Obama and the Hawaii beach house loopholes
As Barack Obama entered the home stretch of his presidency, his close friend Marty Nesbitt was scouting an oceanfront property on Oahu, the Hawaiian island where the two regularly vacationed together with their families.
A home in the nearby neighborhood of Kailua had served as the winter White House for the Obama family every Christmas, and photographers often captured shots of Obama and Nesbitt strolling on the beach or golfing over the holidays.
The prospective property was located just down the shore in the Native Hawaiian community of Waimanalo. Wedged between the Koʻolau mountains that jut 1,300 feet into the sky and a stunning turquoise ocean, the beachfront estate sprawled across 3 acres, featuring a five-bedroom manse, gatehouse, boat house and tennis courts. Fronting the property was a historic turtle pond that used to feed Hawaiian chiefs. Local families took their children to splash and swim in its calm waters.
The property had one major problem though: a century-old seawall. While the concrete structure had long protected the estate from the sea, it now stood at odds with modern laws designed to preserve Hawaii’s natural coastlines. Scientists and environmental experts say seawalls are the primary cause of beach loss throughout the state. Such structures interrupt the natural flow of the ocean, preventing beaches from migrating inland.
But the sellers of the Waimanalo property found a way to ensure the seawall remained in place for another generation. They asked state officials for something called an easement, a real estate tool that allows private property owners to essentially lease the public land that sits under the seawall. The cost: a one-time payment of $61,400. Officials with the state Department of Land and Natural Resources approved the permit, which authorized the wall for another 55 years, and Nesbitt purchased the property.
State officials and community members say the Obamas will be among the future occupants.
The easement paved the way for building permits and allowed developers to exploit other loopholes built into Hawaii’s coastal planning system. Nesbitt went on to win another environmental exemption from local officials and is currently pursuing a third — to expand the seawall. According to building permits, the Obamas’ so-called First Friend is redeveloping the land into a sprawling estate that will include three new single-family homes, two pools and a guard post. The beach fronting the seawall is nearly gone, erased completely at high tide.
Community members are now rallying against the proposed seawall expansion. Some are directing their criticism at Obama, who staked his legacy, in part, on fighting climate change and promoting environmental sustainability.
Obama’s personal office declined to comment, referring inquiries to Nesbitt. And Nesbitt, who declined to be interviewed, would not directly address questions about ownership, only saying that he and his wife bought the land and were “the developers” of the estate.
In written responses to questions, Nesbitt, now chair of the Obama Foundation board and co-CEO of a Chicago-based private-equity firm, said the steps he’s taken to redevelop the property and expand the seawall are “consistent with and informed by the analysis of our consultants, and the laws, regulations and perspectives of the State of Hawaii.” Any damage the structure caused to the Waimanalo beach, he added, occurred decades ago “and is no longer relevant.”
In Hawaii, beaches are a public trust, and the state is constitutionally obligated to preserve and protect them. But across the islands, officials have routinely favored landowners over shorelines, granting exemptions from environmental laws as the state loses its beaches.
Over the past two decades, officials have awarded seawall easements to more than 120 property owners, who have sometimes paid hundreds of thousands of dollars to bypass rules designed to protect the public shoreline, according to an investigation by the Honolulu Star-Advertiser and ProPublica. Among those owners are business and real estate executives from Hawaii, the mainland U.S. and Japan; a former Honolulu City Council chair; and a former managing director of a large hedge fund.
Intended to protect homeowners’ existing properties, easements have also helped fuel building along portions of Hawaii’s most treasured coastlines, such as Lanikai on Oahu and west side beaches on Maui. Scores of property owners have renovated homes and condos on the coast while investors have redeveloped waterfront lots into luxury estates. Meanwhile, the seawalls protecting these properties have diminished the shorelines. With nowhere to go, beaches effectively drown as sea levels rise against the walls and waves claw away the sand fronting them, moving it out to sea.
Researchers estimate that roughly a quarter of the beaches on Oahu, Maui and Kauai have already been lost or substantially narrowed because of seawalls over the past century. That has left less coastal habitat for endangered monk seals to haul up and rest and sea turtles to lay eggs. By midcentury, experts predict, the state will be down to just a handful of healthy beaches as climate change causes sea levels to rise at unprecedented rates.
The Department of Land and Natural Resources defended its approval of easements.
Spokesman Dan Dennison said most applications cover seawalls located along coastlines where there is little to no beach left. Rarely would removing an old structure significantly improve beach width or public access, he added.
Asked why officials did not consider sea level rise in approving easements, he suggested that the idea was to let nature take its course. “Coastal structures such as seawalls will invariably be damaged and maintained as long as possible during the lease term until the property is overwhelmed by flooding, erosion and wave inundation due to sea level rise,” Dennison said.
Still, the Department of Land and Natural Resources has begun making some changes due to concerns about climate change. Last year, for the first time, the agency reduced the term of a new easement, from 55 years to 25 years. Officials say they now “typically” abide by the lower limit for new easements, though property owners can extend them. “In 25 years time, they can apply for another one,” said Chris Yuen, a longtime member of the state land board, which oversees the department. “It gives a chance to look at it before the 55 years is up.”
Critics say the change is not enough.
Chip Fletcher, a coastal geologist at the University of Hawaii at Manoa and the leading expert on beach loss in Hawaii, said easements and other exemptions were perpetuating irresponsible development. More than 6,500 shoreline structures, including hotels, businesses and homes, are projected to be lost or damaged with 3.2 feet of sea level rise, which could occur by 2060, according to state projections. The Waimanalo property, Fletcher said, was a good example of a residential lot that is no longer fit for habitation.
“Why are we, on the one hand, warning the public about climate change and professing to value beaches,” he said, “and on the other hand allowing major renovations of a shoreline that was on its way out?”
Beaches and open coastlines have always been central to Hawaii’s way of life. For centuries, Native Hawaiians enjoyed access to the ocean’s life-sustaining resources. Natural sand dunes provided protection against strong storms and served as a place for Native Hawaiians to bury their loved ones.
After Hawaii became a state in 1959, development of homes and hotels along the coastlines exploded as investors sought to capitalize on what was becoming some of the most valuable real estate in the country. An environmental review commissioned by the state in the 1970s found that three-quarters of the state’s sandy coastlines were now hugged by private property, curtailing public access to shorelines. Many property owners erected seawalls to try to hold back the ocean.
By the 1990s, scientists were warning that those seawalls were causing significant beach loss on all the Hawaiian islands.
Alarmed by these losses, state officials in 1997 released a roadmap for protecting the state’s beaches. The report emphasized that the seawalls were destroying coastal ecosystems, threatening the state’s tourist-driven economy and limiting the public’s access to beaches and the ocean, a right enshrined in the Hawaii Constitution.
If beaches continue to disappear throughout the state, the report warned, “the fabric of life in Hawaii will change and the daily miracle of living among these islands will lose its luster.”
The report laid out a so-called no-tolerance policy to forbid new seawalls and sought ways to encourage development farther inland. But the state took a relatively hands-off approach to the hundreds of seawalls that had already been built.
Hawaii “must balance the preservation of our beaches and dunes with the protection of private lands and public investment,” wrote Michael Wilson, the chair of the Hawaii Board of Land and Natural Resources, which oversees public lands, in 1998. “To simply let these investments wash into the sea is not a rational management decision and preserving beaches is not about tearing down walls.”
Even then, though, global warming’s risk to property owners was clear. The document warned the ocean could rise 1.6 feet by 2100, a fraction of today’s estimates. Scientists now predict the sea will rise 3.2 feet by the mid to latter part of this century. It’s also plausible, they say, that the sea could rise 6.5 feet by 2100. In Hawaii, sea level rise could be 20% higher than those global estimates over the course of this century due to melting ice in Greenland and Antarctica, Fletcher said.
In the two decades since the report was released, property owners have continued to harden the shoreline and develop along the coast using myriad loopholes in Hawaii’s laws and policies.
The most destructive for Hawaii’s public coastlines has been so-called hardship exemptions. Claiming that the ocean threatens their homes, coastal property owners have obtained approvals from state and county officials to erect concrete walls, sandbags and mounds of boulders. Scientists say those hardship exemptions, which are allowed under state and county laws, virtually ensure that every coastal property in Hawaii will eventually be hardened.
Seawall easements, by contrast, ensure that those shorelines already armored will remain so for decades to come, perpetuating the development of coastal properties.
State Rep. Cynthia Thielen, a Republican who represents the Kailua and Kaneohe Bay areas of Oahu and has fought for the protection of Hawaii’s beaches for decades, said government agencies have largely failed.
“I wish we had the same passion and awareness and involvement in saving our beaches and shorelines and getting rid of the hardening as we have with some other environmental issues,” Thielen said. Hawaii has been a national leader, for instance, on renewable energy. In 2015, it became the first state to set a goal of eliminating fossil fuels completely from its power grids, over the course of three decades. “I don’t know what it takes.”
While state lawmakers have introduced numerous bills over the years to tighten public shoreline protections, many have failed amid opposition from developers and the real estate industry.
In 2015, the year that Nesbitt purchased the Waimanalo property, the Legislature considered a bill that would require new development to take into account projected sea level rise and prohibit building in areas that were expected to be significantly impacted by rising waters.
Lobbyists for developers and the real estate industry argued that there wasn’t enough scientific evidence to support the measure. Sea levels, they argued, may actually fall, not rise.
It would “be more appropriate to have the Legislature fund an effort to have a study done of how sea level rise or fall will impact coastal communities,” the Building Industry Association of Hawaii said in written comments opposing the bill.
In fact, the United Nations had just released a stark report on the risks of climate change, including rising seas around small islands.
The bill, however, got little traction in the Legislature.
Two years later, in 2017, state lawmakers debated a bill that would make it much harder for property owners to get special exemptions from counties to build seawalls and other shoreline hardening structures. Lobbyists for developers again argued that there wasn’t enough scientific evidence to justify the bill. They suggested more study.
The bill died.
State Rep. Chris Lee, a Democrat and a former chairman of the Committee on Energy and Environmental Protection, said real estate agents and other development interests “want to be able to keep pushing properties, especially along the shoreline. That’s the stuff that sells for millions or tens of millions of dollars.”
He added, “Trying to hide any sort of risk when it comes to sea level rise is something that can keep properties moving faster and for higher values.”
“They Request It, They Get It”
The Nesbitt property has a storied history.
The lot, along with other prime land along the Waimanalo coastline, was part of a 200,000-acre land trust that Congress reserved exclusively for Native Hawaiians in 1920, according to the state’s Department of Hawaiian Home Lands, the agency that oversees the trust. However, the land was sold to private parties. The state later resolved claims to those parcels and thousands of other acres as part of a $600 million settlement.
In 1930, Julia Grossman Wall, the daughter of a prominent Chicago businessman, developed the property into an elegant European-style estate equipped with a spacious main house, servants’ quarters, boathouse and bathing pavilion.
The property played host to parties for Hawaii’s elite and in later decades television and film shoots, including the popular TV show “Magnum P.I.,” which began airing in the 1980s. A bronzed Tom Selleck can be seen strolling along the sandy beach fronting the property, often with a bikini-clad co-star, though what was left of the beach is now largely gone.
To walk the shoreline, one has to slosh their way through the ocean, scrambling over loose rocks and debris from deteriorating seawalls protecting about half a dozen properties.
In 2014, Grossman’s granddaughter, Eve Anderson, who served a short stint as a Republican state legislator, put her estate up for sale for $15.7 million.
The property wouldn’t be worth much, though, if she couldn’t assure prospective buyers that the seawall could continue to protect the estate. She applied for an easement. “If the wall goes out,” Anderson told the Star-Advertiser and ProPublica, “then half of the house is going to be left hanging without much underneath it.”
The process, set up to determine whether walls can remain in place, was designed to be rigorous because state officials are making long-term decisions about the use of public trust lands along sensitive shorelines and beaches.
The requests are vetted by conservation officials at the state Department of Land and Natural Resources. A recommendation then goes to the department’s land board for a decision. If approved, the Legislature and governor must also sign off.
In practice, however, the process has been more of a formality.
According to a review of applications by the Star-Advertiser and ProPublica, coastal authorities have approved the vast majority of easement requests for older seawalls since 2000, shortly after new policies were put in place to preserve shorelines. During the past two decades, the coastal lands office recommended the land board approve 65 requests for seawall easements on Oahu, fronting some of the island’s most treasured beaches. The agency opposed an additional 10 easements on the island, but the land board approved half of them anyway, allowing walls to remain on beaches in Waialua, Maili and Lanikai.
Land board Chair Suzanne Case declined to be interviewed for this story, but in a statement she said easement cases brought to the land board “have been thoroughly” vetted by the staff and her office. She stressed that the department had taken a much harder line against newer structures that have been erected illegally.
Like most easement requests for older seawalls, Anderson’s encountered little resistance. She hired Peter Young, the former head of the state land board who now runs a private land-use consulting firm, to shepherd her application through the process.
Conservation officials said in their analysis that public shoreline access and beach width would likely be improved substantially if the wall fronting Anderson’s property was removed. But demolishing the wall could also harm Anderson’s home and other structures on the estate and potentially damage neighboring lots, they wrote, so allowing the seawall to remain was “not unreasonable.”
Sam Lemmo, who has led the Office of Conservation and Coastal Lands for two decades, said he struggled with whether to recommend approval of the Waimanalo seawall. “We agonized over this one,” he said.
Ultimately, the risk of litigation from private property owners who could be harmed by the wall’s removal was too high, he said.
In November 2014, the land board gathered for its bimonthly meeting in a small room in the Kalanimoku building in downtown Honolulu, which hosts a maze of crowded government offices. The seawall easement, part of a long agenda, was approved unanimously without any discussion, according to minutes of the meeting.
In the spring of 2015, while Obama was in his seventh year in office, Nesbitt, under an entity called Waimanalo Paradise LLC, closed the sale for $8.7 million. At the time, Nesbitt told Fox affiliate KHON2 in Hawaii, “I am the sole purchaser and did not have any partners or co-investors in the transaction.” The White House also played down the purchase. “The president is not a party to this transaction,” a senior administration official told Politico.
But a source with firsthand knowledge of the matter says the property was being developed, in part, for the Obamas. And in separate interviews with the Star-Advertiser for this story, Lemmo, the state’s top conservation official, and Cedric Duarte, a spokesman for the Department of Hawaiian Home Lands, referred to the estate as Obama’s property. Neighbors and workers told Hawaii News Now this year that they signed confidentiality agreements.
Presidential purchases often carry some mystery. The Obamas’ identity was initially shrouded last year when they bought a seven-bedroom mansion on Martha’s Vineyard in Massachusetts; a trust headed by James F. Reynolds, a longtime friend and onetime presidential fundraiser, oversaw the purchase. Likewise, when George W. Bush and Laura Bush bought their post-presidential home in Dallas, a friend made the purchase.
Obama’s office declined comment on the Waimanalo property, referring inquiries to Nesbitt. In written responses to questions, Nesbitt said “the Obama family and my family have been close for many years, and we have a long tradition of spending time together in Hawaii that I expect will continue.”
One month after the sale, the state Legislature unanimously approved a resolution granting the easement and allowing the wall to remain. The governor also signed off. The text of the one-page measure provided scant detail about the wall or the property, not even an address.
Lee, the state representative who introduced the resolution, said nothing stood out about the seawall.
Thielen, the Republican lawmaker who has championed environmental causes, said the Legislature has done little to serve as a check on the approval process. Lawmakers have approved all but one of the 38 requests submitted by property owners over the past five years. “They go in, they request it, they get it,” she said of applicants.
Thielen introduced a bill this year that would prohibit the state from granting any more easements until the Department of Land and Natural Resources adopts new rules that take into account sea level rise.
The legislation never got a hearing. State Rep. Nicole Lowen, a Democrat who represents Kailua-Kona and is the chair of the House Energy and Environmental Protection Committee, said she tabled Thielen’s bill because there were other measures that were “better written and worked on more collaboratively” with the state Department of Land and Natural Resources.
None of those bills addressed seawall easements.
For years, policymakers and scientists have talked about the need to encourage or require homes and businesses to move inland. But “managed retreat” in Hawaii hasn’t moved much beyond a concept.
Hawaii’s Office of Planning released a long-anticipated 67-page report on managed retreat last year. It provided a broad overview of the issues and challenges and concluded that retreat was “a necessary adaptation strategy,” but there was a lack of consensus among policymakers on “what needs to be retreated, where to retreat to and how much it will cost.”
Anticipating the massive dislocation of coastal communities in the coming decades, states such as California, Florida and North Carolina have also struggled to come up with a proactive approach to relocating shoreline development. Most retreat has been reactive, taking place only after a major disaster, such as a hurricane.
Some lawmakers and scientists in Hawaii say state regulators are failing to execute the powers that they already have to spur retreat from the shoreline, such as denying seawall easements and shoreline hardening requests.
“I think there are going to be places where we are going to have to allow the water to reclaim certain sections of our coastal areas, and then we have to look at what happens to the landowner. This is obviously a very difficult situation,” Thielen said. “But we can’t just keep postponing that by kicking the ball down the field 50 to 65 years. It’s just crazy. There is no justification anymore for continuing this knee-jerk reaction of granting easements to continue hardening our shorelines.”
Every small increment of sea level rise amplifies the risks of flooding from tsunamis, seasonal high waves, storm surges and intense rainfall, said Fletcher, the coastal geologist at the University of Hawaii at Manoa. The water table is also rising, creating less capacity for the land to absorb water.
Isaac Moriwake, an environmental attorney at Honolulu’s Earthjustice who has spent years fighting for the protection of public trust resources, called the approval of easements a “systematic giveaway of public beach land and access.” They effectively let private property owners maintain ownership of, and profit off, lands that would become public if the walls were taken out and the ocean was allowed to wash further inland, he said.
“We should be taking seawalls out, not rubber-stamping more and more of them,” Moriwake said.
Young, the former land board chairman who now works as a consultant, declined to discuss the Nesbitt property, but he said in general that by granting easements, the government could be helping to prevent a kind of “taking” of private property. In a situation where a site is being threatened by the ocean, “it could be that the public’s waves are taking away the private (owner’s) lands,” he said, rather than vice versa. “The wall stopped that taking.”
The legal record, however, argues otherwise.
Former Hawaii Attorney General Doug Chin issued a formal opinion in 2017 reinforcing that when the shoreline moves inland, the state ownership line moves with it. He argued that this did not constitute a taking of private property. “The Hawaii Supreme Court has specifically considered and rejected such claims,” Chin wrote.
A Loophole for Redevelopment
After gaining approval for the seawall easement, Nesbitt embarked on plans to redevelop the estate in Waimanalo. But there was a wrinkle.
Officials from the state Department of Land and Natural Resources had recommended an easement based on a “hardship” claim — the representation that the existing structures on the property could be damaged if the wall was removed. Now Nesbitt was proposing to bulldoze most of the structures on the site.
Under the state’s Shoreline Protection Act, property owners planning new developments along the coastline are required to obtain a local permit that’s designed to protect the environment from coastal development. If approved, the so-called Special Management Area permit can include additional safeguards, such as increasing how far back structures need to be from the shoreline.
But Nesbitt found another loophole. If a single-family home is less than 7,500 square feet, local officials can grant an exemption from the permitting process.
Last year, Nesbitt subdivided the property, proposing a 7,496 square foot home on one parcel and a 7,485 square foot home on the other, according to building permits, sliding just under the threshold.
Records also indicate that a 5,623-square-foot home is planned for one of the lots, as well as two pools and a septic tank.
Officials with Honolulu’s Department of Planning and Permitting granted Nesbitt an exemption. The office did not respond to multiple requests for comment.
Kukana Kama-Toth, vice chair of the Waimanalo Neighborhood Board, said Nesbitt’s consultants told her at a community meeting this year that one house is being built for the Obamas and another house for Nesbitt. A consultant for the development didn’t respond to a request to comment. Nesbitt simply said, “The property was subdivided because the subdivision creates optionality.”
Lemmo, the longtime state official overseeing coastal protection, said the case highlighted the weakness of “a bifurcated regulatory system in our shoreline areas, where regulation ends for us” and begins for the city. “We have had totally different perspectives on what should or should not happen,” Lemmo said of the redevelopment of coastal properties. “It’s a real disaster in terms of overall shoreline management.”
In 2018, state Sen. Donovan Dela Cruz, a Democrat and the chair of the upper chamber’s Ways and Means Committee, sought to shrink the loophole. His proposal would have reduced the size of homes that can be exempt from a permit in coastal zones, from 7,500 square feet to 2,750 square feet, and required counties to consider sea level rise when approving developments.
“We don’t need McMansions along the shoreline. There needs to be public access,” said Dane Wicker, the chief of staff for the committee. “And why build so close to the shore with erosion?”
But just like other measures before it, the bill encountered opposition from the Building Industry Association of Hawaii. Some county officials also worried the proposal would create too much work for them. The bill died.
This year, however, the Legislature passed a related measure.
While it would maintain the 7,500-square-foot exemption for homes in coastal zones, it would tighten restrictions for those situated directly on a shoreline impacted by waves. Such developments, regardless of their size, would have to obtain a special management area permit.
The bill, which strengthens other shoreline protections, is pending before Hawaii Gov. David Ige.
The Building Industry Association of Hawaii, which opposes the legislation, declined interview requests, but it pointed to the letter it sent to Ige urging a veto. “As the construction industry helps to build our way out of the recession,” wrote CEO Jessica Leorna, “we question the need for legislation which will halt single-family residential construction along Hawaii’s shoreline properties.”
A Bigger Wall Stirs Opposition
In February, after construction crews demolished the former Anderson estate, Nesbitt proposed another change to local officials: enlarging the seawall.
In order to protect the property from flooding because of sea level rise in the coming decades, developers are seeking to nearly double the height of some sections of the wall. After construction, the entire structure would stand between 9 and 11 feet tall. They also plan to build two more walls totaling 70 feet in length behind it for support.
The easement on the property prohibits such an expansion; old seawalls are expected to eventually fall into obsolescence so that new development will follow modern-day laws relating to shoreline development. And a Honolulu ordinance states “it’s the primary policy of the city to protect and preserve the natural shoreline, especially sandy beaches,” and it’s a “secondary policy of the city to reduce hazards to property from coastal floods.”
But Nesbitt’s representatives told local planning officials that not allowing the $3.2 million seawall renovation would cause hardship; the property’s owners had already invested millions of dollars in construction. They are seeking an exemption from the city and unveiled their plans at a community meeting.
A Native Hawaiian community group is pushing back. For the past two years, they have been using rocks to rebuild the walls of the historic turtle pond fronting the property, as well as working to cultivate native limu, or seaweed. They’re now worried the expanded seawall will cut off freshwater flowing into the ocean that’s needed for limu.
The group filed a formal objection in June, telling Nesbitt’s developers that they should remove the seawall or move it back so that the shoreline could migrate inland.
Others are also opposing the proposed expansion.
Kamuela Kala‘i raised her two children in the 1970s and 1980s in a home just a few lots down from the Nesbitt property. She remembers being able to walk the entire shoreline in the morning after her two children went to school. She said families frequently used to picnic in front of the seawall. “There was enough sand to do that,” she recalled. But even then, the ocean was already pushing up into the yard of the property, Kala‘i said.
She worries that expanding the wall will further degrade what’s left of shoreline.
“You should have thought about that before you bought the property,” Kala‘i said in an interview. “You should have done your own due diligence and not just think that you are coming over to buy a slice of paradise and I’ve got mine and I am going to wall everyone else out.”
Nesbitt hired Scott Ezer, vice president of HHF Planners, and Andy Bohlander, a coastal scientist at Sea Engineering, to conduct the permitting, environmental review and engineering for the seawall. They declined to be interviewed for this story. But in responses to written questions, they stressed that maintenance of the seawall was needed to protect both the property and the historic turtle pond. They said removing the wall would release large amounts of sediment into the water, which could get trapped by the rock walls of the turtle pond that extend out into the ocean.
They also argued that blaming the seawall for beach loss along the shoreline is “subjective and overly simplistic.” The turtle pond also changes shoreline conditions, they say, and its outer wall prevents waves from pulling offshore sand onto the shoreline.
Nesbitt’s developers must make their case to the larger community. City ordinance requires them to hold a public hearing before local planning officials can rule on their application for an environmental exemption. Officials expect such a hearing in the coming weeks.
Meanwhile, residents are anxious about the changes that might be in store for the local community with the arrival of high-profile neighbors. Kama-Toth, vice chair of the Waimanalo Neighborhood Board, said she would like to meet with Obama to discuss community concerns.
“In Hawaiian culture, we are very personal people,” she said. “We meet face to face, alo to alo, and that is how relationship building occurs.”
She said Obama’s past role as a community organizer should make him amenable to working with local residents.