The buying of land is the main shopping choice for billionaires--we all know that. So of course the big news this past week in Hawai'i is Oracle head Larry Ellison's purchase of Lanai, the state's 6th largest island. And it's not one of those little islands in the Caribbean that some A-list actors can afford to buy out--we're talking about a bit of land on a much larger scale. Ellison, one of the wealthiest men on the planet with a fervent passion for Asian culture, bought 98% of the island from another older, slightly less-wealthy American.
Hawaiian residents are both excited and anxious for this transition. As we all wonder if Lanai will become the next travel destination for well-heeled geeks, one Lanai resident wrote a candid open letter on behalf of the islands locals to the new "Mr. Lanai":
Welcome to the neighborhood — and your new home! Or one of them anyway.
The press keeps saying you already have one here, but I can’t find it and I’m pretty good at searching Maui County’s Property Tax website. Funny, they can find out your company owes $300,000 in back taxes to Hawaii, but we can’t find your house on Lanai?
But then the press got so much wrong over the past few days, I thought I would write a little note and straighten out a few things.
First, don’t be intimidated by all the angst over how it could even be possible for a single really, really rich guy to buy an entire island in the state of Hawaii, United States of America, from another rich guy, in this day and age.
You have to understand that since the 1850’s and Walter Murray Gibson and all those Mormons, this island has been owned and exploited by one really rich guy or another. There are generations here who don’t know any other way to live but under some sort of feudal-serf system. I know this is bizarre, that such a medieval lord-of-the-manor system of control could still be functioning in the Land of the Free, but there you have it. Of course the ILWU has been really helpful here, they’ve been terrific at scaring the hotel workers (the old timers tell me they are mostly recently arrived immigrants these days, but I’ll let the union work that out with you) into thinking the sky will fall any moment if the latest rich guy doesn’t get what he wants.
And don’t be fooled by all the kumbaya over the departure of your predecessor-in-interest, Uncle David. I have to disagree with all the what-a-wonderful-guy-he’s-been from Mayor Arakawa and all, since in many ways Murdock’s legacy is a lot more about what he didn’t do. Lessons to be learned here, Larry, so listen up.
Let’s start with all the press falling for Murdock’s whining about losing all that cash on Lanai operations? This is very old news, Larry. He’s actually been publicly telling us for years now that he has lost SO much money on Lanai that he would be selling us off if we did not settle down, be quiet, and let him build his turbines so he could FINALLY make some money. This chatter about “losing money” (the press never asks for verification) is nonsense: within a month of buying out Castle and Cooke shareholders in 2000 (the island was valued at $160 million back then, hotels and all) Murdock loaded the island with debt, to the tune of $300 million. This is a pretty nifty 30-day profit, don’t you think?
And because we know that the debt (money borrowed and spent elsewhere, for which Lanai is collateral) grew to $600 million in 2007, you can understand why so many of us have remained pretty skeptical about all this grumbling and complaining. Come to think of it, isn’t $600 million just about what the press is saying you are going to pay for us? Maybe they got that wrong as well ...
But back to take-aways:
Murdock’s lust to make money on luxury hotels/resort development has been pretty much a bust. In part this is because his timing was really, really bad, and in part because we have very little water on Lanai. I’m sure your due diligence uncovered that little factoid, yes? That Lanai is one of the least-endowed when it comes to water resources? We (who live here, this being our only home) don’t view this as a negative, it’s simply a limitation on uncontrolled growth, which we see as a good thing. Hope you do, too.
The importation of a lot of off-island labor to build the hotels briefly turned your new home into the methamphetamine “Ice Capital” of the world back in the late 1980s early ‘90s. All those single guys in tent cities! Nothing to do! Many here think the social repercussions are still evident in broken marriages, increased DV incidents, and tolerated Ice use to this day; our dirty little secret. Can we please not go there again?
One really good thing Murdock did was to start a lot of sustainable practices, macadamia nut, coffee, alfalfa, poultry growing, etc., all in an effort to make the island self-sufficient. Unfortunately the ROI wasn’t quick enough for his LA corporate types, and they pulled the plug(s). According to a recent study by Yale graduate students, today we import over 90 percent of our goods. So can you pass this note onto your people, Lar? Patience in everything?
Murdock was spectacularly successful in one area: he has almost completely dismantled any semblance of a middle class. Back in the plantation days (I admit, I am old enough to be pre-hotels) the community pretty much worked and lived in harmony: hard work, picking pine, but you could move up from the fields to Dole Administration, if you were of a mind to, and layoffs were pretty much unheard of. If the crops weren’t ripe, workers cleaned out the culverts, knocked down the kiawe, planted trees on Lanaihale. Now that our only focus is servicing our wealthy guests, no one has time for maintenance work, so our reefs are dying and strawberry guava is killing the watershed. And most of our children now find it impossible to stay.
You need to know that Uncle David was all about control: just ask the business owners who have tried for decades to purchase the buildings they are required to pay property taxes on, make capital improvements on, but cannot own. Think maybe you could consider letting go, Larry?
Finally, Larry, I have to tell you the State of Hawaii does not own the remaining 2 percent of Lanai that you don’t (or won’t) own, no matter how many times the press says it does. We do. That would be the over 1,000 private landowners, many of whom are just now succeeding to their grandparents’ and parents’ interests in the many solid, well-built (by master craftsman Kikuichi Honda in the 1920’s and 1930’s) plantation homes scattered about town. They are paradigms of perfect siting, construction, and natural use of sun and wind. I’ve read that you care about such things, Larry, so I’m hoping you visit some of the old places and see for yourself.
There’s more, but I know you have a lot on your plate right now, what with the unexplained need to transfer our utilities over to you in less than a week. Not sure what’s up with that (since some parties have been waiting months to hear from the PUC on various matters), but one other thing the press reported inaccurately: Lanai’s privately owned water system, not Maui County, feeds us all - not just the hotels. I’m sure you know that as a matter of state law you can’t own the water, right? Just the delivery system? I see you told the Consumer Advocate you will put $10 million into the water system over the next five years. I know this is a pittance of what is really needed, but did you give them a check to put into escrow? Uncle David made a lot of these sorts of promises that he didn’t keep. But we can talk about that another time.
Any questions? Give me a call, love to chat ...