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The Honolulu Advertiser
Posted on: Wednesday, March 26, 2008

Developer scales down Ilikai renovation plans

By Robbie Dingeman
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

The iconic Ilikai Hotel is showing its age. Some owners of its condos fear renovation will increase maintenance fees.

Ilikai photo

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Local developer Brian Anderson said he is withdrawing plans for a $60 million renovation of the Ilikai Hotel after failing to win the support of owners of other condominiums within the complex.

Anderson said he's disappointed that the company won't be able to proceed with the comprehensive makeover. "If the Ilikai does not go through a major renovation, we will not be able to compete as a hotel," he said.

The Ilikai, with its trademark turquoise accents, was built in 1964 by businessman Chinn Ho as part residential condo, part hotel.

It earned pop-icon status as part of the opening scenes of the long-running TV series "Hawaii Five-0." But in recent decades, the property has been showing its age and some of the problems that come with having a succession of owners with different priorities.

Making changes to the aging property has proven difficult. Anderson and some longtime owners of individual Ilikai condo units have clashed. Some of the owners disagree with his vision for the building and fear their maintenance fees will rise.

"It's a shame. The Ilikai — instead of being the icon of Waikiki that it always was — will now be an eyesore," Anderson said. He said he is going forward with some renovations, but it will be a less ambitious plan centered on the interior of units his company owns rather than a comprehensive overhaul.

By contrast, he pointed to billions of dollars in improvements to nearby properties that include the Hilton Hawaiian Village, the Ala Moana Hotel and others.

In July 2006, Anderson's Anekona Development group spent $218 million for a purchase that included 343 units in the main Y-shaped tower as well as commercial space and the connected Yacht Harbor Tower building, with 360 rooms. The company sold the Yacht Harbor Tower, which included the main pool for the complex, meeting rooms and commercial space to an affiliate of San Diego-based eRealty Cos.

About a third of the 1,009 condominium units in the main tower are operated as hotel rooms. Even after some are sold to investors, they are expected to remain in hotel use.

Anderson said his company now owns about 30 percent of the units and manages an additional 10 percent.

Owners of other units in the Ilikai have gone back and forth with Anderson's company over a variety of issues, including losing access to the main pool. Members of the group have put together an unofficial Web site, www.ilikaiowners.com, that outlines some of their objections.

Hawai'i Kai resident Bob Romo has owned in the Ilikai since 1986 — through three owners — and remains active in the meetings with Anderson.

Romo said the owners have resisted some of Anderson's proposals because they feel he is unwilling to compromise on issues, such as the design of the courtyard lobby. The owners favor a garden approach similar to what is there instead of a proposed water feature and cabanas.

Romo and other owners say they would like to see how much money Anekona invests in the building before giving Anderson broader approval to make additional renovations. He said the building is suffering because Anderson hasn't made any large investments yet.

Anderson said he has revised the package many times and came up with the 39th version of the package after two general meetings and eight coffee hours trying to get input.

"It is impossible for us to start without the whole design and project being approved by the city and our bank," Anderson said. He said that means he can't go forward with renovating the upper four floors first. That's partly because he is seeking approval to do guest check-in on the 22nd floor to minimize congestion in the lobby, but currently building covenants would allow only residential use of that area.

Anderson said he has offered to show details of his $60 million plan that breaks down to $13 million for commercial tenant improvements, $22 million for upper floors, $10 million for lower floor units, and $12 million for common areas, and the balance on a new swimming pool on the roof top to alleviate congestion on the one pool now in use.

Romo said some owners feel Anderson moved too quickly without permits or permission on making changes to common areas, such as putting in picture windows and double doors in the second-floor commercial area.

But Anderson said he now has withdrawn the package and will wait to see what the building's board will do. "Now the board will decide to what extent to make the improvements, and each owner will pay their respective share, he said. Anderson says that "the bickering" has ended his offer to do $12 million in common-area improvements at no cost to the other owners. He said he will renovate the units he owns.

The unofficial Ilikai owners Web site indicates the owners saw little benefit in some of Anderson's proposals including: lanai railing replacement, a renovated porte cochere to replace one installed four years ago, a lobby water feature that they say would "convert our traditional Hawaiian-style courtyard to a Las Vegas-style area with cabanas and a reflecting pool."

To get the common area and exterior changes, Anderson said, he would have needed support of 67 percent of owners but has fallen short of gaining that needed majority. "We're close but we're at a standstill," he said.

He said his supporters now hold five of nine seats on the board of directors, but that is not enough to continue with the original plan.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.