Special purpose revenue bonds eyed for Kona Jet Center

  • The Kona Jet Center will include a 36,000 square-foot hangar able to hold the largest private aircraft in the world, in addition to a 7,000-square-foot fixed-base operation, 50,000-gallon above-ground fuel facility and as much as 6 acres of new private ramp for its clients. (Courtesy photo/Special to West Hawaii Today)

KAILUA-KONA — The Senate Committee on Ways and Means will consider a bill Tuesday morning that would authorize the issuance of up to $50 million in special-purpose revenue bonds to assist in the development of the Kona Jet Center at the south end of the Ellison Onizuka Kona International Airport at Keahole.

The Kona Jet Center, being developed by AV8 Partners, will include a 36,000-square-foot hangar able to hold the largest private aircraft in the world, in addition to a 7,000-square-foot fixed-base operation, 50,000-gallon above-ground fuel facility and as much as 6 acres of new private ramp for its clients.

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AV8 partners is a holding company of Keahole FBO I LLC, the company identified in the bill currently making its way through the state Legislature.

“We are extremely pleased and grateful that the first reading of this bill has passed, and hope we are successful with the State of Hawaii in proceeding with special purpose revenue bonds later this summer,” said Matthew Clayton of AV8 Partners. “We believe our project will be a new level of service to the general aviation community in Hawaii, and the near 1,600 movements that (Ellison Onizuka Kona International Airport at Keahole) sees at the south side of the airport on a yearly basis.”

Clayton added that the project is expected to create hundreds of jobs during construction and employ a couple dozen full-time employees once up and running.

The bill making its way through the Legislature would authorize the Department of Budget and Finance to issue up to $50 million in special purpose revenue bonds to assist in planning, design, construction, equipping and operation of the facilities.

Special purpose revenue bonds allow the state to offer financing to help private capital improvement projects that are considered to be in the public interest. The bonds aren’t state money and are bought by private investors, according to the state Department of Budget and Finance. Those investors take on the risk of losing their investment, but the interest payments they receive during repayment are tax-exempt.

The bonds don’t affect the state’s credit rating, nor do they divert funds from other infrastructural needs.

“The great thing about this is it’s a private sector development,” said Sen. Lorraine Inouye (D-North Hawaii), who introduced the bill and whose district includes the airport.

Inouye said the Legislature has been looking for opportunities for public-private partnerships and, with the ongoing modernization effort at the airport, said this is a good opportunity to support the area south of the airport.

Clayton said phase 1’s total project cost is somewhere between $25-30 million depending on the final design features and that they hope to be operational in 2020, with this year focused on permitting, design, utility work and construction.

“At this stage of the project, AV8 is in discussion with numerous parties who have expressed interest in participating,” he added, “and we continue to explore options of strategic partnership.”

He said they’re interested in working with private sector neighbors at the airport and their main focus is getting “a healthy cashflow as soon as possible,” adding that they would only use as much capital raised through the bonds as they need.

“Our investors are interested in investing directly with our company,” he said. “It’s too early to say if they would invest in the bonds, though they may be interested because of the income and tax benefits.”

The company said in testimony to the Senate Committee on Transportation that the infrastructure will mainly serve private jets, and said it would also develop several millions of dollars worth of additional infrastructure for the Department of Transportation, such as ramp and road, which DOT would otherwise have to develop.

“This project calls for extension of roadways and utilities extended into our facility,” Clayton said. “All of this civil work is the responsibility of AV8 Partners to pay for and complete. We see other options at phase 2 of this project including the option for a much-needed and identified hotel for the airport and the hundreds and thousands of visitors coming through each year.”

Clayton added once they are operational, they’ll look at the market to determine the demand for that second phase.

Beyond contributing to aviation services and related industries, the company also touted in its testimony the potential to create revenue and jobs in the sectors of fuel, energy, food and beverage, tourism and more.

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The Senate Committee on Transportation recommended the bill be passed on Feb. 6, and the bill passed second reading on Wednesday. It was referred to the Senate Committee on Ways and Means that same day. That committee is scheduled to hold a public decision making Tuesday morning.

In its report recommending the bill pass second reading and get a referral to Ways and Means, the Senate Committee on Transportation said it “believes that this project will benefit the state by generating revenue through taxes, fees, and leases, and will also create jobs in various sectors for residents of Hawaii.”

  1. fishman2 February 17, 2019 7:04 am

    All that money to please the private jet owners. How does this help the rest of us?


    1. Kaipo Wall February 17, 2019 10:29 am

      They pay property taxes on their places in Kukio , Hualalai Colony , etc . Plus ramp fee taxes , purchase jet A , etc . Some are generous philanthropists , who at times benefit our community in tangible ways . Just people , like so many malahinis , who have decided to live here , at least some of the time . Only socialists begrudge them their money because they don’t have any of it themselves .


      1. fishman2 February 17, 2019 10:39 am

        If the want a garage for their private jets why should the State get involved in funding it? The State did not help me build my garage.


        1. briala February 17, 2019 5:50 pm

          Was your garage attached to a home you got a mortgage on? If so, the Country very likely did help you build your garage, in the same way the State is doing here, via its implicit guarantee of Fannie Mae and Freddy Mac bonds (that are behind most home loans.)

          That said, it’s not clear from the article why this venture could not have been entirely financed via the private market, and I would like to know why the state was interested in getting involved. Was this really the facility Kona is in most pressing need of?


          1. fishman2 February 18, 2019 6:27 am

            No, I built my garage later with my own money. Not part of my mortgage.


      2. Buds4All February 17, 2019 5:00 pm

        Ramp and Landing fees are minimal. Just like the yacht that came tru and dropped its anchor and got fined 250 bucks. Don’t be fooled


    2. Pest Outwest February 18, 2019 8:06 am

      Yeah, I hate to sound like some crazed socialist, but a project like this either has to make economic sense on its own for the owners, or it shouldn’t be done. There’s zero reason for the state or county to use its credit to support such a facility. The public benefit is ghostly at best.


  2. Mike Lumi February 17, 2019 7:15 am

    Another project benefiting the 1%. Watch them push out the smaller companies already there and raise the leases.

    Phase 2 Airport Hotel??? Hell no!!!!


  3. Kaipo Wall February 17, 2019 10:25 am

    give them their own direct entrance off of Kahilihili St ( the ext of Kaiiminani – connector to Makako Bay rd) The airport Keahole Rd is already way over crowded . All those millionaires and their services providers need an exclusive entrance anyway .


  4. Kaipo Wall February 17, 2019 10:55 am

    Here’s another thing the airport planners just are not talking about . Some day , God forbid , it is likely that a jet will somehow lose power on take off and have to ditch into the waters off of Keahole Point . The closest water launch rescue point is Honokohau Harbor . How many miles away ? And in the County organizing any response at all to an aircraft ditching , how long would that take ? Many lives will be lost . What they need to do is cut an ocean entry , large rescue raft capacity boat ramp and rescue raft holding sheds somewhere slightly to the north of Keahole Point . Stationing ocean rescue vessels , towing out large rescue rafts , that can be immediately launched by the trained airport FD personnel , without having to wait for a County of Hawaii response , to a ditched aircraft . This is a facility that may never be used , but were a plane ever to go down , it would be a total lifesaver . All aircraft passengers , both private and commercial , could board their flights with much more assurance , knowing that capacity was there. As things are now , it’s certain death . I suggest this now since they are in the midst of massive planning , construction and improvements . The perfect time !


  5. Buds4All February 17, 2019 4:57 pm

    Meanwhile the men’s room at the airport stinks and the new one will have warm towels and a bathroom boy to wipe their keesters. More for the rich!


  6. fishman2 February 18, 2019 8:22 am

    This whole thing stinks. Anyone know which government officials are pushing this? We want to know who not to vote for again.


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