The eccentric billionaire ends his dramatic reign over Kahala Avenue.
You never know who the angels are going to be until they appear,” says Kahala Avenue homeowner Richard Turbin, who feels as if benevolent spirits have delivered his neighborhood from the blight-filled reign of Genshiro Kawamoto, eccentric Japanese real-estate tycoon and Kahala’s Worst Neighbor Ever.
One of the 27 Kahala Avenue properties that Kawamoto sold to Alexander & Baldwin.
PHOTOS: JONATHAN MORSE
For Turbin and other homeowners along this celebrated avenue—one of Honolulu’s most prestigious residential streets—the angels appeared in the form of local real estate firm Alexander & Baldwin and the Tokyo District Public Prosecutors Office.
The prosecutors hobbled Kawamoto last March when they locked him in jail for a month and brought him up on charges of tax evasion. They also had Kawamoto’s passport revoked, ensuring he won’t be back in Honolulu anytime soon. Alexander & Baldwin made a deal with Kawamoto, out on bail, to buy most of his Hawaii holdings. Altogether that was 31 properties, including 27 along Kahala Avenue—or 16 percent of all the parcels along the 1.8-mile street.
“He’s done his damage, and it will probably take five or 10 years for all of his properties to get sold to responsible owners,” says Turbin, who celebrated Kawamoto’s buy-out by popping open a bottle of champagne with his neighbors and buying stock in Alexander & Baldwin. “It’s finally over.”
Kawamoto hasn’t pulled out of Kahala entirely. He held onto three adjoining lots on the makai side of the street, where he has knocked down walls and mansions to make space for his sprawling collection of statuary. (The gaudy statues and miniature pagodas on some of Kawamoto’s other properties were the first things Alexander & Baldwin removed upon buying the properties.) Still, Kawamoto’s grip on the neighborhood has been broken. The big question remains: What was that all about?
Kawamoto wasn’t simply a bad neighbor. He was a bad neighbor on a colossal scale. He bought up every property along the beautiful street he could get his hands on—sometimes paying well more than market rate—and then he let most of them go to ruin. Some he let go through simple neglect. Others he helped on their way with sledgehammers and heavy equipment. He knocked down walls and left piles of rubble and twisted rebar. He filled swimming pools with big rocks, and let lawns die, weeds grow and thickets of brush go wild.
Some houses, he razed entirely, including a dozen perfectly good beachfront mansions. The derelict properties attracted vandals, who broke windows and left graffiti. Squatters set up camp on some of the lots, making pallet fires and hanging their laundry out to dry. Rats grew in number and boldness. Feral chickens crowed at dawn.
Kawamoto teared up in 2007 on the day he put three low-income native hawaiian families in his Kahala homes.
Luxury_Oahu_Estates_$2M -_$3M
Luxury_Oahu_Estates_$3M -_$4M
Luxury_Oahu_Estates_$4M -_$5M
Luxury_Oahu_Estates_$5M -_$6M
Luxury_Oahu_Estates_$6M -_$8M
Luxury_Oahu_Estates_$8M – 10M
Luxury_Oahu_Honolulu_Condos
In a move that caught the attention of the world’s press, Kawamoto selected three large homeless or nearly homeless Hawaiian families and put them in houses rent free in 2007. He called the project his Kahala Avenue Mission.
Some theorize that Kawamoto was trying to drive down real estate prices so that he could snap up even more property. But if that were indeed the case, it didn’t work out very well. Kawamoto paid around $170 million for the properties that he sold to Alexander & Baldwin for $98 million.
Turbin believes Kawamoto relished tweaking his neighbors and showing off his power, both to the people of Hawaii and his countrymen. Turbin notes that thousands of visitors from Japan pass by Kawamoto’s Kahala Avenue properties every year. Every visitor attending the Sony Open, staying at the Kahala Hotel or running in the Honolulu Marathon (16,000 entrants from Japan in 2012) would see Kawamoto’s properties.
“Kahala Avenue is an important place for the Japanese from Japan, as well as local people,” says Turbin. “And I think he’s telling his countrymen in Japan, ‘Look at me—Kawamoto. I am so powerful, I can wreck this avenue that means a lot to you.’”
Kawamoto’s tenure along Kahala Avenue was only the latest chapter in his long, strange history of real estate investing in Hawaii. He first appeared on the scene a quarter of a century ago, during the go-go days of the 1980s housing bubble, when Japanese investors on real-estate-buying sprees drove prices in Oahu’s depressed housing market through the roof.
During the last four months of 1987, Kawamoto quietly bought 78 homes and apartments in Honolulu, including many in the Portlock and Hawaii Kai neighborhoods.
Stories were told of Kawamoto cruising Oahu in the back of a limousine, pointing out houses that caught his eye, then dispatching agents to knock on doors and make cash offers. It didn’t matter whether the places were for sale or not. By the end of 1988, he owned more than 170 properties.
He made all the purchases in cash, often above market price with what he called “pocket money.” He was dubbed “a one-man inflation spiral.”
Unlike other Japanese investors at the time, who generally kept low profiles, Kawamoto seemed to relish the spotlight. He called press conferences frequently, and quickly became the most public face of the real estate bubble, which squeezed many local people out of the market entirely. Kawamoto insisted he was no speculator, though. He said he only wanted to help with the housing situation, but he seemed to be more talk than action.
Political backlash ensued, including a very public war of words with then-Mayor Frank Fasi, who had proposed banning foreign buyers from investing in residential real estate. Kawamoto said he wanted to build affordable housing on Oahu, but insisted on first meeting with the mayor to see if he had his support. The mayor insisted that Kawamoto go through the housing department, like any other developer.
The two swapped insults in the news media. Fasi called Kawamoto a “jackass” and said “I think he’s all mouth.” Kawamoto said the mayor acted like a “lunatic.” Everyone looked bad.
By his own accounting, Kawamoto was always an odd duck. In a 1989 interview with The Honolulu Advertiser, he said, through an interpreter, that his parents had six children, and “out of the bunch just one strange child.” Him. Among his early eccentricities, he explained, he used far more towels to dry himself after bathing than anyone else, and he demanded that his mother arrange his food on his plate until it suited his aesthetic sensibilities.
Like Donald Trump, America’s homegrown odd-duck real estate mogul, Kawamoto was the scion of a successful real estate investor. Kawamoto’s father made a fortune buying up tracts of bombed-out Tokyo land after World War II. He also ran a kimono company, which Kawamoto took over at a young age, though he was far more interested in building upon the family’s real estate holdings. He eventually came to own about 60 buildings in Tokyo’s business and entertainment districts, many occupied by nightclubs, hostess bars and pachinko parlors. Kawamoto became known as “landlord of nightspots.” When property values skyrocketed during Japan’s bubble period, Kawamoto, who has never married, became one of the wealthiest men in Japan.
Kawamoto teared up in 2007 on the day he put three low-income native hawaiian families in his Kahala homes.
In Hawaii, Kawamoto insisted that he wasn’t a speculator, and tried hard to paint himself as a philanthropist, who wasn’t concerned about making money off his local investments. He said he wanted to help Hawaii by providing affordable housing in a tight housing market. In 1988 he pledged to build 2,000 houses on Oahu to correct “wrong impressions” about Japanese investors. He made some false starts, but he never built any housing here.
There was, for instance, the second phase of housing construction at Kapolei, which the state had picked him to build. But Kawamoto bailed out of the project because, he said, local politicians wouldn’t agree to let him hand out keys to the new homes once they were built. There was also the rental apartment complex he announced that he would build in Kakaako, but he never followed through. And there were the 147 acres he bought in Kihei, where he planned to build 1,050 homes—half of them affordable units. But after disagreements with the county over water, sewer and drainage, that project fell through, too.
As eccentric billionaires tend to be, Kawamoto was full of surprises. In 1988 he bought the former Portlock estate of industrialist Henry Kaiser for $42.5 million—at the time the highest price paid for a house in the U.S. Six years later, declaring that Bishop Estate, the leaseholder, wanted too much money for the fee interest on the property, he simply walked away from the house, surrendering the keys and swallowing the loss.
There were petty incidents, like in 2001, when he tore up the driveway that two of his neighbors used in Kahaluu and posted a “no trespassing” sign. It was Christmas Eve.
There were incidents that sent shockwaves through entire communities. In 2002, he evicted residents from 800 homes in Hawaii and California (where he actually had built housing), initially giving tenants just 30 days notice, but later extending that by 60 days. The uproar over the mass evictions led California to strengthen its tenants-rights laws.
The personal belongings Kawamoto left at his former properties were sold at auction in November.
In Hawaii, the evictions preceded the mass sell-off of his residential properties, many of which had fallen into disrepair. It also marked the beginning of his investments along Kahala Avenue.
By 2006, Kawamoto’s presence along Kahala Avenue had become so distressing to his neighbors that the Waialae-Kahala Neighborhood Board formed a blighted-properties committee. It may as well have been called the Genshiro Kawamoto Committee. “What to do about Kawamoto” was a constant topic of discussion. Neighbors considered a lawsuit, but decided that taking on a billionaire with advanced legal representation would be prohibitively expensive. They talked about approaching the Japanese Consulate, and they considered protesting during the Sony Open. But mostly, they railed against the City and County of Honolulu for not cracking down harder on Kawamoto for numerous code violations.
Constant pressure from Kahala residents eventually led the Honolulu City Council to create a new property blight law, dubbed the Kawamoto Bill, which raised the fine for unresolved property neglect violations from $1,000 a day to $5,000 a day. It’s unclear if that got Kawamoto’s attention or whether the timing was coincidental, but the month after the fines went into effect, Alexander & Baldwin announced it had bought Kawamoto’s properties.
Not everyone on Kahala Avenue was happy to see Kawamoto go. For the three native Hawaiian families house-sitting in Kahala, it was Kawamoto who was the angel.
“Whatever anybody else has against him, we don’t see it like that,” says Trisha Kahale, who was 14 when her mother and four sisters moved from a homeless shelter in Kalaeloa to the four-bedroom, two-story colonial home along Kahala Avenue. “He let us live here, in a place like this. He let us live here freely, however we wanted to. He never bothered us. We could party here and he wouldn’t even grumble.”
Seventeen people live at the Kahales’ residence now, including grandchildren and significant others. They and the other Hawaiian families have until March 1 to move out, and Alexander & Baldwin has put them in touch with a social service agency to help relocate them.
Kahale says the use of the house helped the family get on its feet. “Everybody and their other halves are more stable now and more able to afford their own stuffs,” she says. “Even if it’s bad we do have to make it so short in Kahala, we still enjoyed it while it lasted.”
Kawamoto could not be reached for this story, but HONOLULU Magazine got an exclusive interview with him in 2007, when he was happily still talking about his Kahala Avenue Mission. At the time, he planned to put Hawaiian families in at least eight homes.
“So the eight families, say they have 50 relatives and friends each, that will bring another 400 people to visit Kahala Avenue and have parties,” he said. “I want that community of 400 to play on the beach. That’s what I really wanted. If every weekend, a couple of hundred people visit the families and have fun, the project will be successful.”
When we asked Kawamoto what drives his Hawaii real estate decisions, he said: “I don’t actually think of what I do as a business. It’s a game. If there’s something I’m interested in, I just do it. Maybe you want to ask me why I’m giving away so many millions now on Kahala Avenue and not asking for anything back—do you want to ask me?”
We did, and so—after Kawamoto explained that he only uses his private money in Hawaii, never his business’ money—he said: “The whole point of the homeless people is because I wanted to do something fun with the money. The hundreds of millions don’t really matter to me. I just want the families to be happy and have fun.”
When we asked him about his hobbies, he said he enjoys gardening and “styling and decorating” his houses. Then he said this: “Maybe you can say Kahala Avenue is my hobby, too. Instead of styling a house, I’m styling a town. I’m styling Kahala Avenue.”
Now, a decade after his grand makeover project began, Kahala Avenue is free to return to its original style.
http://www.honolulumagazine.com/Honolulu-Magazine/January-2014/The-Worst-Neighbor-on-the-Block-Genshiro-Kawamoto/
