Helpful General Information on Fee Simple vs Leasehold Ownership
Fee Simple vs Leasehold Ownership
Most people only know of one type of real estate ownership; fee simple, also known as freehold. Hawaii and a few other states have another form of ownership known as leasehold. The difference in these two types of land tenure is very different and affects the value of the real estate. It is important to know the difference, especially if you’re buying real estate in a leasehold state.
FEE SIMPLE: Fee simple ownership is probably the most familiar form of ownership to buyers of residential real estate. A fee simple buyer is given title to the property, which includes the land and any improvements to the land in perpetuity. In the case of a condominium the purchaser would own a pro-rata share of the land. Aside from a few exceptions, no one can legally take that real estate from an owner with fee simple title. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes–sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death.
LEASEHOLD: A leasehold interest is created when a fee simple land-owner (Lessor) enters into an agreement or contract called a ground lease with a person or entity (Lessee). A Lessee rents the land from the Lessor for the rights of use and enjoyment of the land much as one buys fee simple rights; however, the leasehold interest differs from the fee simple interest in several important respects. First, the buyer of leasehold real estate does not own the land; they only have a right to use the land for a pre-determined amount of time. Second, if leasehold real estate is transfered to a new owner, use of the land is limited to the remaining years covered by the original lease. At the end of the pre-determined period, the land may legally revert back to the Lessor, and is called reversion. At the end of the lease term many lessors and lessees have agreed on either a new lease or the Lessor may agree to sell the land to the Lessee. In the case of a condominium Depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.
Monday, August 1, 2011
Friday, July 29, 2011
FREE Homebuyer Seminar
Date: Saturday, August 6, 2011
Time: 9:00am – 10:00am
Location: Good Shepherd Church Parish Hall, Wailuku
(Below McDonald’s at 2140 Main Street)
RSVP: by August 5, 2011 to Na Hale O Maui
(808)244-6110
Email: Info@nahaleomaui.org
Time: 9:00am – 10:00am
Location: Good Shepherd Church Parish Hall, Wailuku
(Below McDonald’s at 2140 Main Street)
RSVP: by August 5, 2011 to Na Hale O Maui
(808)244-6110
Email: Info@nahaleomaui.org
Wednesday, July 27, 2011
Maui Continues To Enjoy Increased Tourism As 607,264 Tourists Visited The State In June ~ Tourist Spending Remains Strong
Tourist arrivals down 2.9% in June, but spending increased
By Alan Yonan Jr.
Article from: Star-Advertiser
The number of visitors traveling to Hawaii declined in June for the first time in nearly two years amid rising airfares, but visitor spending continued to rise at a near-record pace, the Hawaii Tourism Authority reported Tuesday.
The 607,264 tourists who came to the state in June represented a 2.9 percent decline from June 2010, HTA said. It was the first drop since November 2009 when arrivals fell by 1.8 percent. Visitor spending totaled $1.04 billion in June, $120 million more than the same month a year earlier.
At the current pace, spending is on track to hit $12.6 billion this year, just shy of the record $12.8 billion visitors pumped ino the Hawaii economy in 2007, said Mike McCartney, HTA president and chief executive officer. HTA also is projecting visitor arrivals to reach 7.3 million in 2011, which would be the fourth highest on record.
MONEY TALKS
The monthly visitor expenditures of visitors to Hawaii and the percentage change from the year-ago period.
2011
MONTH SPENT CHANGE
June $1.04B +13.1%
May $912.3M +5.9%
April $920.7M +20.2%
March $980.7M +11.8%
February $1.01B +18.7%
January $1.18B +19.8%
Total $6.04B +18.4%
2010
MONTH SPENT CHANGE
December $1.11B +17.9%
November $976.0M +30.4%
October $961.5M +24.7%
September $880.2M +22.2%
August $1.08B +30.0%
July $1.11B +23.3%
June $948.9M +16.1%
May $861.4M +15.9%
April $765.8M -0.7%
March $877.3M +12.0%
February $853.5M +0.8%
January $985.8M +4.1%
Total $11.4B +16.2%
Source: Hawaii Tourism Authority
Business is brisk at many Hawaii enterprises that cater to tourists. Thomas Kafsack, who owns Surfing Goat Dairy on Maui with his wife, Eva Maria, said sales at the popular tourist attraction were up 41 percent in June from the same month last year.
“The last two years have been pretty good, but things really took off this year when we added goat cheese truffles to our selection. People have been buying them like crazy in our shop and on the Internet,” Kafsack said.
He also said several companies that are hosting APEC-related events on Maui have booked Surfing Goat Dairy to provide food for their events this fall.
Maui was the only major island with an increase in visitors in June, with arrivals rising by 2.2 percent. June arrivals were down 6.3 percent on Hawaii island, 4.5 percent on Oahu and 0.4 percent on Kauai.
June’s statewide decline in tourist arrivals followed a meager 0.6 percent increase in May, both months in which airfares from the mainland to Hawaii were up by double digits over year-earlier levels. Airfares were 27 percent higher in June and 17 percent higher in May, according to HTA. Another factor that could be suppressing arrivals is rising hotel room rates.
The average daily room rate in Hawaii rose 10 percent to $175.92 in May and is expected to increase again in June.
Arrivals from all major tourist markets declined in June, except for Canada. The biggest drop was from Japan, which is still recovering from an earthquake, tsunami and nuclear plant breach in March. The 84,950 visitors who traveled to Hawaii from Japan in June was about 16,000 fewer than in June 2010. Through the first six months of the year, arrivals from Japan are down 9 percent from the same period in 2010.
Cliff Tai, who owns Hawaii Beach Bums luggage and surfboard storage in Honolulu, said his business picked up when several airlines added flights to Hawaii this spring.
Tai said he still has not fully recovered from the closing of Aloha and ATA airlines in 2008 and the subsequent downturn in tourism. Hawaii Beach Bums relies on tourists for its luggage storage business, while many of its surfboard storage customers are pilots and flight attendants who want to get in a quick surfing session during a layover in Honolulu, he said.
“I’m glad to see that Alaska Airlines is adding a flight from San Diego this fall. I’d like to see more direct flights from the mainland,” Tai said.
By Alan Yonan Jr.
Article from: Star-Advertiser
The number of visitors traveling to Hawaii declined in June for the first time in nearly two years amid rising airfares, but visitor spending continued to rise at a near-record pace, the Hawaii Tourism Authority reported Tuesday.
The 607,264 tourists who came to the state in June represented a 2.9 percent decline from June 2010, HTA said. It was the first drop since November 2009 when arrivals fell by 1.8 percent. Visitor spending totaled $1.04 billion in June, $120 million more than the same month a year earlier.
At the current pace, spending is on track to hit $12.6 billion this year, just shy of the record $12.8 billion visitors pumped ino the Hawaii economy in 2007, said Mike McCartney, HTA president and chief executive officer. HTA also is projecting visitor arrivals to reach 7.3 million in 2011, which would be the fourth highest on record.
MONEY TALKS
The monthly visitor expenditures of visitors to Hawaii and the percentage change from the year-ago period.
2011
MONTH SPENT CHANGE
June $1.04B +13.1%
May $912.3M +5.9%
April $920.7M +20.2%
March $980.7M +11.8%
February $1.01B +18.7%
January $1.18B +19.8%
Total $6.04B +18.4%
2010
MONTH SPENT CHANGE
December $1.11B +17.9%
November $976.0M +30.4%
October $961.5M +24.7%
September $880.2M +22.2%
August $1.08B +30.0%
July $1.11B +23.3%
June $948.9M +16.1%
May $861.4M +15.9%
April $765.8M -0.7%
March $877.3M +12.0%
February $853.5M +0.8%
January $985.8M +4.1%
Total $11.4B +16.2%
Source: Hawaii Tourism Authority
Business is brisk at many Hawaii enterprises that cater to tourists. Thomas Kafsack, who owns Surfing Goat Dairy on Maui with his wife, Eva Maria, said sales at the popular tourist attraction were up 41 percent in June from the same month last year.
“The last two years have been pretty good, but things really took off this year when we added goat cheese truffles to our selection. People have been buying them like crazy in our shop and on the Internet,” Kafsack said.
He also said several companies that are hosting APEC-related events on Maui have booked Surfing Goat Dairy to provide food for their events this fall.
Maui was the only major island with an increase in visitors in June, with arrivals rising by 2.2 percent. June arrivals were down 6.3 percent on Hawaii island, 4.5 percent on Oahu and 0.4 percent on Kauai.
June’s statewide decline in tourist arrivals followed a meager 0.6 percent increase in May, both months in which airfares from the mainland to Hawaii were up by double digits over year-earlier levels. Airfares were 27 percent higher in June and 17 percent higher in May, according to HTA. Another factor that could be suppressing arrivals is rising hotel room rates.
The average daily room rate in Hawaii rose 10 percent to $175.92 in May and is expected to increase again in June.
Arrivals from all major tourist markets declined in June, except for Canada. The biggest drop was from Japan, which is still recovering from an earthquake, tsunami and nuclear plant breach in March. The 84,950 visitors who traveled to Hawaii from Japan in June was about 16,000 fewer than in June 2010. Through the first six months of the year, arrivals from Japan are down 9 percent from the same period in 2010.
Cliff Tai, who owns Hawaii Beach Bums luggage and surfboard storage in Honolulu, said his business picked up when several airlines added flights to Hawaii this spring.
Tai said he still has not fully recovered from the closing of Aloha and ATA airlines in 2008 and the subsequent downturn in tourism. Hawaii Beach Bums relies on tourists for its luggage storage business, while many of its surfboard storage customers are pilots and flight attendants who want to get in a quick surfing session during a layover in Honolulu, he said.
“I’m glad to see that Alaska Airlines is adding a flight from San Diego this fall. I’d like to see more direct flights from the mainland,” Tai said.
Tuesday, July 26, 2011
A Great Article On Real Estate Myths And The Importance of Knowing Local Real Estate Trends Not Nationwide
Don’t fall for real-estate myths in this market
You’re not going to get 50% off the asking price on a home, and the good houses in the good neighborhoods go fast.
Posted by Teresa at MSN Real Estate
Article from: RealEstate.MSN.Com
It’s easy to think that because we’re in a buyers market, buyers can call all the shots: Wait weeks before deciding whether to make an offer on a particular house, find grateful acceptance of lowball offers or scoop up homes for 50% of the asking price.
Your worst real-estate enemy? You
Good luck with that. Clinging to those and other popular myths may keep you from getting the house you want.
I’m always amused to see how unrealistic some of the would-be buyers are on the TV house-hunting shows. But when I was 25, I knew everything, too — even if I didn’t realize my life would never be complete without granite countertops and stainless-steel appliances.
Syndicated columnist Lew Sichelman had a column in last weekend’s Los Angeles Times about some of the real-estate myths that can keep buyers from getting the homes they want.
“… many people believe they can make any bid they want, no matter how ridiculous, because it’s a buyers market. False,” he wrote. “Even foreclosures and short sales are never priced at half their value ‘or anything even close to that type of fire-sale discount,’ says Christina Rordam of Exit Real Estate Results in Longwood, Fla.”
Is the buyers market a mirage?
No one can predict how a particular seller will respond to an offer, whether the seller is an individual or a bank. If the seller doesn’t like you, you run the risk that he will refuse to deal with you.
Here are some other myths that could doom your purchase:
If the house has been on the market a long time, the seller will take a low offer. Wrong. The house could be on the market a long time because the seller not only won’t take a low offer but also won’t take a reasonable offer.
A distressed property is always cheaper. Maybe it is and maybe it isn’t. Lenders aren’t always logical in their negotiations, so you may get as good a deal or better from a realistic homeowner.
If you look long enough, you’ll find your perfect house. Afraid not. The perfect house doesn’t exist, at least not in your price range. And that’s true no matter what your price range.
Your family and friends will give you good advice about real estate. They’ll give you advice, all right. But it is unlikely to be as good as the advice you’ll get from a professional.
We’ll offer one more piece of advice: All real estate is local. Very local.
Don’t fall victim to a lying seller
That means that while it may be a buyers market nationwide, or even in your city, it could easily be a sellers market in your first-choice neighborhood. Do your homework.
Look at houses for sale in your desired neighborhood
If you’re thinking of buying a home, we suggest you dig into the articles in in the homebuyer’s section of MSN Real Estate. That should save you from a few misconceptions and a lot of wasted time.
**Thank you to Teresa at MSN Real Estate for this important insight on knowing your local real estate market and consulting a real estate professional. If you have questions about a particular property or a particular area please call The Hansen Ohana directly at (808)879-3667**
You’re not going to get 50% off the asking price on a home, and the good houses in the good neighborhoods go fast.
Posted by Teresa at MSN Real Estate
Article from: RealEstate.MSN.Com
It’s easy to think that because we’re in a buyers market, buyers can call all the shots: Wait weeks before deciding whether to make an offer on a particular house, find grateful acceptance of lowball offers or scoop up homes for 50% of the asking price.
Your worst real-estate enemy? You
Good luck with that. Clinging to those and other popular myths may keep you from getting the house you want.
I’m always amused to see how unrealistic some of the would-be buyers are on the TV house-hunting shows. But when I was 25, I knew everything, too — even if I didn’t realize my life would never be complete without granite countertops and stainless-steel appliances.
Syndicated columnist Lew Sichelman had a column in last weekend’s Los Angeles Times about some of the real-estate myths that can keep buyers from getting the homes they want.
“… many people believe they can make any bid they want, no matter how ridiculous, because it’s a buyers market. False,” he wrote. “Even foreclosures and short sales are never priced at half their value ‘or anything even close to that type of fire-sale discount,’ says Christina Rordam of Exit Real Estate Results in Longwood, Fla.”
Is the buyers market a mirage?
No one can predict how a particular seller will respond to an offer, whether the seller is an individual or a bank. If the seller doesn’t like you, you run the risk that he will refuse to deal with you.
Here are some other myths that could doom your purchase:
If the house has been on the market a long time, the seller will take a low offer. Wrong. The house could be on the market a long time because the seller not only won’t take a low offer but also won’t take a reasonable offer.
A distressed property is always cheaper. Maybe it is and maybe it isn’t. Lenders aren’t always logical in their negotiations, so you may get as good a deal or better from a realistic homeowner.
If you look long enough, you’ll find your perfect house. Afraid not. The perfect house doesn’t exist, at least not in your price range. And that’s true no matter what your price range.
Your family and friends will give you good advice about real estate. They’ll give you advice, all right. But it is unlikely to be as good as the advice you’ll get from a professional.
We’ll offer one more piece of advice: All real estate is local. Very local.
Don’t fall victim to a lying seller
That means that while it may be a buyers market nationwide, or even in your city, it could easily be a sellers market in your first-choice neighborhood. Do your homework.
Look at houses for sale in your desired neighborhood
If you’re thinking of buying a home, we suggest you dig into the articles in in the homebuyer’s section of MSN Real Estate. That should save you from a few misconceptions and a lot of wasted time.
**Thank you to Teresa at MSN Real Estate for this important insight on knowing your local real estate market and consulting a real estate professional. If you have questions about a particular property or a particular area please call The Hansen Ohana directly at (808)879-3667**
Monday, July 25, 2011
First Hawaiian Bank Deposits Hit Record High ~ CEO Notes Improving Hawaii Economy
First Hawaiian deposits hit record high
By Dave Segal
Article from: Star-Advertiser
First Hawaiian Bank, the state’s largest bank in terms of assets, posted flat second-quarter earnings compared with a year ago but saw deposits jump 11.6 percent to a record $11.7 billion.
The bank, which released its earnings today, said net income slipped 0.4 percent to $54.5 million from $54.7 million in the year-earlier quarter. Deposits, though, increased from $10.8 billion in the first quarter and $10.5 billion in the second quarter of 2010.
“The deposit growth is reflective of both an increase in market share and also a wait-and-see attitude by our customers,” First Hawaiian Chairman and CEO Don Horner said. “The economy is improving, but our businesses are choosing to pay down debt and build cash reserves.”
Still, Horner said that despite weakness in the construction sector and sluggishness in employer hiring, the tourism and retail sectors are “producing positive trends which reflect improvement in consumer confidence.”
Last week, First Hawaiian, the state’s largest local credit and debit card processor of merchant services, said card sales at businesses open at least a year rose 8 percent over the same period a year ago and followed first-quarter growth of 10.7 percent.
“First Hawaiian remains committed and well positioned to supporting our customers, especially during these challenged economic times.”
The bank said total assets rose 0.3 percent to $14.8 billion last quarter from $14.7 billion a year ago but fell from $15.2 billion at the end of the first quarter. Loans and leases increased 2.2 percent to $8.2 billion from $8.1 billion a year ago but remained even with the first quarter of this year.
Nonperforming assets remained one of the strongest in the U.S. at 0.2 percent of total assets, the same level as a year ago.
“The bank’s strong credit quality has been consistent through the economic cycle,” Horner said. “In many ways the bank is old-fashioned because we look to our customers’ strength and character rather than the strength of their credit score. That credit philosophy has served us well.”
Horner said a challenge for the bank going forward is the lack of growth in its loan portfolio because of a decrease in demand.
“Given our strong deposit growth, the bank has substantial liquidity to lend,” he said.
First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, is not required to separately report its earnings, but does so voluntarily each quarter.
The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.
By Dave Segal
Article from: Star-Advertiser
First Hawaiian Bank, the state’s largest bank in terms of assets, posted flat second-quarter earnings compared with a year ago but saw deposits jump 11.6 percent to a record $11.7 billion.
The bank, which released its earnings today, said net income slipped 0.4 percent to $54.5 million from $54.7 million in the year-earlier quarter. Deposits, though, increased from $10.8 billion in the first quarter and $10.5 billion in the second quarter of 2010.
“The deposit growth is reflective of both an increase in market share and also a wait-and-see attitude by our customers,” First Hawaiian Chairman and CEO Don Horner said. “The economy is improving, but our businesses are choosing to pay down debt and build cash reserves.”
Still, Horner said that despite weakness in the construction sector and sluggishness in employer hiring, the tourism and retail sectors are “producing positive trends which reflect improvement in consumer confidence.”
Last week, First Hawaiian, the state’s largest local credit and debit card processor of merchant services, said card sales at businesses open at least a year rose 8 percent over the same period a year ago and followed first-quarter growth of 10.7 percent.
“First Hawaiian remains committed and well positioned to supporting our customers, especially during these challenged economic times.”
The bank said total assets rose 0.3 percent to $14.8 billion last quarter from $14.7 billion a year ago but fell from $15.2 billion at the end of the first quarter. Loans and leases increased 2.2 percent to $8.2 billion from $8.1 billion a year ago but remained even with the first quarter of this year.
Nonperforming assets remained one of the strongest in the U.S. at 0.2 percent of total assets, the same level as a year ago.
“The bank’s strong credit quality has been consistent through the economic cycle,” Horner said. “In many ways the bank is old-fashioned because we look to our customers’ strength and character rather than the strength of their credit score. That credit philosophy has served us well.”
Horner said a challenge for the bank going forward is the lack of growth in its loan portfolio because of a decrease in demand.
“Given our strong deposit growth, the bank has substantial liquidity to lend,” he said.
First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, is not required to separately report its earnings, but does so voluntarily each quarter.
The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.
Friday, July 22, 2011
First Hawaiian Bank Deposits Hit Record High ~ CEO Notes Improving Hawaii Economy
First Hawaiian deposits hit record high
By Dave Segal
Article from: Star-Advertiser
First Hawaiian Bank, the state’s largest bank in terms of assets, posted flat second-quarter earnings compared with a year ago but saw deposits jump 11.6 percent to a record $11.7 billion.
The bank, which released its earnings today, said net income slipped 0.4 percent to $54.5 million from $54.7 million in the year-earlier quarter. Deposits, though, increased from $10.8 billion in the first quarter and $10.5 billion in the second quarter of 2010.
“The deposit growth is reflective of both an increase in market share and also a wait-and-see attitude by our customers,” First Hawaiian Chairman and CEO Don Horner said. “The economy is improving, but our businesses are choosing to pay down debt and build cash reserves.”
Still, Horner said that despite weakness in the construction sector and sluggishness in employer hiring, the tourism and retail sectors are “producing positive trends which reflect improvement in consumer confidence.”
Last week, First Hawaiian, the state’s largest local credit and debit card processor of merchant services, said card sales at businesses open at least a year rose 8 percent over the same period a year ago and followed first-quarter growth of 10.7 percent.
“First Hawaiian remains committed and well positioned to supporting our customers, especially during these challenged economic times.”
The bank said total assets rose 0.3 percent to $14.8 billion last quarter from $14.7 billion a year ago but fell from $15.2 billion at the end of the first quarter. Loans and leases increased 2.2 percent to $8.2 billion from $8.1 billion a year ago but remained even with the first quarter of this year.
Nonperforming assets remained one of the strongest in the U.S. at 0.2 percent of total assets, the same level as a year ago.
“The bank’s strong credit quality has been consistent through the economic cycle,” Horner said. “In many ways the bank is old-fashioned because we look to our customers’ strength and character rather than the strength of their credit score. That credit philosophy has served us well.”
Horner said a challenge for the bank going forward is the lack of growth in its loan portfolio because of a decrease in demand.
“Given our strong deposit growth, the bank has substantial liquidity to lend,” he said.
First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, is not required to separately report its earnings, but does so voluntarily each quarter.
The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.
By Dave Segal
Article from: Star-Advertiser
First Hawaiian Bank, the state’s largest bank in terms of assets, posted flat second-quarter earnings compared with a year ago but saw deposits jump 11.6 percent to a record $11.7 billion.
The bank, which released its earnings today, said net income slipped 0.4 percent to $54.5 million from $54.7 million in the year-earlier quarter. Deposits, though, increased from $10.8 billion in the first quarter and $10.5 billion in the second quarter of 2010.
“The deposit growth is reflective of both an increase in market share and also a wait-and-see attitude by our customers,” First Hawaiian Chairman and CEO Don Horner said. “The economy is improving, but our businesses are choosing to pay down debt and build cash reserves.”
Still, Horner said that despite weakness in the construction sector and sluggishness in employer hiring, the tourism and retail sectors are “producing positive trends which reflect improvement in consumer confidence.”
Last week, First Hawaiian, the state’s largest local credit and debit card processor of merchant services, said card sales at businesses open at least a year rose 8 percent over the same period a year ago and followed first-quarter growth of 10.7 percent.
“First Hawaiian remains committed and well positioned to supporting our customers, especially during these challenged economic times.”
The bank said total assets rose 0.3 percent to $14.8 billion last quarter from $14.7 billion a year ago but fell from $15.2 billion at the end of the first quarter. Loans and leases increased 2.2 percent to $8.2 billion from $8.1 billion a year ago but remained even with the first quarter of this year.
Nonperforming assets remained one of the strongest in the U.S. at 0.2 percent of total assets, the same level as a year ago.
“The bank’s strong credit quality has been consistent through the economic cycle,” Horner said. “In many ways the bank is old-fashioned because we look to our customers’ strength and character rather than the strength of their credit score. That credit philosophy has served us well.”
Horner said a challenge for the bank going forward is the lack of growth in its loan portfolio because of a decrease in demand.
“Given our strong deposit growth, the bank has substantial liquidity to lend,” he said.
First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, is not required to separately report its earnings, but does so voluntarily each quarter.
The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.
Wednesday, July 20, 2011
Interesting Developments For Company Looking To Buy Hawaii’s Main Electric Utility And Move It Away From Fossil Fuel
Heavy hitters join board to gird for HEI bid
Ex-officials of the CIA and federal Energy Department ante up as the $35 billion plan gains momentum
By Andrew Gomes
Article from: Star-Advertiser
A $35 billion plan to buy Hawaii’s main electric utility and quickly get it off fossil fuel while reducing rates for consumers was greeted with heavy skepticism in January when the ambitious endeavor was made public.
Some dismissed the initiative by an entrepreneurial Minnesotan who moved to Hawaii last year as unrealistic or, worse, a joke. Others lauded the idea but figured it was financially impossible and wouldn’t gain traction.
But since then the venture named Ku‘oko‘a Inc. has attracted several leaders with powerful connections, including a past chief of the Central Intelligency Agency and a former deputy secretary of the federal Department of Energy.
T.J. Glauthier, the Energy Department’s No. 2 official from 1999 to 2001, and R. James Woolsey, CIA director from 1993 to 1995, have joined Ku‘oko‘a as investors and board members.
Rob Robinson, a Hawaii venture capitalist and professor of entrepreneurship and e-business at the University of Hawaii, is another investor taking a seat on the board recently.
And Rick Blangiardi, general manager of local TV broadcaster Hawaii News Now, agreed to serve as Ku‘oko‘a’s board vice chairman.
In all, Ku‘oko‘a has eight board members, and the addition of one or two more is being considered.
The company’s goal is to buy Hawaiian Electric Industries Inc., which provides power to about 95 percent of the state’s population, and shift it completely from its current dependence on imported oil to alternative energy sources within 10 years.
Of the eight board members, seven aren’t involved in running Ku‘oko‘a as employees or executive officers. But they all have invested money in the startup, giving them a financial stake in realizing the plan, according to Alan Tang, Ku‘oko‘a’s chief strategy officer and the owner of local marketing firm Olomana Marketing.
“They are committed to the vision,” Tang said.
Individual investments weren’t disclosed, but Tang said the total amount is roughly a “few hundred thousand dollars.” Some local business leaders said Ku‘oko‘a’s founder sought $20,000 investments with offers for a seat on the board.
Investments tied to board positions are common for startup companies trying to raise seed capital, according to corporate governance experts. Such board members differ from independent directors, who typically provide guidance to well-established companies and are paid for attending meetings.
Glauthier, who is involved in the private-sector energy industry and was on the 2008 transition team helping Barack Obama assume the presidency, said he examined Ku‘oko‘a closely.
“I looked at it hard before agreeing to sign on,” he said. ”I believe it’s feasible.”
Woolsey, whose introduction to Ku‘oko‘a was made by Glauthier, said he has high regard for Glauthier’s judgment of people and technology. Woolsey is also a founding member of an organization dedicated to freeing the United States from its dependence on oil for fuel, and views Hawaii as an opportunity to demonstrate that independence from oil can be achieved.
“It’s a very interesting opportunity,” Woolsey said of Ku‘oko‘a, which is the Hawaiian word for freedom or independence. “It seems to me it’s really worth a try.”
Ku‘oko‘a’s vision is to tap a variety of renewable energy sources to replace oil as Hawaii’s main source for electricity. The backbone of the plan is to derive most electricity from geothermal energy on Hawaii island and Maui for delivery to Oahu and other islands via undersea cables.
Geothermal power is proven and has the benefit of not being an intermittent source of energy like the sun and wind. An existing geothermal plant on Hawaii island, Puna Geothermal Venture, supplies about 20 percent of that island’s electricity needs.
Other power sources such as wind, solar, biofuel, wave and ocean thermal energy would likely also play roles, though geothermal would supply the base load and is the linchpin to Ku‘oko‘a’s plan, according to Roald Marth, a self-described nerd from Minnesota who started Ku‘oko‘a and is the company’s chief executive officer.
Marth told a Rotary Club of Honolulu meeting in April that geothermal energy might even be able to oversupply the state with power, allowing extra power to be exported if converted to another form such as liquid hydrogen.
The exports and fixed energy costs, according to Marth, would not only insulate ratepayers from higher oil prices and electricity rates, but also would cut the cost of electricity to 20 cents per kilowatt-hour statewide. Presently the rate is about 30 cents on Oahu and around 40 cents on neighbor islands.
Marth also told the Rotary Club group that a state plan to reduce Hawaii’s dependence on oil, the Clean Energy Initiative, will result in too little alternative energy too late.
The initiative, launched in 2008 with support from the U.S. Department of Energy, has a goal to reduce statewide energy consumption by 30 percent through efficiency and shift 40 percent of production to renewable sources by 2030. Renewable energy production under the initiative is largely based on planned but controversial wind farms on Maui and Lanai.
Even if the state’s goal is achieved, Hawaii could still be 60 percent reliant on oil that could cost $300 or $400 a barrel — enough to drive the price of a kilowatt-hour of electricity to 80 cents, Marth told the group.
“The Hawaii Clean Energy Initiative does not go far enough and does not go fast enough,” he said. “The cost of electricity and the cost of fuel is killing the economy of Hawaii — and it can be fixed.”
Of course, Ku‘oko‘a’s plan is far from being realized, and faces monumental obstacles.
The company is still in a formation stage, has no physical office and has not made a formal bid to buy Hawaiian Electric.
Hawaiian Electric saidin January that it would not acknowledge or comment on any purchase offer it might receive, and the company reiterated that position last week.
Buying Hawaiian Electric — with its subsidiaries on Oahu, Maui and Hawaii island — would be at least a $2.3 billion proposition based on the company’s market value.
Marth has estimated total costs of buying the utility plus shifting it to 100 percent renewable energy production and delivery could be roughly $35 billion over 10 years.
To date, Marth has raised some seed money from investors but has largely funded Ku‘oko‘a himself. He said he has personally contributed $1.2 million. Most of that, according to Tang, is to pay salaries for eight executives and a similar number of employees.
Marth claims to have 26 investment bankers interested in financing the $35 billion plan. “I’m fighting off the money right now,” he said at the Rotary Club meeting.
Some observers question whether it’s feasible to run a cable along the extremely rough and deep Alenuihaha Channel between Hawaii island and Maui.
Marth says it can be done, though not easily or cheaply. According to Puna Geothermal, the state investigated the feasibility of an Alenuihaha Channel cable in the 1980s and concluded it was possible but too costly without considerable government subsidies. The state estimates it will cost $800 million to $1 billion to install a cable linking Oahu to wind farms on Molokai and Lanai.
Marth has said a company like Hawaiian Electric with public shareholders interested in growing quarterly profits faces a disincentive to invest billions of dollars in renewable energy production.
A company like Ku‘oko‘a with private capital focused on long-term returns from renewable energy investments is necessary to make the conversion, he said.
One big concern for local consumers and businesses is whether such a return could be achieved without coming at the expense of ratepayers. Some stock analysts and energy industry experts have expressed doubt about Ku‘oko‘a’s plan penciling out.
Another uncertainty is whether the state Public Utilities Commission, which regulates utilities, would approve a purchase of Hawaiian Electric.
Beside the technical and financial issues, much skepticism raised in January focused on the people leading Ku‘oko‘a.
Marth, 46, is a former real estate agent and motivational speaker who later co-founded and sold two companies — one that provided technology and software training for the real estate industry and one that provided Internet services to real estate agents.
Two initial partners also helped Marth start Ku‘oko‘a. One is Richard Ha, owner of Hamakua Springs Country Farms on Hawaii island. Ha, who is Ku‘oko‘a’s board chairman, has researched alternative energy as a source for his business and is co-chairman of a state advisory group on geothermal energy.
Ku‘oko‘a’s other initial partner is Ted Peck, who quit his job as the state’s energy administrator to become company president. Peck, among other things, directed Hawaii’s Clean Energy Initiative.
Marth has said Ku‘oko‘a has been belittled as a plan by a motivational speaker, a tomato farmer and a bureaucrat. He told the Rotary Club audience that the founding partners have a lot of talent and drive that is now being combined with board members and others on Ku‘oko‘a’s team to move the initiative forward.
“We’re not just the tomato farmer and the bureaucrat and the motivational speaker trying to buy an electric utility,” Marth said. “That’s not what we’re about. We’re a bunch of really, really smart, determined people with a little bit of money who are trying to build a new industry in Hawaii.”
Ex-officials of the CIA and federal Energy Department ante up as the $35 billion plan gains momentum
By Andrew Gomes
Article from: Star-Advertiser
A $35 billion plan to buy Hawaii’s main electric utility and quickly get it off fossil fuel while reducing rates for consumers was greeted with heavy skepticism in January when the ambitious endeavor was made public.
Some dismissed the initiative by an entrepreneurial Minnesotan who moved to Hawaii last year as unrealistic or, worse, a joke. Others lauded the idea but figured it was financially impossible and wouldn’t gain traction.
But since then the venture named Ku‘oko‘a Inc. has attracted several leaders with powerful connections, including a past chief of the Central Intelligency Agency and a former deputy secretary of the federal Department of Energy.
T.J. Glauthier, the Energy Department’s No. 2 official from 1999 to 2001, and R. James Woolsey, CIA director from 1993 to 1995, have joined Ku‘oko‘a as investors and board members.
Rob Robinson, a Hawaii venture capitalist and professor of entrepreneurship and e-business at the University of Hawaii, is another investor taking a seat on the board recently.
And Rick Blangiardi, general manager of local TV broadcaster Hawaii News Now, agreed to serve as Ku‘oko‘a’s board vice chairman.
In all, Ku‘oko‘a has eight board members, and the addition of one or two more is being considered.
The company’s goal is to buy Hawaiian Electric Industries Inc., which provides power to about 95 percent of the state’s population, and shift it completely from its current dependence on imported oil to alternative energy sources within 10 years.
Of the eight board members, seven aren’t involved in running Ku‘oko‘a as employees or executive officers. But they all have invested money in the startup, giving them a financial stake in realizing the plan, according to Alan Tang, Ku‘oko‘a’s chief strategy officer and the owner of local marketing firm Olomana Marketing.
“They are committed to the vision,” Tang said.
Individual investments weren’t disclosed, but Tang said the total amount is roughly a “few hundred thousand dollars.” Some local business leaders said Ku‘oko‘a’s founder sought $20,000 investments with offers for a seat on the board.
Investments tied to board positions are common for startup companies trying to raise seed capital, according to corporate governance experts. Such board members differ from independent directors, who typically provide guidance to well-established companies and are paid for attending meetings.
Glauthier, who is involved in the private-sector energy industry and was on the 2008 transition team helping Barack Obama assume the presidency, said he examined Ku‘oko‘a closely.
“I looked at it hard before agreeing to sign on,” he said. ”I believe it’s feasible.”
Woolsey, whose introduction to Ku‘oko‘a was made by Glauthier, said he has high regard for Glauthier’s judgment of people and technology. Woolsey is also a founding member of an organization dedicated to freeing the United States from its dependence on oil for fuel, and views Hawaii as an opportunity to demonstrate that independence from oil can be achieved.
“It’s a very interesting opportunity,” Woolsey said of Ku‘oko‘a, which is the Hawaiian word for freedom or independence. “It seems to me it’s really worth a try.”
Ku‘oko‘a’s vision is to tap a variety of renewable energy sources to replace oil as Hawaii’s main source for electricity. The backbone of the plan is to derive most electricity from geothermal energy on Hawaii island and Maui for delivery to Oahu and other islands via undersea cables.
Geothermal power is proven and has the benefit of not being an intermittent source of energy like the sun and wind. An existing geothermal plant on Hawaii island, Puna Geothermal Venture, supplies about 20 percent of that island’s electricity needs.
Other power sources such as wind, solar, biofuel, wave and ocean thermal energy would likely also play roles, though geothermal would supply the base load and is the linchpin to Ku‘oko‘a’s plan, according to Roald Marth, a self-described nerd from Minnesota who started Ku‘oko‘a and is the company’s chief executive officer.
Marth told a Rotary Club of Honolulu meeting in April that geothermal energy might even be able to oversupply the state with power, allowing extra power to be exported if converted to another form such as liquid hydrogen.
The exports and fixed energy costs, according to Marth, would not only insulate ratepayers from higher oil prices and electricity rates, but also would cut the cost of electricity to 20 cents per kilowatt-hour statewide. Presently the rate is about 30 cents on Oahu and around 40 cents on neighbor islands.
Marth also told the Rotary Club group that a state plan to reduce Hawaii’s dependence on oil, the Clean Energy Initiative, will result in too little alternative energy too late.
The initiative, launched in 2008 with support from the U.S. Department of Energy, has a goal to reduce statewide energy consumption by 30 percent through efficiency and shift 40 percent of production to renewable sources by 2030. Renewable energy production under the initiative is largely based on planned but controversial wind farms on Maui and Lanai.
Even if the state’s goal is achieved, Hawaii could still be 60 percent reliant on oil that could cost $300 or $400 a barrel — enough to drive the price of a kilowatt-hour of electricity to 80 cents, Marth told the group.
“The Hawaii Clean Energy Initiative does not go far enough and does not go fast enough,” he said. “The cost of electricity and the cost of fuel is killing the economy of Hawaii — and it can be fixed.”
Of course, Ku‘oko‘a’s plan is far from being realized, and faces monumental obstacles.
The company is still in a formation stage, has no physical office and has not made a formal bid to buy Hawaiian Electric.
Hawaiian Electric saidin January that it would not acknowledge or comment on any purchase offer it might receive, and the company reiterated that position last week.
Buying Hawaiian Electric — with its subsidiaries on Oahu, Maui and Hawaii island — would be at least a $2.3 billion proposition based on the company’s market value.
Marth has estimated total costs of buying the utility plus shifting it to 100 percent renewable energy production and delivery could be roughly $35 billion over 10 years.
To date, Marth has raised some seed money from investors but has largely funded Ku‘oko‘a himself. He said he has personally contributed $1.2 million. Most of that, according to Tang, is to pay salaries for eight executives and a similar number of employees.
Marth claims to have 26 investment bankers interested in financing the $35 billion plan. “I’m fighting off the money right now,” he said at the Rotary Club meeting.
Some observers question whether it’s feasible to run a cable along the extremely rough and deep Alenuihaha Channel between Hawaii island and Maui.
Marth says it can be done, though not easily or cheaply. According to Puna Geothermal, the state investigated the feasibility of an Alenuihaha Channel cable in the 1980s and concluded it was possible but too costly without considerable government subsidies. The state estimates it will cost $800 million to $1 billion to install a cable linking Oahu to wind farms on Molokai and Lanai.
Marth has said a company like Hawaiian Electric with public shareholders interested in growing quarterly profits faces a disincentive to invest billions of dollars in renewable energy production.
A company like Ku‘oko‘a with private capital focused on long-term returns from renewable energy investments is necessary to make the conversion, he said.
One big concern for local consumers and businesses is whether such a return could be achieved without coming at the expense of ratepayers. Some stock analysts and energy industry experts have expressed doubt about Ku‘oko‘a’s plan penciling out.
Another uncertainty is whether the state Public Utilities Commission, which regulates utilities, would approve a purchase of Hawaiian Electric.
Beside the technical and financial issues, much skepticism raised in January focused on the people leading Ku‘oko‘a.
Marth, 46, is a former real estate agent and motivational speaker who later co-founded and sold two companies — one that provided technology and software training for the real estate industry and one that provided Internet services to real estate agents.
Two initial partners also helped Marth start Ku‘oko‘a. One is Richard Ha, owner of Hamakua Springs Country Farms on Hawaii island. Ha, who is Ku‘oko‘a’s board chairman, has researched alternative energy as a source for his business and is co-chairman of a state advisory group on geothermal energy.
Ku‘oko‘a’s other initial partner is Ted Peck, who quit his job as the state’s energy administrator to become company president. Peck, among other things, directed Hawaii’s Clean Energy Initiative.
Marth has said Ku‘oko‘a has been belittled as a plan by a motivational speaker, a tomato farmer and a bureaucrat. He told the Rotary Club audience that the founding partners have a lot of talent and drive that is now being combined with board members and others on Ku‘oko‘a’s team to move the initiative forward.
“We’re not just the tomato farmer and the bureaucrat and the motivational speaker trying to buy an electric utility,” Marth said. “That’s not what we’re about. We’re a bunch of really, really smart, determined people with a little bit of money who are trying to build a new industry in Hawaii.”
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