urban core. It would have connector roads, so you can run errands without taking the main road,” says Hunter. “To get that town, people have to give up on the dream of owning 40 acres and a horse. Some people are having a hard time letting it go.”
Carolyn Wong considers herself one of the lucky ones. The Maui native, who moved to Waimea three and a half years ago, works in town—an unusual privilege for most residents. Moreover, her office is right across the street from the duplex she shares with her young daughter, whose elementary school is less than a block away. When it’s not raining, mother and daughter walk to school.Lucky You Live Waimea

“I really like the fact that everyone knows everyone. I have a lot of friends here. My job is here. I love it,” says Wong. “I found home.”

However, ask Wong, a soil conservationist with the USDA’s Natural Resource Conservation Service, about the possibility of owning a home in Waimea, and her sunny outlook changes. The single mom has a well-paying, secure job, and she admits that the $950 a month in rent for her duplex is “the best deal in town.” But saving money for a down payment has been a long, slow process. A little more than a year ago, she cut off her cable television and Internet service. She also doesn’t have a telephone landline anymore, using her cell phone instead.

“It shouldn’t have to be this hard to live up here, but it is,” says Wong. “Once my rent gets over $1,000, it’s going to be very hard to pay rent, pay bills and eat well. I just hope that something will happen soon.”

Waimea, 40 miles from Kona and 60 miles from Hilo, has it all: stunning vistas; cool, mild weather, good public schools and very good private schools, a new state-of-the-art hospital and a vibrant performing arts theater. It is also the home to the headquarters of two of Mauna Kea’s research telescopes, a small collection of productive farms and one of the state’s most diverse populations. In addition to having the largest concentration of Native Hawaiians on the island (15.6 percent of Waimea’s population), it also has large Caucasian (30.6 percent) and hapa or mixed-race (32.2 percent) populations.

However, many, like Wong, can’t have it all. In 2000, the median cost of a single-family home in Waimea was $173,000. By 2005, the price had reached $510,000.

According to Gary Davis, vice president of Clark Realty, Waimea’s real estate world started to change, as it did for the rest of the state, about four or five years ago. Some of the new buyers were Big Island residents moving from the increasingly crowded and busy Kona Coast. But most new residents have been Mainland immigrants, mainly from the West Coast. With 10,000-square-foot lots costing half-a-million dollars and larger parcels of an acre or more starting at $1 million, many have high incomes.

In 2005, according to the adjusted gross income figures from the IRS, Waimea’s residents reported average earnings of $46,700, which made it the 22nd wealthiest zip code in the state, right behind Oahu’s Waialae Kahala at $46,948 and Mililani at $46,847.

As a result, Waimea’s economic and social gaps, which have been with the town since its founding, seem to be turning into chasms as kamaaina, longtime residents, and relative newcomers become increasingly frustrated with their town’s gradual transformation into a wealthy enclave. In his 2005 report, Walker, who conducted extensive interviews throughout the community, wrote: “From the perspective of established residents, the newcomers represent a gentrifying force that will push them out and/or annihilate the local culture (variously defined as “Hawaii,” “paniolo,” “the spirit of aloha,” etc.). This character embodies a threat both economic and cultural, and some residents conceive that newcomers are willfully trying to transform Waimea into another Mainland community.”

Waimea’s gentrification isn’t much different from other transformations that are taking place in other communities on Oahu, Maui and Kauai. And some would argue that, however difficult, there are clear economic benefits being gained by a majority of both new and longtime residents.

“One of the things that Waimea has going for it is that its growth is being fueled by ‘immigrants’ with money, lots of money. These are not the Joads coming in a beat-up truck from Oklahoma or foreign illegals coming in from south [or north] of the border,” writes David Hammes, professor of economics at the University of Hawaii at Hilo in an e-mailed response. “This has echoes of the issues faced by other areas of the state, where the people with more money have come in and turned the local residents into ‘the Joads,’ as prices go up they have trouble staying [if they were renting] or the opportunity cost of the land they own rises so quickly they either have trouble making the tax payments or they ‘just have to’ sell in the face of the large appreciations. No tears here on their gains, but it does represent having to make a lifestyle change that is wrenching.”

For many of the new Joads, that lifestyle change may have been made a long time ago. Earlier this year, members of the Waimea Community Development Plan Committee surveyed longtime South Kohala residents, who work in the various hotels along the coast. The study found that 85 percent of those polled held two or more jobs to make ends meet. In addition, 80 percent reported that they had to leave their children at home unattended for most of the day. Some of those latchkey kids are as young as 5 and 6 years old.

Meanwhile, Back at the Ranch

Last September, Kanazawa put the finishing touches on a draft of Parker Ranch’s new strategic plan, which may keep the trust in the black in perpetuity and ultimately solve Waimea’s growing pains. According to Kanazawa, the new plan, which he refers to as “The Next Century Plan,” prominently features the use of conservation easements to not only preserve significant habitats and open space, but also generate significant revenue. It may be the kind of cutting-edge strategy and innovative leadership that could shape Waimea into the town that it needs to be.

In a nutshell, a conservation easement is an agreement in which a landowner either sells or donates certain rights associated with its property, such as the right to develop or subdivide. A private organization or a public agency then agrees to hold the landowner’s promise not to exercise those rights. The landowner still retains title to the land it places in a conservation easement and it can still use it for such activities as farming and ranching, but it gives away certain development rights to that land. In other words, it will be preserved—forever.

Conservation easements have been in use on the Mainland for decades. They buffer national parks, such as Yellowstone, from development and human activity and have been used to create migratory corridors for a wide range of animals. As of 2000, local and regional land trusts in the United States had protected nearly 2 million acres through conservation easements.

In Hawaii, conservation easements have been in place since 2000 and the total acreage that has been set aside is in the hundreds not thousands. Last September, the Big Island’s first conservation easement was created when landowner Pacific Star LLC donated 185 acres of shoreline, just north of Kealakekua Bay, to the Hawaii Island Land Trust. Other conservation easements can be found on Maui and Kauai.

The number and size of conservation easements in Hawaii and across the nation will likely increase dramatically over the next year. Last August, President George Bush signed The Pension Protection Act, which provides dramatic tax benefits to landowners who donate their land to a qualified government or nonprofit entity. Instead of receiving a deduction of 30 percent of adjusted gross income over five years, landowners now can receive a 50 percent deduction over 15 years. In addition, if the landowner derives 50 percent or more of its income through farming or ranching activities, it can qualify for a 100 percent deduction. However, the tax incentives expire at the end of 2007.

“We’ll likely see a dramatic up-tick in the use of conservation easements next year,” says Jocelyn Garovoy, Hawaii Island Land Trust president. “These agreements can be put together in a relatively short time, weeks instead of months or years. However, deciding whether to do it or not can take a while. Once you sign, it means forever. So in large part, it really depends on getting someone to champion it, because it is a complicated concept.”

Kanazawa seems to be that person right now. Although he is tight lipped about how many acres he’s willing to set aside, he does say that company officials are working with Stanford University researchers to create an extensive ecological inventory of Parker’s holdings, a possible step in establishing a conservation easement. He also admits that an old Hawaii field system, which runs through much of the Ranch’s Kohala lands and parcels along the base of Mauna Kea, are ideal candidates for conservation. Parker’s holdings in and around Waimea could also be set aside, preserving the town’s famous panoramas forever.

So, with open lands held in perpetuity and money in the bank, will Parker Ranch forego large, high-revenue-generating housing developments? In other words, will a more consistently performing portfolio give Parker Ranch the financial freedom to implement some of the community plans that promise to ease Waimea’s traffic and enhance the town’s livability? Will Parker Ranch build truly affordable housing?

Kanazawa won’t say just yet. It’s putting the cart before the horse, so to speak. Besides, those things are just beyond the horizon, and for now, he’s trying to make sure that everyone will still be able to view that horizon in the decades to come.

“My objective is to preserve Waimea’s current footprint for the next 10 to 20 years,” says Kanazawa. “So we need to look at this with a whole different approach. What if we create an environment that is so unique that it attracts like-minded people to invest and preserve? We could provide financial support to our beneficiaries while deriving great social value that everyone would enjoy through the preservation of our landscape and perpetuation of our working ranch. Are we just dreaming, or is this a reality?”


Related Stories

On Newsstands Now
HB July 2017


David K. Choo