08-26_J-x_Request for RFP for Ala Wai SBH 2022 (part 1)

STATE OF HAWAII

DEPARTMENT OF LAND AND NATURAL RESOURCES

Division of Boating and Ocean Recreation

Honolulu, Hawaii 96819

August 26, 2022

Chairperson and Members

Board of Land and Natural Resources

State of Hawaii

Honolulu, Hawaii

Land Board Members:

SUBJECT: Authorize the Division of Boating and Ocean Recreation to Issue a

Request for Proposals for Development of Public Lands at the Ala Wai

Small Boat Harbor, Kalia, Honolulu, Oahu, Hawaii

Tax Map Key Plat Nos.: (1) 2-3-037 and (1) 2-6-010

APPLICANT:

Department of Land and Natural Resources, Division of Boating and Ocean Recreation

(DOBOR).

LEGAL REFERENCES:

Sections 171-6, 171-11, 171-13, 171-16, 171-17, 171-18, 171-19, 171-35, 171-36, 171-

41, 171-53, 171-59, and other applicable sections of Chapter 171; sections 200-2.5, 200-

2.6 and other applicable sections of Chapter 200; Hawaii Revised Statutes (HRS), as

amended. Session Laws of Hawaii 2011 Act 197, Section 9, Subsection (g)

LOCATION:

Government lands situated at Ala Wai Small Boat Harbor (AWSBH), Kalia, Honolulu,

Island of Oahu, identified by Tax Map Keys: (1) 2-3-037:012 (por.), :020, :024, :026,

:033, :034; and (1) 2-6-010:003 (por.), :005, :016. These parcels shall collectively be

referenced as the "Subject Property." Basic property information is summarized in the

table shown in Exhibit C. The total area for development is approximately 11 acres

and includes certain fast and submerged or reclaimed (filled) lands. The Subject

Property is

Additional submerged lands may be included within the leased area subject to legislative

approval to lease submerged lands.

Item J-1

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 2

TRUST LAND STATUS:

Section 5(a) and 5(b) lands of the Hawaii Admission Act

DHHL 30% entitlement lands pursuant to the Hawaii State Constitution: No

UTILITIES: All utilities are available at the harbor.

EXISTING IMPROVEMENTS: Including but not limited to paved roads, parking

equipment, parking stalls, potable water lines, sewer system, public restrooms, harbor

office, lighting, slips, piers, ramps, wash down area and outdoor showers.

Fixed and floating docks may be included within the leased area subject to legislative

approval to lease submerged lands.

LEGAL ACCESS: There is legal access from Ala Moana Boulevard connecting to Holo

Moana Street, Hobron Lane and Kahanamoku Street.

CURRENT USE STATUS:

Within the AWSBH, there are currently 3-Leases (not included in the Subject Property),

5-Revocable Permits (RP), (an additional RP is conditioned on County permit approval)

and 1 Mobile Food Concession. The Subject Property is managed by DOBOR as part of

the AWSBH.

Exhibit A-1 Depicts AWSBH encumbrances, which may affect or adjoin the Subject

Property.

Exhibit A-2 Depicts the current parking plan, which may affect or adjoin the Subject

Property.

Exhibit A-3 Summarizes the AWSBH encumbrances, which may affect or adjoin the

Subject Property.

Exhibit B Depicts Parcels A thru D and Moles 1 and 2 shown in the 2019 RFP.

Parcel A: TMK Nos. (1) 2-3-037:012 (por.), :024, :033 and :034

Harbor management office single story

Paid parking stalls

Public restroom

Washdown area

Trailer boat storage

Parcel B: TMK Nos. (1) 2-6-010:003 (por.), :005, :016.

Public restroom

Piers

Boat ramp

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 3

RP to Blue Water Shrimp International LLC pending county

approvals.

Pedestrian access to/from Ala Moana Blvd.

Parcel C: TMK Nos. (1) 2-3-037:020

Single story structure

Restroom

Piers

Storage and Catamaran mooring, HBM, LLC RP

Parcel D: TMK No. (1) 2-3-037:012 (por.)

Parking Permit only

Kiosk Parasail ticket booth, Hawaiian Parasail, Inc. RP

Pier for parasail boat

Landscaping

Mole 1: TMK No. (1) 2-3-037:012 (por.)

Parking - Permit and free

Public restroom

Access to fuel pier, Parcel C.

Pier support mooring cleats, boat lockers, boat power and water.

Landscaping

Mole 2: TMK no. (1) 2-3-037:012 (por.)

Parking - Permit only

Public restroom

Access to lessee Hawaii Yacht Club (lease BO-99-2) which expires

on July 29, 2034.

- RP

Pier support mooring cleats, boat lockers, boat power and water.

Landscaping

Prior to issuance of a lease, such uses that are inconsistent with the lease of the Subject

Property will need to be terminated. DOBOR is requesting the Board to authorize the

cancellation of revocable permits, concessions and contracts and delegate authority to

the Chairperson to determine when the cancellations shall take effect.

STATUTORY AUTHORITY:

HRS Section l71-59(a) provides that a lease of public land may be disposed of through

negotiation upon a finding by the Board that the public interest demands it.

The statute also provides a process under which the Board may select the lessee. The

statute requires DLNR to: (i) provide public notice of its intention to lease public land

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 4

through negotiation; (ii) establish reasonable criteria for the selection of the lessee; (iii)

determine the applicants who meet the criteria for selection; and (iv) select the lessee

that submits the highest most responsible offer.

In the alternative, HRS Section 171-59(b) allows for disposition by negotiation if the use

meets certain categorical criteria (e.g., marine, maritime, and maritime-related

operations) provided that such lease encourages competition within such type of

operation.

CHAPTER 343 ENVIRONMENTAL ASSESSMENT:

The selected applicant shall be required to comply with all HRS Chapter 343 and HAR

Chapter 11-200 environmental requirements regarding the selected applicant's proposed

use of the Subject Property during the development agreement phase of the project, and

prior to any disposition by lease. The issuance of a lease shall be subject to compliance

with Chapter 343, which may require the issuance of an Environmental Assessment (EA)

with Finding of No Significant Impact ("FONSI") or Environmental Impact Statement

("EIS"). T a final EA-FONSI and/or EIS is required prior to issuance

of a lease.

As a pre-condition to the issuance of a lease, the applicant selected through the RFP

process shall also fulfill any and all federal, state and county governmental requirements.

The prior Lessee to Parcels B and C under State Boating Lease BO-13120, obtained a

final EA/FONSI on October 8, 2010 (dated Sept. 21,

project) and supplemental Final Environmental Assessment (FEA) also on October 8,

2010 (dated July 30, 2010) to account for traffic impacts. The FEA also cited a Phase I

Environmental Site Assessment prepared on January 12, 2004,

(Parcel C). These documents will be made available to all prospective applicants.

BACKGROUND:

Boating Lease No. BO-13120 was issued to Honey Bee USA, Inc. for Parcels B and C on

Dec. 6, 2013 and terminated on November 15, 2015.

Parcel B was previously the site of a haul out facility. License No. 74 was issued to Ala

Wai Boat Works, Ltd. on April 27, 1953, and expired on April 30, 2004. Ala Wai Marine,

Ltd. was a holdover tenant to License No. 74, and had been cited by the Department of

Health Clean Water Branch for discharge and permit violations. Ala Wai Marine, Ltd. held

a revocable permit (RP No. B-93-39) effective August 14, 1993, for boat storage and

parking purposes until it was vacated in February 2009.

Parcel C was the subject of revocable permits, including RP No. B-03-06 to Magic Island

Petroleum, Inc. (MIP) to operate a fuel facility and convenience store on December 1,

2002. The facility was in poor condition and required substantial upgrades and repairs.

MIP indicated it would be uneconomical to invest substantial sums of money for repairs

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 5

without a long-term lease. It is currently being used for catamaran storage by HBM, LLC

under a revocable permit. The Makai pier recently collapsed in January 2022.

At its meeting held on April 13, 2018, under agenda item J-4, the Board instructed

DOBOR to issue a Request for Proposal (RFP) for development of public lands at

AWSBH. The RFP process was completed in 2019 and did not result in a lease. A

subsequent request was suspended due to the COVID-19 pandemic in 2020 and 2021.

Vision: The Subject Property is located within AWSBH, which is the largest recreational

harbor in the State and is situated at the Ewa end of Waikiki. DOBOR intends to issue

an RFP to invite responsible applicants to partner with it in achieving its vision for AWSBH

in the public interest. The goal is to transform the harbor into a world-class marina that

meets the needs of residents and visitors who use the ocean for a myriad of activities.

This transformation includes development of the fast lands to improve the aesthetics of

the harbor especially since it is considered a gateway to Waikiki, improvement of the

harbor and management services provided to tenants, and the development of DOBOR

managed fast (and submerged/reclaimed) lands in this area to support the community

and recreational activities of this legendary area. DOBOR is eager to optimize the use of

AWSBH in keeping with the conservation mission of the Department. To this end, its

vision includes helping mitigate environmental concerns in the area, including water

quality management, and working with local and regional entities such as the Seabin

Foundation, Ala Wai Watershed Coalition, Waikiki Beach Special Improvement District

Association, and others. The Division seeks a partner that will help it attain Clean Marina

certification or other appropriate designations. Finally, the Division wishes to partner with

the Division of Aquatic Resources on th

announced at the 2016 IUCN World Conservation Congress, specifically the 30 by 30

initiative and seeks

a marina partner that will help it attain these goals.

In 2021, DOBOR requested assistance from the University of Hawaii Community Design

Center (UHCDC) who prepared an Ala Wai Small Boat Harbor Vision Report. The report

has been completed and DOBOR proposes that it be used to help provide guidance to

potential bidders. The report can be viewed on the DLNR-DOBOR website via the

following link:

Division of Boating and Ocean Recreation | Ala Wai Small Boat Harbor Vision Report (June 2022)

(hawaii.gov)

Rationale for RFP: DOBOR believes a Request for Proposals (RFP) method of

procurement should be used to safeguard the public trust. Elements such as experience,

past performance, resources, method of approach, and other criteria will be considered

when selecting the successful applicant. An auction process would simply award the

contract to the highest bidder, not necessarily one that shares in partnering with DOBOR

and its vision for the AWSBH. DOBOR does not possess the expertise or funding for this

undertaking and believes this facility should be upgraded under a lease arrangement with

a private entity. Such an arrangement has excellent potential to increase the lease rent

revenues generated to support operations. DOBOR will review submitted

proposals in accordance with the evaluation criteria set forth in the RFP.

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 6

Capital Improvements: DOBOR has been implementing a comprehensive improvement

plan for the AWSBH. As part of this plan, since 2008, floating docks "B", "C", "D" and "F"

have been completely rebuilt and placed into service. DOBOR has also replaced the

concrete piers and revetment of the 700-row, replaced debris catchment, completed

roadway and parking lot repairs, and upgraded electrical, telephone and water utilities.

DOBOR is planning to upgrade the in the sewer system when CIP funds are made

available. The 700-row piers were replaced in 2012 and improvements to the 600-row

have begun with six new piers having been recently installed. The water lines are in the

process of being replaced and is projected to be completed by the end of 2022.

To better manage public harbors in other parts of the country, private partnerships have

brought more capital for much needed infrastructure development, optimized revenue to

honor the public interest, and freed up these states to carry out their original mandates

more effectively. This has been successfully done through leases in Keehi Lagoon with

Keehi Marine, Inc. and La Mariana Sailing Club. To help it leverage CIP funds

appropriated by the Legislature, DOBOR requests authorization for an RFP for a long-

term lease so that the successful applicant may partner with DOBOR to bring AWSBH

the improvements that it desperately needs.

Harbor Management: Management of AWSBH has consumed a disproportionate

amount of staff time and financial resources. A development proposal which incorporates

harbor management functions as part of redevelopment may be favored in order to

promote efficiency of marina operation and allow staff to focus on ocean recreation

management which has become a major priority due to the ever-increasing demands on

conservation and sustainable use.

Nationwide, states do not generally operate recreational harbors and marinas and where

they do, they widely use third parties to manage them. Using third party harbor

management, governments in other states have shown a good track record of efficiency

and optimization of revenue. The City of Chicago has the largest municipal marina

system in the U.S. It began using third party management of its 6,000 slips (three times

the number in the entire State of Hawaii) in the early 1990s and has not looked back. Its

revenues went from zero in 1995 to $13 million per year in 2015. Similar trends can be

has shown a similar trend.

REQUEST FOR PROPOSALS (RFP):

n to qualified applicants to submit

proposals for harbor redevelopment at AWSBH for the Subject Property. Request for

Qualifications will be incorporated into the RFP and will request the requisite information

from interested parties. An evaluation committee selected by the Chair and the Division

will review the applications and determine which applicants meet the eligibility criteria to

submit development proposals.

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 7

Upon selection by the committee, the successful Applicant and its proposal must be

approved by the Board at a board meeting open to the public. Should the Board approve

the selected Applicant and proposal, the selected Applicant and DLNR will commence

exclusive negotiations of a development agreement and proposed lease for the Subject

Property with the approved Applicant.

Accommodation Requirements: The Developer shall provide office space and related

utilities for harbor management staff. The square footage of the office space shall be

equal to or greater than the current harbor office unless otherwise agreed to by the

Department. The Developer shall provide storage space for miscellaneous harbor

materials that is at least one thousand (1,000) square feet. The Developer shall provide

a minimum of ten (10) parking stalls to be used by harbor management staff and

associated vehicle parking at no charge. This requirement may be subject to change

should the Department receive the necessary approvals from the Hawaii State Legislature

to lease submerged lands that include the slips and mooring spaces within the harbor.

The Developer shall follow the existing parking plan approved by the Board of Land and

Natural Resources (Board) that provides for a minimum of three hundred (300) free public

parking stalls, for a minimum of three hundred twelve (312) permit parking stalls for harbor

tenants with valid mooring permits, and for a minimum of three hundred twenty-nine (329)

paid parking stalls according to approved parking rates. The current parking plan is

subject to change depending on the type and configuration of the new development

project. See Exhibit A-2 for the existing parking plan. Any changes to this parking plan

shall be approved by the Board. Access for State Department of Transportation (DOT)

personnel to inspect the lower footings of Ala Wai Canal bridge and State personnel to

inspect waste catchment areas near the same location also needs to be accommodated.

Character of Use: The Subject Property may include any use(s) allowed under the

Hawaii Revised Statutes, City and County of the Honolulu Zoning Code, Special

Management Area Ordinances for the Subject Property, the Waikiki Special Design

District and as provided in SLH 2011 Act 197, using the Ala Wai Small Boat Harbor Vision

Report as guidance.

PROPOSED DEVELOPMENT AGREEMENT:

The selected Applicant (aka Developer) may need to undertake various predevelopment

activities before a lease can be issued and construction can commence i.e., due

diligence; comply with HRS Chapter 343 requirements and county permitting and as

provided in SLH 2011, Act 197.

The Developer will also be required to submit evidence of the

capacity to complete the proposed development, including personal guarantees

(construction bond); a lease rent proposal, a development agreement rent proposal, and

a development timetable.

The Developer will be allowed to use only those submerged lands that have been

approved by the Legislature subject to the Developer acquiring all required approvals.

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 8

A Development Agreement will be negotiated with the selected Developer, in which the

agreement will set forth the predevelopment terms and conditions that the selected

Developer must perform (including payment of development agreement rental fees) for a

lease to be issued.

PROPOSED NEW LEASE:

The proposed lease shall include a survey map and descriptions of the Subject Property

and easements according to State Department of Accounting and General Services

standards.

Lease Term:

Anticipated to be up to Sixty-five (65) years (as stated in HRS §200-2.5, or

according to §171-59, as applicable).

Minimum Annual Rent: To be determined by the selected Applicant's proposal, but not

less than the fair market rental, as determined by staff or independent appraisal, subject

to review and approval by the Chairperson.

RECOMMENDATION:

That the Board of Land and Natural Resources:

1. Find that the public interest demands that a lease for the Subject Property may be

disposed of through negotiation pursuant to HRS Section 171-59(a) or any

applicable section of HRS Chapter 171;

Delegate the authority to the Chairperson

(i) to publish a Request for Proposals ("RFP") consistent with HRS §171-59

for the selection of the lessee for redevelopment of Ala Wai Small Boat

Harbor;

(ii) establish a selection committee.

(iii) establish the criteria for evaluating and selecting the lessee;

(iv) accept and evaluate the applications submitted by prospective lessees;

and

(v) make a preliminary determination and recommendation to the Board of the

best applicant;

3. Authorize and approve the Chairperson to negotiate and approve any

modifications to the RFP process or requirements, if in the best interests of the

State and consistent with HRS Section 171-59, and any other recommendation as

discussed above, and subject to review and approval of the Department of the

Attorney General.

Ala Wai Small Boat Harbor August 26, 2022

Request for Proposals Page 9

Respectfully Submitted,

________________________________

EDWARD R. UNDERWOOD, Administrator

Division of Boating and Ocean Recreation

APPROVED FOR SUBMITTAL:

____________________________

SUZANNE D. CASE, Chairperson

Board of Land and Natural Resources

Attachment:

A-1 Map of AWSBH Encumbrances

A-2 Current Parking Plan

A-3 List of Encumbrances

B Map of the Harbor showing Parcels A, B, C, and D, and Moles 1 and 2

C Parcel Information

Exhibit A-1

Ala Wai Small Boat Harbor

Encumbrances

Hawaiian

Parasail, Inc.

RP 10 - 36 Sq. Ft.

Honolulu Transpac, Ltd.

RP 11 699 Sq. Ft.

HBM, LLC

RP 39 15,202 Sq. Ft.

Galley Foods

(Food Truck

Concession)

AWSBH-201201

300

Sq. Ft.

Hawaii Hot Dogs

RP 115 160 Sq. Ft.

Pending RP

9,000 Sq. Ft.

Hawaii Prince Hotel Waikiki

(Lease

till 1/29/52

)

Waikiki Yacht Club

(Lease till 7/29/34)

Hawaii Yacht Club

(Lease till 1/28/34)

Harbor

Management

Office

Exhibit A-1

Exhibit A-2

Parking Plan

Permit Parking

(312 Stalls)

Paid Parking

(329 Stalls)

Free Recreational

Parking

(300 Stalls)

LEGEND

Tenant Notes

Lease,

RP No.

TMK Purpose

County Zoning Info

Secure Parking

Hawaii LLC

Concession

for parking

on Moles 1

and 2

120

(1) 2-3-

037:012

Parking Concession Contract

P-2 General Preservation

District*, Public Precinct

(Waikiki Special District)**,

Resort Mixed Use Precinct

(Waikiki Special District)

Galley Foods,

LLC

Concession

near

helipad

area

AWSBH-

201201

(1) 2-3-

037:012 (por.)

Mobile Concession Food Truck

P-2 General Preservation

District*, Public Precinct

(Waikiki Special District)**,

Resort Mixed Use Precinct

(

Waikiki S

ecial District

)

John's World

Famous Hawaii

Hot Dogs LLC

RP 115

(1) 2-3-

037:012 (por.)

Mobile Concession Food Cart

P-2 General Preservation

District*, Public Precinct

(Waikiki Special District)**,

Resort Mixed Use Precinct

(

Waikiki S

ecial District

)

Hawaii Prince

Hotel Waikiki

Corp.

Lease H-87-25

(1) 2-6-

010:008 (1)

2-3-037:012

or.

)

Easement used by the Hawaii

Prince for a Port Cochere

Public Precinct (Waikiki

Special District)**

Hawaii Yacht

Club

Lease B-99-2

(1) 2-3-

037:013

Yacht Club Purposes

Public Precinct (Waikiki

ecial District

)

Waikiki Yacht

Club

Lease B-99-1

(1) 2-3-

037:006, 012

Yacht Club Purposes

P-2 General Preservation

District*, Public Precinct

(

Waikiki S

ecial District

)

Hawaiian

Parasail, Inc.

RP 10

(1) 2-3-

037:012 (por.)

Ticket Booth

P-2 General Preservation

District*, Public Precinct

(Waikiki Special District)**,

Resort Mixed Use Precinct

(

Waikiki S

ecial District

)

Honolulu

Trans

ac, Ltd.

RP 11

(1) 2-3-

037:026

Office Space

Public Precinct (Waikiki

ecial District

)

HBM, LLC

Catamaran

stora

RP 39

(1) 2-3-

037:020

Revocable Permit issued to

HBM, LLC for vessel moorage

Public Precinct (Waikiki

Special District)**

M Waikiki, LLC

Access

Easement

(1) 2-3-

037:012 (por.)

To conduct pool deck and

outdoor dining activities within

the portion of certain elevated

deck abuttin

ert

Public Precinct (Waikiki

Special District)**

Exhibit A-3

Current Encumbrances, AWSBH

*Lands zoned under the P-2 general preservation district are intended to preserve major open space, recreation lands,

and lands of scenic and other natural resource value. Areas designated urban by the state but well suited to the

functions of providing visual relief and contrast to the city's built environment or serving as outdoor space for the public's

use and enjoyment are also zoned in this district.

**Lands zoned under the Waikiki Special District are subject to the standards found in the Waikiki Special District Design

Guide.

Exhibit B

Aerial Map of Ala Wai Small Boat Harbor Parcels A, B, C, D, and Moles 1 and 2

Exhibit B

Exhibit C