Can Lingle Really Save Turtle Bay?
Wednesday - January 30, 2008
Does the state of Hawaii have a vested interest in the demise of the Turtle Bay Resort? This is not a flippant observation, rather a possible explanation for an improbable proposal delivered by Gov. Linda Lingle in her recent State of the State address advancing the idea that the state purchase the Turtle Bay Resort. A couple of disclosures. At the time of this writing, the details of this proposal have yet to be revealed. Perhaps the administration will have provided more information about this provocative announcement. If so, I will address them in the future. Secondly, I am fortunate to have been involved with the Turtle Bay Championship PGA golf tournament for the past seven years. It has been a wonderful experience to host several events featuring touring golf professionals and amateur participants. I have broadcast my radio program from the resort over the past several years, too. I have had the chance to meet and get to know some of the quality, hard-working men and women of the Turtle Bay Resort and respect all they accomplish on the North Shore.
There are two recent news stories that feature the Turtle Bay Resort. The foreclosure announcement by the resort’s creditor, Credit Suisse, made headlines in December of last year. Oaktree Capital Management owns Kuilima Resort Co., which owns the Turtle Bay Resort. A payment was missed on a $271 million loan. The amount owed is now $283 million with interest and fees. Despite the legal action, the resort is continuing its day-to-day operations. It is no secret the KRC is seeking a financial partner in order to expand. The announcement to comply with the 1986 zoning decision to allow the resort to expand has rekindled anti-development sentiments on the North Shore.
It should be noted that under present law, the owner of the properties in question had full developmental rights. The initial KRC proposal cites the addition of 3,500 rooms to the existing 440 found at the resort today. Is this written in stone? According to those familiar with the story, absolutely not. However, in order for the resort to remain relevant and viable in the very competitive tourism industry, there is a need to generate more revenue to keep the 880-plus acre property alive.
The Turtle Bay Championship is a jewel for both the PGA Champions Tour and the LPGA Tour. The pros love the course, the organizers do a remarkable job conducting the tournament and the North Shore community benefits as well. The Turtle Bay Championship has generated almost $500,000 to North Shore charities. The publicity and exposure that Hawaii derives from a three-day international broadcast is invaluable. However, Turtle Bay, the title sponsor of this event for seven years, is ending its financial investment in the tournament.
Why?
Cash. The hard cash investment tops more than $1.2 million a year. Consequently, Turtle Bay is offering its world-class resort and golf facilities and is seeking a sponsor to assume the title position. When the governor advances the idea the state is desirous in purchasing the Turtle Bay Resort, what signal is that to a potential investor? It’s a signal that there is too much controversy, too much instability and too much uncertainty - all of which are deal breakers to an astute investor.
In the short-term analysis, the governor has rendered the ownership of the Turtle Bay Resort virtually impotent in its ability to survive. I am not sure if this was the intent, but it certainly is a consequence of the most blindsiding policy statement made in recent memory.
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