State trying to purchase 9 acres of private land to expand Hilo Harbor

The proposed expansion project of Hilo Harbor has taken a step forward with the Harbors Division of the state Department of Transportation completing a final environmental assessment, which found no significant impact to the acquisition of land contiguous to the harbor.

This assessment enables the state to try to purchase five privately-owned parcels totaling 9.38 acres. The state says this land is needed for the project that would expand harbor facilities to improve efficiency while alleviating traffic along Kalanianaʻole Street.

But it also would mean the relocation of a church and about 15 business, including AirGas Gaspro, which operates a medical and industrial cylinder fill plant to package and distribute medical and industrial oxygen, industrial nitrogen, and industrial and food grade carbon dioxide. 

In the environmental assessment, the Department of Transportation noted that AirGas Gaspro is the primary provider of bulk and packaged medical oxygen in Hawaiʻi, and is the only company equipped to fill medical oxygen cylinders on the the Big Island.

“We were notified about the harbor expansion about four to five years ago and are still unsure of a timeline, but I believe the state is valuing the properties before officially coming to each property owner with an offer,” said Airgas Real Estate Director Chris Seekatz. “Our problem will come down to the fact that moving a plant is very expensive. It wouldn’t be covered by reimbursement for the land alone.”

According to Seekatz, Airgas has had discussions with other state offices about a potential relocation plans, but everything is still “up in the air.”

“We have millions of dollars in equipment and are essential to this island for filling medical oxygen tanks,” Seekatz said. “Without us, there will be massive issues to the medical supply chain on the Big Island.”

But he said negotiations do not result in a sale, the state could invoke eminent domain.

In Hawaii, eminent domain gives the state or county the power to take private property even if owners donʻt want to sell. Under the Fifth Amendment to the U.S. Constitution, eminent domain must be used for a public use and the government must pay owners “just compensation.”

The five parcels have three owners. The other two owners, 595K LLC and Sparks & Boschetti LLC, could not be reached for comment.

The expansion of Hilo Harbor likely would meet the threshold of public use. It is Hawaiʻi Island’s main port for cargo shipping and is also used for major cruise ships. The first structure in Hilo Harbor was built in 1861, and its facilities have since been built out and modernized.

Private cargo shipping organizations Matson Navigation Company, Pasha Hawai‘i Transport Lines and Young Brothers Limited are the harbor’s primary users carrying and processing cargo. About 31.2 acres of the 46-acre harbor facility is used as cargo handling and storage areas, which is spread throughout the facility. 

In the assessment, the Department of Transportation stated the importance of the marine cargo industry as an essential component of Hawaiʻi’s economy and livelihood with 85% of all the stateʻs consumer goods being imported via ocean transportation.

The project will improve traffic flow conditions along Kalanianaʻole Street by improving harbor entry points and creating internal stacking lanes for semi-trailers to deliver or pick up containers at Matson, Pasha and YB operations, with the majority of these access
improvements to be situated within the new proposed boundaries of the harbor with the
property acquisitions, according to the assessment.

The project’s estimated total cost is about $62 million, with $15 to $17 million to be spent on the land acquisitions with those estimated prices based on 2023 assessed market values. The acquisitions would be paid by special state funds allocated to the Harbors Division.

The state Department of Transportation did not respond to repeated requests for comment and the Hawaiʻi District Manager who oversees the Hilo Harbor and Kawaihae Harbor said he could not provide comment.

According to the environmental assessment, after the land purchases are completed and approved by the Board of Land and Natural Resources, the Harbors Division plans to negotiate with the existing businesses to either remain on the properties until their leases expire, or terminate their leases with the state before relocating.

The process to acquire the properties is projected to be completed within about two years. The design and construction phases are estimated to take 3 to 4 years, however, more years may be added to the schedule depending on the outcome from the negotiations.

If any of the three property owners do not reach a sales agreement with the state, and the state decides to take the property by eminent domain, the timeline likely would be much longer.

Parcel 1 is located on the corner of Kalanianaʻole Street and Kūmau Street and home to the Airgas Gaspro plant and store, which sells gas, welding equipment and other safety and industrial supplies .

Parcel 2 is situated along Kalanianaʻole Street and has two buildings, which house Zion’s House of Praise Holiness church and Ocean Front Kitchen, and a large warehouse that is used by several businesses, including Service Rentals and Supplies, a commercial kitchen and cardboard recycling service.

Parcel 3 along Kalanianaʻole Street has two buildings, but is mostly an open lot for Hilo Auto Sales & Rentals and Maikaʻi Auto Body & Paint. Hoʻola Farms uses one of the buildings by appointment only for its Hilo Food Hub. Parcels 2 and 3 are owned by 595K LLC.

Parcels 4 and 5 are owned by Sparks & Boschett LLC. Parcel 4 along Kalanianaʻole Street encompasses the Kūhiō Industrial Park, and is the largest property at 5.56 acres, with about 11 businesses operating from the buildings and warehouses.

The businesses include: Keoki’s Auto Repair, Hoppa-On Hoppa-Off Bus, Conen’s Freight Transportation Inc., Westside Audio Hilo, Ambrosio’s Auto Glass, Surplus Plus, Automotive Solutions Hawaii & Car Rentals LLC, a boat body repair shop, an office, a former chemical warehouses and machine shops.

Tareq V, owner of Automotive Solutions, said that they “have not heard anything at all” from the state or property manager regarding the acquisition and harbor expansion.

“If weʻre told that we have to move, we’ll be doing that,” he said. “But until that happens, we’ll be operating at this location.”

Parcel 5 is situated along Kahanu Street adjacent to the Kūhiō Industrial Park property. The only vehicle access to this site is from the driveway at Kūhiō Street that serves the Kūhiō Industrial Park. 

The property includes a large warehouse that is used by Conen’s Freight Transportation, which provides general freight trucking, truck transportation and warehouse services. The site is used as a storage area consisting of vehicles, large appliances, shipping containers, petroleum products, building materials and industrial machinery.