Hawaii Eden: $260M price tag
But outsiders soon learn they can’t do what they want
Anyone who spends $260 million on a property could reasonably expect to do with it as they please. Potential owners of Molokai Ranch, a 55,575-acre tract on Hawaii’s Molokai island, however, might quickly discover that a quarter-billion dollars doesn’t necessarily buy you the right to do what you want.
The ranch occupies 35 percent of Molokai, Hawaii’s fifth-largest island. The property sits on the island’s western end and includes lush pastureland, tropical rainforest, two towns, and more than 20 miles of private beach.
There are two resorts on the ranch, along with an extant — and operating — agricultural and cattle business. More than a ranch, the property represents the possibility to become a wealthy buyer’s vast, private, Eden. Except there’s a hitch. “We have a very strong activist community on this island,” said Richard “Rikki” Cooke III, an island resident and descendant of one of the ranch’s first owners. “They don’t want change, and they don’t want outsiders.”
Should an ambitious developer purchase the ranch and its miles of pristine white beaches, “they’d never have a chance on this island,” he said confidently.
To understand the origins of the saga unfolding on Molokai, it helps to start with the ranch’s origins.
The tract began as a sheep ranch owned by the Hawaiian royal family, but when that dynasty’s last surviving member died in 1884, her lands — numbering hundreds of thousands of acres across Hawaii’s islands — were transferred into an estate.
A few years later, the estate sold the land on Molokai to a group of Hawaiian businessmen who began to turn it into a sugar plantation. A decade after that, one of those businessman, Charles Cooke, bought out his partners and officially founded Molokai Ranch.
Relatively soon after embarking on the sugar plantation mission, however, its new owner discovered that pineapples “grew beautifully” on the island.
According to the aforementioned Rikki Cooke, his ancestor Charles duly pivoted, shipping in hundreds of laborers to harvest pineapples.
“It’s very difficult work,” Cooke said. “To pick the pineapples meant walking through cactuses, with bugs everywhere, and the pineapples themselves had points that could cut you.”
Despite the backbreaking, hazardous tasks, employees came to stay on the ranch, and the Cooke family occupied a sort of benign, feudal position: They built a town, owned a bank, invested heavily in infrastructure and tourism, and funded virtually every civic building on the island.
In its heyday, the ranch produced pineapples on 14,000 acres, had an active hotel (the 22-room Kaluakoi resort, which had 198 rooms, was located along the coast), and a farming operation with pastures full of cattle and sheep. The family even donated 25,000 acres to the Hawaiian Homes Commission Act for use by native Hawaiians, in perpetuity.
By the early 1980s, the ranch was in trouble. Pineapples had grown so beautifully, it turned out, thanks to Heptachlor, an insecticide that played a star turn in Rachel Carson’s 1960s bestseller “Silent Spring.”
When Heptachlor was banned, the ranch’s pineapple operation began to suffer.
High labor costs, Cooke said, finished it off.
In 1988, in what he described as a “friendly takeover,” the ranch was purchased by New Zealandbased Brierley Investments Ltd., which eventually morphed into the Singaporebased investment holding company, GL Ltd., in turn controlled by Hong Kong based Guoco Group Ltd., an investment holding company.
Guoco Group, ultimately, is a part of Malaysia’s Hong Leong Group, whose founder, Tan Sri Quek Leng Chan, has a net worth of $5.1 billion, according to Bloomberg.
Starting in the mid-1990s, the company made various attempts to develop projects on the ranch. It constructed the luxurious, 22-room Molokai Ranch Lodge inland and began to embark on an ambitious scheme along the coast.
After investing heavily in municipal infrastructure, such as water pipes and utilities, it submitted, with the endorsement of various elected officials, a plan to build a luxury subdivision; part of the plan included donating more than 1,000 acres to the island for conservation purposes.
But GL managed to alienate a vocal segment of the 7,000-person population.
“Residents of Molokai don’t like to be bullied,” said Alan Arakawa, mayor of the city and county of Maui, under whose jurisdiction Molokai Island falls.
“They don’t like to be told what to do,” he said. “They have a lifestyle that they’d like to preserve.”
By Arakawa’s telling, the problems began when the new owner decided to build a luxury residential development, a subdivision on a picturesque outcropping known as La’au Point.
“They just did what they felt like doing,” Arakawa said, “which was to lock off the beaches and build an exclusive type of housing.”
The islanders felt isolated from development discussions, which, said the mayor, “didn’t go down well.”
Along with the usual protests came more extreme incidents: In 1995, a ranch vacation cottage was burned and in 1996, five miles of water pipes were destroyed.
In the meantime, the Kaluakoi resort, leased to a Japanese company, “was doing just fine, but the company went bankrupt, so they shut it down” in 2001, Cooke said.
This added to the island’s already swelling ranks of unemployed. (GL kept the resort’s golf course open.)
As its members became more frustrated, the Molokai community found it had recourse to stop some of the changes.
To develop on the island, GL needed to obtain a building permit that must be approved by a locally elected town council. After protestors succeeded in blocking the plans, GL announced in 2008 that it would shut the entire ranch.
A skeleton crew of about a dozen people maintains the land and tends the enduring cattle.
With all of this in mind, a potential buyer might pause before plunking down the requisite $260 million.
“Let me point out that the Kaluakoi Hotel was a viable, functioning hotel with a golf course, and the lodge was a viable business, too,” said Arakawa. “There’s potential to have business there, and the community backed some of that. There’s not guaranteed opposition.”
Arakawa wouldn’t expand as to how community input might affect things, other than to note that “there could be compromises established that allow for reasonable economic benefits from the properties.”
As an example, he pointed to an attempt by GL to build a wind farm: “The residents opposed it, the company tried to force it, and they got shot down,” he said. “But now there’s another company [on the island] that’s building a photovoltaic system that’s much more friendly to the community, and now we’re going to be the first island in the U.S. that’s powered by 100 percent sustainable energy.”
Arakawa pointed to nearby Lanai Island as a model: Some 98 percent of it was purchased by Oracle founder Larry Ellison for a reported $300 million in 2012. “At first there was opposition to him, too,” Arakawa said. “But once people started to understand what he was going to do — he made jobs [for residents] and isn’t over-developing, but is fixing the [community] gymnasium and put in basketball courts — well, now he has a large group that supports him.”