Lanai Being Sold – UPDATE
Updated June 24, 2012
The island of Lanai, owned mostly by Castle & Cooke, is being sold to Lawrence Ellison, co-founder and chief executive officer of Oracle Corporation, one of the world’s leading enterprise software companies. Castle & Cooke (C&C), headed by billionaire David Murdock, owns about 97 percent of the island’s 141 square miles. The transaction is subject to final government approval.
The 89-year-old Murdock has owned the island since 1985, and his company loses up to $40 million a year, according to Forbes. Ellison is the third richest American, with an estimated worth of $36.5 billion.
“Exploring the possibility of new ownership of my Lanai holdings was not a new or an impulsive decision,” said Murdock in a statement. “Paramount to this process was to ensure that the new owner would have the right enthusiasm, commitment and respect for the island and its people, and be a positive part of the island community…. I believe… Ellison will bring a new and fresh perspective to the island and its people.”
The future of a proposed wind farm on the island is uncertain. Murdock said in a statement he will retain the rights to develop a potential wind farm on the remote northwestern part of Lanai.
Representatives of Ellison reportedly communicated to Sen. Kalani English that Ellison has no plans to pursue the large-scale wind farm, which would transfer power to Oahu via undersea cable, according to the Associated Press.
“It’s interesting Mr. Murdock needed to divest himself of Lanai because it was a financial drain, but he has specifically kept the rights to develop Big Wind on Lanai,” said Molokai resident Cheryl Corbiell who opposes the state’s Big Wind initiative. “That tells me that wind developers know wind projects in Hawaii are cash cows.”
Sale Assets and Transfers
Lanai is believed to be the largest privately held island in the U.S., according to C&C. Assets include The Four Season Resorts Lanai, Lodge at Ko`ele and The Four Seasons Resorts Lanai at Manele Bay, two championship golf courses, luxury residential development, commercial and land management operations and La Ola, one of the largest utility-scale photovoltaic solar farms in the state.
The asking price for the island was reportedly between $500 million and $600 million, according to The Maui News.
C&C is also seeking to include its three subsidiary utility companies in the transfer. C&C filed an application for the transfer of the utilities with the Public Utilities Commission (PUC) last week.
“[C&C] submits this application as part of an extraordinary opportunity for the
people and Island of Lanai to bring in new investment to the island… that should result in the creation of new jobs, provide local economic stimulus and reinvigorate the local tourism industry,” states the filing.
The company requested that the PUC make an interim decision on the utility transfer by Tuesday, June 26, a time frame PUC Chief of Policy and Research Josh Strickler called “expedited… and somewhat unusual.” He said he could not say whether the commission would make a decision by that date, but said the issue is “definitely being given the weight that it deserves.”
“It’s a pretty ongoing topic of conversation at the Commission… it’s being examined pretty closely,” he said. Considerations include a determination whether the buyer is “fit, willing and able to take over and run the utilities,” a case the application made strongly based on Ellison’s financial assets.
Henry Curtis, executive director of nonprofit public interest group Life of the Land, called the request for an expedited decision just another example of how “Castle & Cooke has proven disrespect for laws.”
“The public has 20 days to file a Motion to Intervene,” said Curtis in a statement. “Castle & Cooke should not be permitted to bypass the public review process.”
Strickler said the PUC has granted expedited interim decisions in the past, and stressed that if such a decision were made, it would not prevent public input on the case.
“We’re not cutting off intervention,” he said, adding that process can still take place before a final decision is made in the future.
Molokai Dispatch Facebook and website users suggested the state should buy back the land instead of allowing it to continue being privately owned, and they are not alone in that idea. According to the Civil Beat, state Senate President Shan Tsutsui sent a letter to Gov. Abercrombie urging him to block the deal by purchasing the land.
“The continued private ownership of Lanai may prove detrimental to the people of Lanai,” stated Tsutsui. “The island could become a major asset to the State and, if managed properly, could be utilized to promote significant state initiatives, including diversified agriculture or cultivating renewable energy resources.”
The governor, however, stated his support of Ellison in a statement last week.
“It is my understanding that Mr. Ellison has had a long standing interest in Lanai. His passion for nature, particularly the ocean is well known specifically in the realm of America’s Cup sailing. He is also a businessman whose record of community involvement in medical research and education causes is equally notable.”
Sen. English offered words of support to the approximately 3,000 residents of the island.
“To the people of Lanai, this transfer of ownership is much more than a business transaction,” he said. “It is the livelihood of a community and of an island. As such it remains imperative that cultural and conservational values be maintained.”
Robin Kaye, a Lanai resident and president of Friends of Lanai, an organization opposed to Big Wind, said he’s optimistic Ellison will be a good steward, according to Civil Beat. But he added that it’s “absolutely medieval to have one man own an island with 3,000 people on it,” noting an imbalance of power created by C&C’s monopoly.
Lanai employees of C&C have already received letters informing them of the sale, and that they will be retained by Ellison, according to the Associated Press.
The two percent of land not part of the transfer is owned by state, county and private residents.
Murdock said he will continue to be a homeowner on Lanai and a member of the community.