Aloha from the Garden Island! 

Though it may be winter everyplace else, here on the Garden Island, after a couple of months of cool, rainy weather, it feels like spring has finally arrived. There is nothing more beautiful than Kauai on a day like today, when the sun lights up every leaf, and even though the seasonal flowering trees are still bare, African tulips, bougainvillea, and red and pink ginger are all in bloom. Ridges in the distant mountains, once hidden by clouds, jump into focus and seem to alter the shape of the landscape. If you haven't experienced Kauai in the late winter or early spring, you might want to consider it for a future visit.  As you can see in the photo, the albatrosses have just had their babies. 

New Laws Aim to Preserve Kauai's Past

As Kauai matures into an increasingly attractive resort destination, many who've lived here for a generation or more, as well as some newcomers, have become increasingly outspoken about preserving the open spaces and the neighborly atmosphere that are regarded by many as sacred tradition. The county council has taken heed, and has recently passed several new laws and is considering others that are intended to control and slow growth. Because these laws also limit private property rights, they have been, and continue to be controversial. If you own property here, or are thinking of owning, you should be familiar with some of the laws and with the tone of debate here, which indicate the direction the county is headed.

On February 1, the council unanimously passed a bill that will stop the creation of new vacation rentals in any area outside those zones designated in the county's 20-year-old master plan as "Visitor Destination Areas."  The mayor still needs to sign off on the bill, and as soon as he does so it will become law. The visitor areas include Princeville, most but not all of Poipu, and some of Kapaa. Although they are prime tourist attractions that currently have vacation rentals everywhere, Hanalei, Haena, Anini Beach are not included as visitor destination areas in the county's master plan. Property owners who are currently operating vacation rentals in these areas and paying their state taxes will be allowed to "grandfather in" their properties if they submit an application, which is supposed to become available in March, by October 15, 2008 and have it approved by March 30, 2009. After that, no new vacation rentals can be created in these areas, or any other areas outside the plan's designation.

This law came about because some people were unhappy about the proliferation of vacation rentals in their neighborhoods. However, other residents of those neighborhoods who have used the vacation rentals as a reliable source of income on this expensive island were against it. Some feel that people should be able to do as they like with their own property. Although some residents complain of noise and partying on the part of vacation renters, others claim that permanent residents with barking dogs and parties of their own are no better. This sort of debate could go on for years without resolution, and it has. But it seems Kauai has reached a tipping point with the number of visitors arriving daily by plane and cruise ship, and the local authorities and much of the voting public have taken a distinctly regulatory turn. The Kauai of the past, where laws governing property development and use were sometimes conflicting and unclear and often not enforced, is giving way to the Kauai of the future, which aims for clarity and enforcement. Still, some of the new laws remain confusing, and whether the county has the manpower or even the will to enforce them remains an open question.

One new law that the county seems bent on enforcing is the November 2006 bill regarding additional dwelling units on agricultural or open zoned land. This one's a little complicated, but unless the underlying zoning on such a property allows for more than one home, building permits for any additional home must be completed by December 15, 2009. For those who own a CPR, be aware that some provisions of your CPR documents may be voided by this law. The underlying zoning is not always mentioned in the CPR documents. If you own land that is zoned "A" (agricultural) or "O"  (open) on your deed, it's best to check with the county planning department to learn if this law affects you. You can call Planning at (808) 241-6265. If you are still uncertain, you may write to the planning director and request written confirmation of your building status. Don't delay, because even though December 2009 seems far away, things move slowly on the island. That's one thing that hasn't changed!

The county council is also debating a law to ban gated communities, which the mayor feels create an "us and them" mentality. The sentiment behind the proposed bill is to promote neighborhood interaction and encourage people of different circumstances and heritage to interact with each other. The law would ban both gates and guard stations.The mayor has said that the county attorney has given his written approval of the bill. However, a legal scholar at the University of Hawaii says it may be a violation of the Constitution's Fifth Amendment to prohibit public access to private lands. Hopefully the county, which has increasingly been nailed with lawsuits that consume a large portion of its budget, will consult with experts before passing a law that may not hold up in court. 

Environmental News

The county's new coastal protection law is less likely to be challenged, because other islands already have similar laws. But Kauai's law, passed in December, requires a 40-foot minimum setback plus 70 times the annual coastal erosion rate, and is now the strictest in the state. Of course, the new law cannot prevent beach erosion, but it aims to ensure public access to beaches that get a little closer to private homes every year. Again, questions about enforcement and property owners' responsibilities are still a bit murky.

There is nothing murky about an agreement that creates the state's third-largest nature preserve. Large landowner Alexander & Baldwin has agreed to give the Nature Conservancy the right to manage over 7,000 acres in the north shore's Wainiha Valley and extending into the Alakai Swamp and Mt. Waialeale at the island's stormy center. The agreement, which lasts for a period of 10 years, will help protect the 127 species of flowering plants found only in Hawaii, as well as rare -- and rarely seen --native forest birds with luminescent coloring and curved bills.

Also on the private front, Kauai's Costco will be installing a solar energy system next fall that is expected to be up and running in January 2009. The 148,000 square foot system will provide solar energy and also will have an internet tracking system to monitor energy storage and output. Hawaii's 30 percent tax credit for businesses using a solar system figured in the company's decision to try it.

It turns out those big winter waves on the north shore may be good for something besides tow-in surfing. Over in Maui, an Australian company is negotiating with that county to install off-shore turbines that would harness wave power for energy and transmit the resulting electricity back to homes on shore by way of an undersea cable. This would be a first for Hawaii, and if successful, may eventually find its way to Kauai. Wave power is more erratic than energy from the sun's rays, but if combined with other sources of power could help to lessen dependence on oil. According to a state study, wave energy from the islands' north shores could be enough to provide full electric service for all the neighbor islands (though not Oahu.) 

Improvements for Residents and Visitors Alike

We all know what the word "improvement" means generally. But in land use law, any structure built on raw land is called an improvement, though it may be a nuisance to some and an eyesore to others. Judging by favorable comments and by the numbers of people walking and riding on it, Kauai's bike-path-in-progress is an improvement in both senses of the word to many people. But to some, that word would only be used in bitter irony. Some bike path dissenters are irked that they can't walk their dogs on the path, which is now designated as a county park, and others object to the sun-shading gazebos dotting the path, which they don't like to see anywhere near the shoreline. You can't ever please everybody, and the project is moving forward, having recently completed the first half of the second phase with a 2.5 mile extension from Lihi Park to Kealia Beach Park. The last section of the path, set to open this summer, will run from Kealia to Donkey Beach. In total, the path will encompass 16 miles of trails from Nawiliwili along the central coast, through the east shore's "Coconut Coast" and north to Anahola, on the border of the north shore. It will encompass some of the island's most spectacular scenery, and there is nothing else like it in Hawaii.

Surely no one will object to the $2 million in improvements that the state recently appropriated for Kauai's state parks. Most of the money, $1.5 million, will be used to pave a 3-mile stretch of potholed, often watery and impassible road between Kokee State Park and the Kalalau Lookout. Also, a much-needed wastewater treatment plant will be installed at Haena Beach Park.

The state is also spending tax money to put a lifeguard station at Ke'e Beach on the extreme north shore. Ke'e is one of the island's most beautiful beaches, but its currents are dangerous and its distinctive pointy-shaped waves violent in the winter months. Even with lifeguards present, visitors should respect the ocean's power at this beach, particularly along the rocky ledge where the snorkeling is good, but currents can drag you out toward the forbidding Napali coast. 

Visitors Coming, Residents Going

Two separate reports add up to a single trend which residents have noticed for some time, and which has led to many of the changes and laws described above.

The first report, from the state Department of Business, Economic Development and Tourism, reveals that Kauai was the only island with an increase in visitors from each of the four major visitor markets: the U.S. West, the U.S. East, Canada, and Japan. Kauai's visitor count was up a total of 5.7 percent over 2006, while tourism in Oahu, Maui, and Molokai declined and the Big Island and Lanai had increases of less than 1 percent. Yes, the world has discovered Kauai. But Kauai's own Visitors Bureau does not expect the trend to continue. Tourism is expected to flatten out in 2008, due to softer economic conditions on the mainland. This report is about visitors, not residents. But some repeat visitors end up moving to the island, or at least buying property here.

In the meantime, another trend was described in our local newspaper's headline as "Hawaii Residents Flee Expensive Isles." This report, from the U.S. Census bureau, shows that 10,000 Hawaii residents moved from the islands to the mainland between July 2006 and July 2007, which is the largest out-migration in at least 8 years. the report did not specify numbers for Kauai. High cost of living, including housing costs, were mentioned as possible reasons for the trend. If this trend continues, it could exacerbate Hawaii's need for workers, especially skilled workers.

What, if anything, can be done to change this trend? Does the government have a role to play in encouraging the development of affordable housing ... or has government caused the problem by strangling development, causing prices to shoot up in the face of great demand and limited supply? Everyone agrees that tourism is vital to the island's economy. But how can the island accommodate more visitors and still retain its beloved rural character? These are the questions Kauai will continue to struggle with as it stumbles into the 21st century.

 Prime Princeville Land Sold to Luxury Hotel Developer

A 122-acre parcel of land adjacent to the Princeville Hotel and overlooking Hanalei Bay has been sold to an affiliate of Las Vegas-based Montage Hotels & Resorts for an undisclosed price. Montage, which owns the Montage Resort and Spa in Laguna Beach, was started in 2002 by hotel veteran Alan Fuerstman, who has helped run the Bellagio Las Vegas and the Phoenecian Resort in Scottsdale, AZ. The company has no immediate plans for development, and has not set a future date yet. It will undoubtedly be a very upscale hotel. Rates at the Montage Laguna Beach property start at $695 per night. The Princeville Hotel itself is due to start its $60 million transformation into a St. Regis hotel sometime in April. When developer Jeff Stone acquired Princeville three years ago, his goal was to make the community into a high-end resort, but so far the area has seen no major changes. Now, with money flowing in from the Montage sale, other development projects could be in the works.

 Real Estate

 Real estate sales in Kauai got off to a slow start in January, with the number of homes sold down 40 percent over January of 2007. This was true for home sales in the resort areas of Koloa, where sales were down 54 percent, and the north shore district, where they were down 44 percent. For the island as a whole, land sales were down 36 percent, and condo sales remained flat.

But on the north shore, where a new luxury town home development is being built, condo sales were up 60 percent over January 2007.   In land sales, four lots sold, as opposed to one last year.

In Koloa on the south shore, condo sales were flat, and land sales down 40 percent.

For the island as a whole, the median house price declined from $799,000 in January 2007 to $630,000 this year, a decrease of 21 percent. Koloa pretty much followed this trend, with a 27 percent decline in median home price, from $799,000 in January 2007 to $580,000 this January. That does not mean that a home that sold for $800,000 last year is worth $580,000 this year. It means that buyers are seeking out less expensive homes to purchase, while the more expensive ones linger on the market.

On the north shore, home prices were actually up 4.8 percent over last year's. But with a median price of $1,467,000 (this includes homes on acreage), there are few sales. North shore condo prices were up 83 percent, but much of that increase is due to the new luxury Kaiulani development. Land prices were up 15.6 percent.

In Koloa, condo prices declined 5.8 percent, while land prices were shown to shoot up 140 percent ... but we're only talking about 3 sales.

Many people are asking, "Has the market bottomed out? Are there any good deals out there?"

The answers are: I don't know,  and Yes, there are.

The only way to call a market bottom or top, whether it's the real estate market or the stock market, is to look back after the peak or trough has passed. What you can see in the meantime, however, is trend. Right now, the trend is a build-up of inventory that is putting pressure on prices. For sellers who bought before the boom of 2000-2006, this may not matter so much. They can afford to wait it out, or take their property off the market until better times come along. But some sellers who bought at the peak and have had to refinance at higher rates are now in trouble. That's where the deals come in for buyers. Even in the resort areas of Princeville and Poipu, we are starting to see some short sales, in which owners are behind on their mortgages and a sale must be negotiated through the bank. Other properties have not reached the short sale stage and intend to bypass it by lowering their prices below market for a quick sale. Those are the properties that sell, sometimes right away, and sometimes after several price reductions.   

Goodbye for now .  Feel free to ask me questions anytime, and I hope to see you back on island soon.