Oahu wave pool on track with $95M vote of confidence

The Honokea Surf Village took another step forward this week as the state legislature approved the group’s appropriation bill. Governor Ige signed bill SB1412 into law, a measure which significantly reduces the equity requirements for the project.

“The Honokea Surf Village Special Purpose Revenue Bond Bill authorizes State of Hawaii tax-free revenue bond authority as a financing tool for the project,” Honokea said in a statement. “The bonds require no capital from the State as this is private capital and poses no financial risk to taxpayers (the returns are guaranteed by the project).”

The development group said the $95M in bond authorization demonstrates the State of Hawaii’s commitment from the highest level.  

“The project will create over 200+ local jobs, help the surf and film industries, support local retailers,  promote Hawaiian culture, ocean safety, ohana, wellness, and environmental awareness,” added the group. 

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Honokea’s proposed location just west of Honolulu. Image Google Maps

Honokea said the permission to build its community-oriented village was included in the States designation of Opportunity Zone parcels on Oahu in 2018. Opportunity Zone legislation was passed in 2017 to encourage investment in rural development areas by the private sector across the country and passed quickly with unanimous bipartisan support.

“The O.Z. legislation incentivizes investment in designated Opportunity Zones by allowing people with capital gains to invest their gains into a O.Z. Fund or Business instead of paying the capital gains to the IRS,” said Honokea. “The investment defers one’s capital gain tax obligation til the end of 2026. It also reduces that tax obligation by 10%, and after holding the investment for 10 years, any earnings on the investment are capital gains tax-free, essentially adding a 9% return to an investment.”

Honokea opened the Honokea O.Z. Fund in 2021 and said they will be raising capital in two rounds.

“In Round 1 we are raising $2.1MM in $150K increments and have 12 spots left. We took on our first investments last week and plan to close this round in the next 4-6 weeks. One must be an accredited investor, investment requires capital gains for OZ tax benefits.”

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The group plans to use a Wavegarden Cove facility

Honokea’s targeted site on Oahu sits adjacent the Wai Kai development which will feature the world’s largest rapid, or standing wave. That project broke ground earlier this year. The two developments are expected to generate revenue in an area often overlooked by Hawaii’s booming tourist industry.

Hawaiian surf rescue legend Brian Keaulana, son of Buffalo and brother to Rusty Keaulana, is behind Honokea. The waterman is promoting the development as both a community resource steeped in Aloha and as a training facility for Hawaiian surfers and Olympic hopefuls. Kenan “Keno” Knieriem Jr is Honokea’s co-founder and CEO. Both surfers described the project as a world-class facility that will celebrate Hawaiian culture.

Main image of pineapples by Fiona Smallwood