Planning is underway for the Department of Hawaiian Home Lands’ Pana‘ewa homestead project, its first residential development in East Hawaii in over 20 years. In order to fund the infrastructure needed to prepare it for occupancy, the department is also pursuing development of a nearby business park that could potentially include a Costco.

A DHHL staff member confirmed that Costco was one of the companies the department has been in conversations with about serving as one of the business park’s “anchor tenants.”

The business park will be located on approximately 146 acres along Railroad Avenue in Hilo, across from the existing commercial center where Home Depot is located.

Ann Mikkio, a consultant for DHHL with PBR Hawaii, presented a market study for the proposed business park at an Oct. 19 meeting of the Hawaiian Homes Commission.

“The business park will serve East Hawaii, and the majority of the population in those areas live between Puna and North Hilo … ,” she said. “There’s 109,000 people living in that area. That’s more than all of Kauai County. That’s about two thirds all of Maui County, just in this small area. The developments there, I think, will also benefit from some of the population in the Ka‘u and Hamakua districts for those who find it easier to get to Hilo than to the similar types of facilities on the west side.”

Currently the only Costco on the island is in Kona. In addition to several spaces for larger companies, the business park would also have lots available for smaller businesses.

“You’ve probably heard that DHHL has been having conversations with some very large big box opportunities, and we do hope that those will work, but we also wanted to look at a baseline scenario as well … ,” Mikkio told commissioners, before presenting several different market outlook scenarios.

“What you can see on this mix here is, under either scenario, half or more of all lots would be leased at the 0.5- to three-acre size,” she said. ”So, that’s a size that’s very accessible and very popular with the local market and hopefully with beneficiaries of the trust as well.”

The proposed business park’s location is just down the road from the Pana‘ewa residential development, which sits on approximately 334 acres along Elama Road. The department recently said it expects to award up to 200 additional leases next year for the site as planning moves forward and the space is evaluated.

However, before any of the lessees can move onto the property, significant infrastructure will need to be installed. The parcel of land is currently undeveloped and in need of roads, electricity, water and sewage before residents can move in, which is anticipated to be in 2031.

Kalani Fronda, administrator of DHHL’s Land Development Division, presented an update about the project at the Oct. 19 meeting.

“There’s a lot of work that’s going on in Pana‘ewa. This one in particular is a partnership along with our planning office in being able to get this prepped for development, specifically for homesteading,” he said.

Wastewater, specifically, he said, poses a challenge due to lack of existing capacity. For this reason, he said DHHL is exploring building a new sewage treatment plant specifically for the Pana‘ewa development that would be managed in partnership with the county.

“We are looking at actually being able to build our own wastewater treatment plant … ,” he said. “We don’t have a staff that will manage this. So, it’s a matter of we build it to spec and then turn over the management to them. So, those are early conversations that we’re having.”

He said that a wastewater plant, along with other infrastructure, will require significant funding, beyond what the department currently has available. This is where revenue from the business park could come into play, said DHHL Chair Kali Watson during the meeting.

“We got to generate revenue. I mean, we got to put in more infrastructure. So, not only the community, we’re looking to provide jobs as well as opportunities to get into business enterprise, but also based on the market studies that’s been done, there’s some real potential, and we got to start generating money so that we can issue out bonds that we can then use to collateralize revenue from these, like we’ve done in the past.”

He said this model has been used before and that he feels it is necessary to ramp up revenue-generating operations in order to get beneficiaries onto land and shorten the nearly 30,000-people-long waitlist.

“For the Big Island, some of the commercial centers that we have existing are actually financing a little over $100 million in bonds that we use to put in infrastructure,” he said. “So, we’re just kind of repeating the process. It’s been a long time. It’s unfortunate the department has, over the last I don’t know how many years, just been sitting, and our lands have just been sitting.”

Email Grace Inez Adams at grace.adams@hawaiitribune-herald.com.