February 2016 E-Mail Update
Here is our 02/11/2016 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website.
Median home prices continue to creep upwards as inventory remains constrained. The median price for single-family homes set a record at $733,500 (8.7% higher than January 2015) and the median price for condos was $374,500 (1.8% lower than January 2015). There are currently 2.6 months of remaining inventory for single-family homes and 2.9 months of remaining inventory for condos (six months or remaining inventory is considered a stable market). Seasonally adjusted demand is trending higher with little new inventory available to satisfy that demand.
A tragic training accident off the North Shore of Oahu claimed the lives of 12 marines when two Sikorsky CH-53 Super Stallions collided during night operations on January 14th. The marines are still conducting salvage operations and have recovered some of the bodies. Our prayers go out to the families and loved ones of the marines who gave the ultimate sacrifice for our freedom.
Virgin America announced that daily flights between Los Angeles and Honolulu will start May and between Los Angeles and Kahului, Maui in June. The airline has received strong demand for its San Francisco to Honolulu flights that started late last year. The announcements have been good news for travelers as the increased competition is resulting in lower fares.
President Obama made local headlines by stalling eastbound H-1 traffic for one hour between Aiea and Pearl City as he enjoyed his last meal at Buzz’s Steakhouse in Kailua and then commuted to Air Force One at Joint Base Pearl Harbor-Hickam. One poor driver had to watch his car burn up after overheating because the Honolulu Fire Department could not get to him. The burned shell of the car remained after traffic cleared.
The National Park Service plans to restore historic chief petty officer bungalows on Ford Island in the middle of Pearl Harbor. The abandoned structures will join the USS Arizona Memorial, the Mighty Mo, the USS Bowfin, and the Pacific Aviation Museum as historic destinations. Pearl Harbor continues to be the #1 tourist destination in Hawaii.
The state legislative session has started and the drama has begun. State senators and congressman can be counted on to share their expertise in matters of all shapes and sizes. A state senator has already grabbed some low hanging fruit by questioning the Department of Land and Natural Resources’ (DLNR) employment practices who hired a DLNR officer accused of sexually assaulting a a female minor while on the job. The DLNR officer in question was an officer for the Honolulu Police Department (HPD) from 2000 until February 2012 when he was fired for transporting a juvenile female runaway without a supervisor’s authorization and then lying during the investigation. DLNR hired the individual even after HPD recommended against hiring the officer in question. Police last week arrested the officer who is charged with two counts of second-degree sexual assault and three counts of fourth-degree sexual assault.
Governor David Ige ran for election promising to restore budget discipline and beat incumbent Governor Neil Abercrombie in a landslide during the Democratic Primary and handily beat Republican candidate Duke Aiona during the election. The governor is now backtracking on that promise and trying to raise taxes and fees to fund ever-larger budgets. The latest proposal is a three cents per gallon tax gas increase to address road repairs even though the state has left federal highway funds sitting on the table. It appears that Governor Ige wants to lock in a tax increase while gas prices are low knowing that a decrease would likely never happen in the future. While many in the legislature voiced disapproval, House Speaker Joe Souki supported the proposal. The proposed gas tax increase was introduced despite the fact the Hawaii’s general tax fund is 9.5% higher than the previous year.
University of Hawaii (UH) President, David Lassner, has presented a request for $16.2 million in budget add-ons, including support for the struggling UH Cancer Center and money losing athletic program, despite pulling back on planned tuition increases for the next two years. The money would be added to the already approved $428 million in general funds over the next two years. Not surprisingly, several legislators are protesting the use of taxpayer funds to fill a hole from UH’s failure to execute the planned tuition increases. One legislator questioned more than 1,600 unauthorized UH positions (posts not funded with tax dollars). UH President Lassner is trying the populist argument of “making tuition affordable.” Maybe Lassner should tap into the knowledge of his business school before proposing future budgets to the legislature.
Plans to build a $50 million center on the University of Hawaii-Manoa campus to honor the late U.S. Senator Daniel K. Inouye have been shelved indefinitely due to criticism of the growing UH repair backlog of $503 million. Some lawmakers have sensibly questioned the pursuit of new building projects when the university has done such a poor job of maintaining its existing facilities.
State lawmakers have warned Governor David Ige’s staff that they will be expected to explain why federal funds are going unspent while the homeless population continues to grow. The Department of Hawaiian Home Lands is coming under heavy criticism for failing to spend $10 million in federal funding while a recent report showed that a significant percentage of homeless families are Native Hawaiians.
The Hawaii no-fun police has joined other states in claiming that daily fantasy sports sites are a form of illegal gambling. Hawaii attorney general, Dough Chin, claims to be saving people from their gambling vice while not acknowledging that the Hawaii to Las Vegas route is one of the most heavily traveled as Hawaii residents continue to flock to the gambling mecca. Several lawmakers have once again, sponsored several bills to legalize gambling in one shape or another.
A recent panel recommended that the state of Hawaii turn over a larger portion of Transient Accomodations Tax (TAT) over to the counties so that the various islands can better support the growing tourism industry. Not surprisingly, the state legislature disagrees with the recommendation since they would rather spend the funds themselves.
Kaiser Permanente Hawaii signed an agreement on January 14th to take over the state-owned hospital system on Maui and Lanai in what will become the first private acquisition of a Hawaii state hospital. Kaiser has pledged to spend $20 million on upgrades over the next five years. State officials hope the deal will save taxpayers $260 million over the next ten years.
A year after much debate over converting one King Street lane into bike lanes, City and County of Honolulu officials have pitched their new plan to the public. The outcry over the King Street bike lane led the Honolulu City Council to consider a bill giving the city council more say over bike lane plans. The bike lane currently sees a whopping 700 cyclists that typically use the bike lane from 6:30 am to 6:30 pm along the heavily congested street (compared to over 1,000 that hike to Lanikai’s pill boxes every day). Tim Kelley regularly drives King Street on a weekly basis and has seen a total of about seven cyclists over the past year. Mayor Kirk Caldwell hopes to increase the number of commuters that are cyclists from the current 1% of commuters to 5% of commuters by adding additional bike lanes. “Welcome to Fantasy Island.” We recently joked about having the Fantasy Island character, Tatoo, hang out on King Street and point out “Da Bike, Da Bike!” when the rare cyclist pedals by.
The head of the City Council’s Committee of Public Works, Infrastructure and Sustainability demanded answers from the Department of Environmental Services after reviewing an audit that showed operating revenues increased 5.5% while expenses increased 18% between 2008 and 2015. The operation generated a net loss of $543 million last year compared to a net income of over $18.8 million in 2008. The audit concluded that taxpayers ended up paying over $1 billion for HPOWER, the city’s waste-to-energy facility, although original contracts were worth $313.7 million. The audit identifies sole-source, cost-plus and time and material contracts as major reasons for the cost over-runs. The good news is that the state considers this waste of taxpayer money “sustainable.” City taxpayers can’t wait to shell out more money once the Honolulu’s Authority for Rapid Transportation’s (HART) rail project to hit full stride. The City Council Budget Authority just authorized a five-year extension of the 0.5% General Excise Tax Surcharge to plug HART’s budget-busting project.
Rail officials announced more great news by stating that property taxes will have to increase 9% just to cover the projected operating hole every year once the over-budget construction project reaches completion. The Honolulu Authority for Rapid Transportation (HART) projects that the operations will be in the red to the tune of about $1 billion every decade. HART officials initial budget plans to have fares cover only about 30% of the cost of operations (similar to The Bus operations).
Interesting Real Estate Factoid: Larry Ellison paid $300 million for 98% of the island of Lanai. The sale included the two hotels, the Four Seasons at Manale Bay and the Four Seasons Resorts Lanai, Lodge at Koele. Tim and Tracey spent four days of their honeymoon at the Lodge at Koele in 1993. Highlights included finger sandwiches at tea-time, croquet, and the kitchen preparing Tim’s epic struggle of a 10-lb. fish that he could have sworn was a record-breaking marlin before it reached the boat.
Hawaii has the third-highest concentration of hotels in the nation that charge resort fees averaging $21.08 per day per a Travelers United study. Travelers United, a nonprofit, has advocated a ban on resort fees since the mandatory charges are not included in advertised room rates on-line. Travelers United found that consumers paid 2.04 billion in mandatory resort fees last year nationwide. Florida has the dubious honor for having the most hotels that charge a resort fee.
Hawaii’s first K-Mart in Hawaii is closing. The Iwilei store made headlines in 1992 when the huge crowds that attended the grand opening prevented trucks from making their deliveries to restock empty shelves. Times have changed.
A team at the Oceanic Institute of Hawaii Pacific University (HPU) has successfully bred a batch of yellow tangs after a decade of trying. The state currently sustains its $2 million aquarium industry by harvesting hundreds of thousands of fish from reefs each year. The yellow tang is one of the most recognized of all Hawaii reef fishes and one of the world’s most popular saltwater aquarium fishes. HPU’s success could be a boon for reef conservation efforts.
Mari’s Garden, one of the nation’s largest aquaponics farms in the nation has removed itself from the electric grid with the help of Wisconsin-based EnSync Energy Systems. The Mililani farm uses 25 kilowatts of photovoltaic (PV) solar panels and a 25-kilowatt battery storage system to power the farm’s pumps. Tim and Tracey should visit the farm to see how it is done. Tim and Tracey set up an aquaponics garden with their daughter Ashley, five years ago. They are great at growing salad greens and tilapia but absolutely terrible at harvesting anything. Tim goes out to the garden every morning to feed the fish. It may be a matter of time when Tim names all the fish, officially making them pets. At this time, there is still a small possibility that the fish may make the dinner table.
The announcement of Alexander & Baldwin, Inc. ceasing operations at the last sugar plantation on Maui has Kauai-based Koloa Rum Company considering a small sugar cane plantation on Kauai that would supply the rum manufacturer with cane juice rather than sugar to make the rum. The crushing of sugar cane into cane juice would eliminate the need for burning sugar cane as part of the harvesting process.
Consolidated Theatres will add luxury amenities offered elsewhere in the country but not currently on Hawaii including oversized recliner seats, reserved seating, and an enhanced food and beverage menu that will include beer and wine. The upgrades to some of the theatres is part of the effort by The Howard Hughes Corp. to create high-end offerings that will cater to residents of its ultra-luxury condos currently under construction.
Fresh off its agreement with the state of Hawaii, City and County of Honolulu, and several community groups, the owners of Turtle Bay Resort are looking for investors for a planned expansion that includes a 452-room hotel, two golf courses, and a spa.
Hawaii’s Ko Olina Resort has invested 30 seconds of promotion time for a 90-day period on a video billboard in New York City’s Times Square valued at $200,000. Tim and Tracey paid $40 for four candy bars and their faces up on a Time Square billboard (see photo below) during their November 2015 visit.