High-rise development in Kakaako has outstripped capacity to distribute electricity to several planned residential towers in the growing urban Honolulu neighborhood.
The incapacity has contributed to major delays for at least a few projects, including a pair of workforce housing towers and two state-initiated affordable rental towers with apartments reserved for low- and middle-income Hawaii households.
Addressing the issue by upgrading a Hawaiian Electric substation and more than a mile of underground power lines is also inflating project costs that include a new $19 million expense for the two-tower affordable rental project slated for 625 homes.
The situation, which is contributing to what could be a three-year delay for the affordable rental project called Pohukaina Commons, arose despite two major landowners in Kakaako having long-established master plans for tower development, and a state agency with a mission that includes facilitating infrastructure growth to accommodate high-density residential redevelopment in what used to be a largely low-density industrial area.
The agency, the Hawaii Community Development Authority, was formed in 1976 and has helped improve infrastructure in Kakaako in order to facilitate redevelopment.
Hawaiian Electric has also worked with developers to project future demand in Kakaako to accommodate growth, though that has been challenging in part due to an inconsistent and fluid pace of projects.
Don’t miss out on what’s happening!
Stay in touch with breaking news, as it happens, conveniently in your email inbox. It’s FREE!
Developers with firm project plans do seek confirmation that the utility has capacity to serve a project’s needs, often by asking for a “will-serve” letter. Hawaiian Electric in some cases replied to Kakaako project developers that power distribution upgrades would be needed because its Kewalo substation had reached maximum capacity.
The utility also told developers of projects planned in the Ward Village and Our Kakaako communities master-planned by Howard Hughes Holdings and Kamehameha Schools, respectively, that 25,000-volt underground lines from the substation would need to be installed at their expense because existing 11,500-volt lines weren’t sufficient.
These upgrades, however, aren’t easy or quick to make.
Long process
Hawaiian Electric sought state Public Utilities Commission approval in March 2023 to upgrade its Kewalo substation at an expected cost of $22 million, noting that it likely would take more than two years to receive necessary equipment after ordering it.
“The transformer and switchgear are needed by February 2025, for the project to serve the Kakaako area by November 2025, and early procurement of these items is imperative,” the company said in its application, which the PUC approved in March 2024.
Developers, meanwhile, have been hamstrung in some cases from moving ahead with projects.
For Pohukaina Commons, which was formerly known as 690 Pohukaina and is planned by Highridge Costa on state land, building the first of two towers was previously expected to commence in 2024 and finish this year. But according to the Hawaii Housing Finance and Development Corp., a state agency helping finance the project, a 2022 will-serve letter from Hawaiian Electric was “pulled” in April 2024 due to the capacity issue.
The best option for Highridge was to install new lines over nearly two blocks connecting to new lines needed to serve parts of Ward Village and Our Kakaako from Hawaiian Electric’s Kewalo substation more than a mile away.
“We did have a will-serve letter from HECO at the onset,” HHFDC Director Dean Minakami told agency board members in January. “It was very surprising when they pulled that will-serve letter. So we had to scramble to work with Kamehameha Schools to find a solution to provide power, not just for our project but also for the other projects that are dependent on that HECO trunk line that’s bringing power up.”
The 2022 will-serve letter said existing distribution lines could potentially serve the project, but warned that the lines may need upgrading. “At this time, we do not have sufficient information and detailed plans to make this determination,” the letter said.
Housing holdup
Design work, archaeological surveys and permitting required to build underground ducts for new lines to serve Pohukaina Commons took over a year, and construction on the Ward Village and Our Kakaako line ducts began earlier this year.
Hawaiian Electric said the substation upgrade and first segment of duct construction at the Diamond Head edge of Ward Village along Queen Street is expected to be finished by early 2027.
A second segment extending from the end of an existing duct along Ala Moana Boulevard near Ward Avenue into the Our Kakaako neighborhood along Koula, Auahi, Cooke and Coral streets is expected to be finished in mid-2027, according to HHFDC, which is also helping finance one planned workforce-housing tower in Our Kakaako.
Then a final duct segment to the Pohukaina Commons site along Coral and Pohukaina streets is expected to be done in 2028, according to HHFDC.
The agency said in July that building Pohukaina Commons isn’t expected to begin until sometime after June 2027.
Highridge President Mohannad Mohanna said he’s trying to advance the project as fast as possible. “We’re pushing this,” he said. “Like anything else, you have to work through the challenges.”
Part of the challenge for Pohukaina Commons is that lenders are wary of funding tower construction while needed power infrastructure depends on others, which creates risk that infrastructure won’t be in place when it’s needed.
Pohukaina Commons includes an initial tower with 431 units with rent that’s affordable for households with moderate incomes, and a second tower with 194 units with rent that’s affordable for low-income households.
HHFDC is financing most of the project’s cost, which was about $320 million before the estimated $19 million expense for electrical work.
Neighboring impacts
For Our Kakaako, two high-rise projects announced in 2022 and a third announced in 2024 have yet to break ground and depend on new power lines.
One of them, Kahuina with 861 units in two towers including 123 rental apartments and 396 for-sale condominiums for mostly moderate-income households, was announced in 2022 and was expected to break ground in 2024. Instead, demolition of warehouse buildings on the site began earlier this month, according to project developer Stanford Carr Development.
Another Our Kakaako tower called Kali‘u with 330 market-priced condos planned by ProsPac Holdings also was announced in 2022. On April 10, ProsPac announced that nearby underground utility work had begun, “marking an important step in preparing the future home of Kali‘u and supporting the long-term growth of the surrounding neighborhood.”
A third planned Our Kakaako project dependent on power infrastructure upgrades is Waiakoa, featuring two towers with a combined 1,025 condo units, including 620 priced for moderate-income households. Construction was previously expected to begin this year, but warehouse buildings remain on the site.
According to HHFDC, which is helping finance Kahuina, Kamehameha Schools as the master developer of Our Kakaako is funding duct and cabling work from Ala Moana Boulevard to Koula, Auahi and Coral streets at an estimated cost of $32 million.
Our Kakaako was approved by HCDA under a 2009 master plan for 29 acres and is expected to include close to 5,000 homes, including two towers and three midrise buildings completed since then surrounding the SALT retail complex. A third tower, Alia with 477 units, is nearing completion.
Some planned Ward Village towers also depend on power distribution upgrades. Hughes Holdings has two towers, Launiu and Kalae, in early stages of construction on the mauka corners of Ward Avenue and Ala Moana Boulevard, and is preparing to demolish the nearby Ward Centre retail complex to make way for two more towers, Ilima and Melia.
A predecessor to Hughes Holdings received HCDA approval in 2009 for a master plan to create a community with roughly 6,000 mostly luxury condos in a dozen or so towers mixed with retail, restaurants and parks on 60 acres. To date, nine towers are complete.