“Doing Nothing Wasn’t An Option”—A Conversation With The City’s Guy Kaulukukui

A world-class campus of facilities to serve Honolulu’s growing entertainment scene is the flip side of a three-year shutdown of the Blaisdell Center, says Kaulukukui, who’s overseeing an ambitious $773 million redevelopment project.

December 15, 2019

Don Wallace,

Verdi’s La Traviata (2018-19 Opera Season)

Photos: courtesy of Hawai‘i Opera Theatre

There’s no question that the planned 2021 redevelopment of the Neal S. Blaisdell Center has created a worrisome situation for local groups such as the Hawai‘i Symphony Orchestra, Hawai‘i Opera Theatre and Ballet Hawai‘i. But as all three groups agreed in interviews for a January article in our print edition, the current Blaisdell is tired and past the point where small fixes can make a difference. We talked to Guy Kaulukukui, director of the Department of Enterprise Services, about what drove the construction decision-making process, which still awaits a successful bidding outcome from private companies—and final City Council approval.

Some bidding background: Public-private partners (known as P3s) had until Nov. 29 to submit their credentials. These were reviewed and the applicant pool winnowed down. On Dec. 31 the successful candidates (no more than three) will be announced and allowed to submit their proposals, due by June. This story will be updated to include those selected.

Verdi’s La Traviata (2018-19 Opera Season)

HONOLULU Magazine: How does it look so far?

Guy Kaulukukui: We’re really sussing out what the market looks like for projects. By June when we expect proposals back, then they’ll be evaluated. In terms of potential partners, for the last four going on five years we’ve been very methodical: We evaluated the market [for entertainment in Honolulu]. We did feasibility studies, what we should do, what was our range of options; doing nothing was the only one not considered. We looked at everything from a light makeover to total makeover. We determined there is an ongoing market for our program and our product: a state of the art facility for the 21^st century. We were state of the art 50 years ago; [we] no longer are.

HM: What does that entail?

GK: We made a commitment to a full renovation of the campus. We developed a master plan, about 30% of the design. In January [2019] we held an industry day that was well-attended, in LA and Honolulu. We found that there’s a there there for our project. We moved forward to the RFP (request for proposal) development stage. We had [an event] in April, that was well-attended. We kept getting the message, the market is interested, laying the foundation of where we are right now.

HM: How do you know they’re serious, though?

GK: Teams now are expending resources; they’re figuring out how they’ll work together. Once we invite proposals in December we’ll know.

HM: When did you tell the symphony and opera?

GK: We have been communicating with our annual tenants like the symphony, opera and ballet, and our larger exhibitors, for at least two years now. As long as we stay on schedule—and we are on schedule—we won’t be doing any bookings after December 2020.

HM: How can the city help them?

GK: There’s only a little we can physically do to help. Unfortunately, the city doesn’t have another auditorium or arena. We’ve helped them brainstorm some other facilities. We are currently investing in the Waikīkī Shell, so it can hang bigger speakers and sets for concerts. The Shell has roughly the same capability that we have in the arena. It’s an outdoor experience; we understand it’s not a vibe people expect. The symphony also has a concern about sound; the Shell was built in the ’60s for acoustic performances, not for electrical instruments. We’re looking for ways to beef up the sound. (Editor’s note: According to the symphony’s departing executive director, Jonathan Parrish, the Shell’s acoustics were dampened to accommodate electric instruments, making it currently unsuitable for symphonic performances.)

The first performance of HOT in 1961 at McKinley High School.

I’m excited for the symphony. We don’t want to see the symphony struggle during this period. There is a risk. We know their board, and their chair, Paul Kosasa, can build a business market and grow their market.

HM: What are the finances like for the Blaisdell? The convention center has this huge debt that’s only grown (in 2002, the convention center’s cost, including debt service, was estimated to be $768 million; in 2017 $317 million was still owed, with debt service at $26 million annually).

GK: [Our expenses are] only $15 million a year, including debt service, so we don’t have a heavy load—maybe $24 million or so.

HM: Revenue?

GK: We take in $15 million and we lose $6 million.

HM: It seems you’re going to have to make a lot more revenue after spending $770 million on a new facility. Any Book of Mormons out there?

GK: Talking about the concert hall first, this year’s season of Broadway shows: We completed a run of Phantom of the Opera, The Illusionists was also well attended, Rent is about to start. All were done by MagicSpace Entertainment [through their Broadway in Hawai‘i division]. Hey, some years you have a run of Broadway shows, some years none. But I think this market can support more. We jumped in and MagicSpace is proving it correct. We’re having a nice season. They announced Jersey Boys for next year because they got excited, really excited, with the ticket sales. But the whole idea is to start to build the market leading up to the close [of the Blaisdell]. We can open 2020 with a big season and show promoters it’s a viable market—priming the pump for the reopening.

For the arena, we don’t necessarily have the ability to do that priming the pump. It’s a strict formula for the promoters. How well can they scale the house? How many seats are there and how much can they charge for each seat?

HM: How will the new Blaisdell improve on what it’s got now?

GK: Our redevelopment is not only about improving the aesthetics, but on the inside, too. We are radically changing the orientation. Right now, capacity of the arena is 8,000, but a promoter will never sell the seats behind the acts. So they’re taking 2,500 tickets out to the maximum just like that. The new configuration will no longer be a theater in the round. Although the building is round, inside all the seats will face straight to the stage. The farthest seat is a third closer than the farthest seat now. The promoter can sell every seat. So without changing the actual capacity we can raise the sell-off capacity. Which allows the promoters to book bigger and more expensive shows.

Puccini’s Tosca (2019-20 Opera Season)

HM: And there’s also a new performance space going in, right?

GK: Our formula is to add space. To balance local and outside acts, the master plan has a new performance hall with 1,500 seats. It’s acoustic so appropriate for symphonic music, it’s designed with the symphony in mind and with symphony input. The great thing is the performance hall can take scheduling pressure off the concert hall. The symphony is 100% on board with this space. It’s not a second-rate space, it’s just smaller.

HM: And the sports pavilion?

GK: We’re doing the same thing. Currently only 20% of bookings are sports-related, because most could fit in a venue of 2,500 seats. So we’ll have a program at the sports pavilion of typical sporting events: the state volleyball championships, basketball championships, wrestling. Hawai‘i Pacific University plays its games here. All this takes pressure off the arena. With a sports arena as well as a performance hall, we eliminate 100% of the problem.

HM: What will the staff do during the three years? Will there be layoffs?

GK: No one loses their job during the period that we’re dark. How that works out, we’re still in discussion with the relevant unions. We’re very fortunate that the Department of Enterprise Services is in a variety of services: the golf course, the zoo, concessions. At the Blaisdell we have two sections; the first is those in customer service, support and product sales; the second is those on the building services side, including maintenance. We have to find the latter a place to relocate them. They will go to work and support the zoos. To the golf courses on demand. It’s an opportunity to improve the places where they go. We’ve challenged services to plan ahead for what they can do at the zoo and golf courses.

We’re fortunate that the facility has aged well and we have long-tenured staff. The staff, honestly, is the reason the facility has been resilient for a long time. We have people who’ve been there for 30 or 40 years. If you put a new team in, the facility doesn’t work nearly as well.

HM: Last question: If everything goes as planned and you get a private partner, what happens if we hit a recession?

GK: I’m actually an economist by trade, so we don’t want to use the word recession. Call it a pre-rally decline. As we head into one, our timing ideal is catch the market before it slides. We’re positioned to benefit from potentially lower construction costs, compared to five years ago. In talking to construction folks, they say the idea is timing our construction to catch it on the backward slide but before the inventory (cranes, equipment, labor) moves out of the state. You want to face the smallest mobilization costs possible. We’re in that weak spot, but this is just going to play out as it plays out. But we are in the window.

To hear how the symphony, opera and ballet are coping with losing their performance homes for three years, pick up our January issue on newsstands or at shop.honolulumagazine.com.