The Kobayashi Group is not a “Small Business” as Defined by the HCDA Law

News Release from Senator Laura Thielen, April 23, 2014

Thursday April 24th the Senate is voting on whether to confirm Brian Tamamoto as the Small Business representative on the Board of Hawaii Community Development Authority (HCDA).

I oppose Mr. Tamamoto’s nomination. Nothing against the gentleman personally. But his nomination violates the letter, or at least the intent, of the law requiring small business representation on the HCDA Board.

The law requires two members of the nine-member HCDA Board “shall represent small businesses on the Board, and be owners or active managers of small businesses” located in Kakaako.

“Small business” is defined as “a business which is independently owned and which is not dominant in its field of operations.”

Mr. Tamamoto works for a subsidiary of the Kobayashi Group, which is self-described development company that “successfully responded to real estate market changes by transforming itself from a quality housing and commercial developer to a high-end resort, luxury residential and retail developer in recent years” which “has had significant influence on the development and business landscape in Hawaii.”

According to their Web page, the Kobayashi Group has developed over $3 Billion worth of property in Hawaii. Major projects include Kukio Golf and Beach Club, Wailea Beach Resort Condominium-Hotel.

In addition, Kobayashi Group is in partnership with the Howard Hughes Corporation to build ONE Ala Moana, the ultra-luxury condominium being built above Nordstrom’s parking in Ala Moana.

In addition, they and a partner purchased six acres in Kakaako to build two luxury residential condominiums, which purchase was confirmed by Mr. Tamamoto during his confirmation hearing, although he stated the plans for the property were not finalized.

In addition, Kobayashi Group is also in a partnership to replace the King’s Village retail complex in Waikiki with a luxury condominium-hotel. According to PBN, the project presentation to the Neighborhood Board stated they would seek height, density and setback exemptions for the development.

So you decide – is this a small business that is not dominant in the field of development in Hawaii?

The decision is important, because the small business representatives on the HCDA Board are granted a partial exemption from the laws governing conflicts of interest. In 2008 the Legislature passed SB 2654 which states:

Notwithstanding section 84-14(a), the small business representatives shall not be prohibited from voting on any matter concerning any district under the board’s jurisdiction; provided that the matter is not limited to solely benefitting the specific interest of that member and the matter concerns broader interests in the district.

Translation: a small business representative can vote on density limits, setbacks, affordable housing policies, permissible uses and other similar rules that are applied in Kakaako. But they couldn’t vote on approving a permit for their own business.

The Legislature clearly stated the reason for this partial exemption was to make sure the small business representatives could further the legislature’s intent, “which was to address insufficient commercial and industrial facilities for rent in the Kakaako area.”

The partial exemption from conflicts of interest makes sense when you have a small business representative who owns a light industrial business like an auto body shop, or a commercial restaurant.

How is it not a direct conflict of interest for the Kobayashi Group representative to vote on the affordable housing policy for Kakaako, when they own property in Kakaako and are in the business of developing luxury residential condominiums?

How is this company, given it’s focus, meeting the intent of the law – to increase the industrial and commercial rentals in Kakaako – to make sure the area really is a working, diversified community?

I am really displeased at being sent this nominee as the so-called small business representative for the Board of HCDA.

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Background: HCDA ‘Small Business’ Reps: Kobayashi & Mitsunaga