Coco Palms doubts rising

WAILUA — The partially demolished, disemboweled skeleton of the Coco Palms Resort sits just mauka of Kuhio Highway in Wailua, seemingly still frozen in death after being killed by Hurricane Iniki in 1992.

Sporadically over the last 18 months or so, demolition crews have stripped the detritus from six reinforced concrete building shells, including plentiful amounts of asbestos that sat unaltered since the resort was devastated in the hurricane, never to reopen. Other structures — including the bungalow said to be favored by singer Elvis Presley in his occasional stays at Coco Palms — have vanished without a trace.

But increasingly, patience is growing thin within county government and the community for the project to rebuild Coco Palms and restore it to whatever glory it once enjoyed.

The Garden Island asked a half-dozen current and former officials in county and state government to weigh in on when — if ever — the reconstruction of Coco Palms will be finished. While only one of them would speak for attribution, all agreed that concerns have risen that the project will never see completion. The skepticism remains and appears to be growing despite insistence from the developers that while there have been delays, Coco Palms will indeed rise again.

County Councilmember JoAnn Yukimura was the only past or present government official willing to speak for attribution, but her views were representative of others.

“I draw my conclusions based on performance thus far: lots of talk but nothing to actually show,” Yukimura said. “As difficult as it is, it appears we need to hold close and honor our memories of beloved Coco Palms, but let go of the idea of bringing those days back.

“Instead, we should contemplate what the next life of that site is and work together to make something wonderful happen.”

Yukimura noted that proposals have floated from time to time for the Coco Palms property to be converted to park land, with its salvageable building frames repurposed as affordable or kupuna housing.“It may be time for that now,” she said.

Coco Palms Hui

Coco Palms Hui, an Oahu-based limited liability corporation, formed in 2014 to acquire and rebuild the Coco Palms property. Announced dates for rebuilding and reopening the hotel slipped from 2015 to 2017. More recently, Coco Palms Hui has said it intends to begin construction sometime next year with reopening projected for 2019 or 2020. Coco Palms Hui exists under the business umbrella of the Greene Waters Group, a Honolulu real estate developer.

Like most companies in its business, Greene Waters Group has an inconsistent record of delivering on its development promises. Its website, for example, identifies an Oahu Hotel called the Endless Summer Resort as opening this year. The property, according to the website, is to include a gigantic, artificial surf-generating pool.

But as this is written, the Endless Summer Resort still lacks a site, much less evidence of construction and no word on an opening date. Coco Palms Hui said its plans for the surfing hotel are on hold indefinitely, until it finished construction on and reopens Coco Palms.

The firm said its financing and construction plans are on target. Kauai County officials said Coco Palms currently has 24 pending building permit applications on file.

“Although the Kauai of 2017 may be vastly different from the Kauai of 1992,” said Tyler Greene, one of the two principals in Coco Palms Hui, “we believe that Coco Palms will fit wonderfully into the contemporary tourist economy of the island.

“A development of this magnitude has many challenges and obstacles and often takes much longer than desired or expected. We are proud of the progress we have made to date and grateful for the community, county and all the folks that have stood beside us. We are confident Coco Palms will be rebuilt.”

County’s role

The county has a great deal at stake in developments concerning any Coco Palms reconstruction. It has struggled for more than a quarter-century with an eyesore that is widely seen as a blight on the image of Kauai, especially for visitors who are heading north on Kuhio Highway after arriving at Lihue Airport.

Yet the county — and the state, for that matter — lack funds to buy the property outright and identify a viable adaptive reuse.

Because of that reality, Mayor Bernard Carvalho Jr. chose a measured tone when asked what he thought would become of Coco Palms.

Said Carvalho: “I join the community in their desire to see this site improved. The property has changed owners several times over the past 25 years and no one has yet been successful in redeveloping the property, which has been understandably frustrating for our residents.

“I have supported the efforts of the current owners to restore the property using the same footprint as the original Coco Palms. They have successfully completed the demolition process and disposal of hazardous materials, and they are now in the process of obtaining building permits. These permits do require the developer to hit certain benchmarks to ensure that the project moves forward in a timely manner.

“We’re hopeful that the developers will be successful in their efforts and I believe it would be premature at this time to discuss alternate projects for the site.”

Construction concerns

As the project sits idle, however, concerns have arisen about numerous aspects of the reconstruction:

w Although Coco Palms’ building permits are still under review, the county’s Engineering Division has concluded that the entire Coco Palms site is within the floodplain that could be inundated during a hurricane or tsunami. Although Coco Palms is permitted to rebuild on its original footprint, the resort must still comply with flood abatement standards in the current County Code.

Those standards are more stringent than they were in 1992. The code would require that any spaces at ground level — which were in use as hotel rooms in the original resort, could not house guest accommodations or would have to be completely flood-proofed.

Responding to a series of questions form TGI, Greene said: “All rooms will comply with relevant federal, state and county regulations.”

w The Kauai hotel economy of 2017 is vastly different from what obtained when Coco Palms was last in operation.

In 2014, Coco Palms Hui and Hyatt Hotels Corp. announced that Hyatt would manage the new hotel. Later, Hyatt said Coco Palms would be one of its “Unbound Collection” properties. In a 2016 news release, Hyatt described the collection as “a portfolio of new and existing upper-upscale and luxury properties.” Coco Palms Hui said “our agreement with Hyatt is confidential.”

However, asked to describe the market niche a reopened Coco Palms would occupy, Greene said it would be “a 3.5 star hotel” on a five-star scale. According to online hotel reservation provider Orbitz, that rating would be consistent with “mid-scale, convenience plus comfort.”

The difference could be critical since a newly constructed Marriott Courtyard hotel opened a few months ago just north of Coco Palms and a Hilton Garden Inn took over a renovated property just south of Coco Palms. Both hotels offer rooms in the $135 to $200 per night range and each is beachfront, away from Kuhio Highway and not subject to substantial traffic noise.

Greene declined to specify the rate schedule at a rebuilt Coco Palms. He said rates would be set by Hyatt once construction is complete. All the company would say of its plans for Coco Palms, however, was that “Hyatt does have a development agreement in place to manage the hotel. We do not have further details to share.”

w The state Department of Transportation has announced construction of an additional lane of Kuhio Highway directly in front of Coco Palms, which will bring the highway significantly closer to the hotel than is currently the case. The County Code does not require noise abatement measures, like sound walls.

Coco Palms Hui said “our architects, engineers and consultants will have appropriate sound mitigation measures built into the design.”

w Unlike its nearby competitors, Coco Palms will not have direct access to any beach. The beach across the highway from the hotel is comparatively narrow. Traffic volumes on Kuhio Highway are significantly greater than when Coco Palms was in operation.

In the past, Coco Palms has said it would address beach access issues by providing shuttle service, but not by construction of an overpass for guest use. In his responses to questions from TGI, Greene said “we are continuously evaluating beach access issues and will work to implement what we believe will provide the guest with the best hotel experience.”

Greene discounted doubts created by traffic noise and beach access.

“We believe in the appeal to Coco Palms and it being a beacon for old-style Hawaiian hospitality,” he said. “This will permeate the resort and will attract the guests we are hoping for. We have programs in place for both the traffic noise and for comfortable beach access.”

Financing questions

It remains unclear whether Coco Palms Hui has full financing in place to proceed with construction.

“The final mix of investors will be a combination of individual and corporate entities,” Greene said. “The current project cost is $140 million.”

Asked to identify the investors, Greene said, “As a matter of standard practice, we don’t release investor information.”

Information available in public records, however, suggests that Coco Palms Hui has struggled so far to attract investor support. In 2014, for example, Coco Palms Hui filed with the U.S. Securities and Exchange Commission to offer eligibility for U.S. visas in exchange for investment commitments of at least $500,000 by non-U.S. citizens. The program was intended to produce $28 million in investor commitments, according to the SEC filing, although only $1 million had actually been raised.

The filing also noted that BPG Hawaii LLC, another entity owned by Greene and Chad Waters, the other principal in Coco Palms Hui, intended to collect $800,000 in sales commissions and finders fees from the $28 million offering. How much the visa-for-cash offer produced is not known.

Though Coco Palms Hui declined to release information on its investors, a 2016 article in Pacific Business News quoted Greene as saying “Giving the community an opportunity to take an ownership share of this majestic place is important to us.”

To raise the capital necessary to proceed with demolition, Coco Palms Hui obtained a loan from Utah-based Private Capital Group, LLC., which specializes in investments in distressed properties. The company’s website says it is interested in “foreclosed or distressed commercial and residential developments that may require improvements, construction or rehabilitation.”

Coco Palms Hui declined to disclose the terms of its financing from PCG, but federal court records indicate that the firm has been involved — in some capacity — in 24 cases in U.S. Bankruptcy Court and eight other federal court cases. In one case that attracted media scrutiny, PCG sued a professional football player, whom they accused of defaulting on a $1.3 million loan.

The player, Marcell Dareus, who currently plays for the Jacksonville Jaguars, claimed that an imposter had actually applied for and received the loan. In 2016, a Utah federal judge dismissed PCJ’s suit against Dareus “with prejudice,” which barred PCG from trying to file a new case against Dareus. This raises into question PCG’s due diligence in assessing the financial positions of those to whom it makes loans.

Ownership dispute

Coco Palms has also struggled with the occupation of some of the property by a group of Native Hawaiians and other people who contend they hold rightful title to the land on which the resort would be reconstructed. Coco Palms Hui and the county attorney contend the occupation is illegal, but the small group continues to occupy the property. Forcible eviction of the occupiers — regardless of the legal merits of their status — could trigger a backlash in the Native Hawaiian community.

Some of the occupiers have been residing on the Coco Palms property for more than a year. A trial in Fifth Circuit District Court is set for Dec. 20.

Greene declined to say what Coco Palms Hui might do about the occupation — whether it wins or loses at trial.

“It would not be appropriate for us to comment on a pending legal action,” Greene said.

Coco Palms legacy

Yet the troubled current state of the Coco Palms project also seems to mask another debate — about what memory of Coco Palms is to be preserved or renewed by a hotel that might open in two or three years, or not at all.

Many longtime Kauai residents who knew Coco Palms well in its heyday say now that, by the time Hurricane Iniki struck, the resort was already well past its prime. The abandoned hulk of the hotel remained after the hurricane not because of the scale of the damage, but because Coco Palms lacked adequate insurance to rebuild.

Said Greene: “Although the property may have suffered pre-Iniki due to lack of capital improvement, the meaning of Coco Palms did not. Our followers seem to be more focused on the meaning and spirit behind the resort and are confident that we will bring that back.”

What Coco Palms Hui sees as the mystique of the property is driven to some degree by the memory of Presley, who visited the hotel frequently in its glory days and shot a movie there. Linda Deutsch, a legendary — now retired — reporter with The Associated Press in Los Angeles recalled that, as a teenager, she was national president of the Elvis Presley Fan Club.

But Deutsch said that modern-day fans no longer see Coco Palms as part of his legend. Connection with place for Elvis fans, Deutsch said is limited these days to Graceland, his mansion in Memphis.

However, Greene sees it another way. “Elvis Presley was and always will be connected to the Coco Palms Resort,” he said.

That may mean that the future of Coco Palms may hinge on whether it is true or not that, as the old saying about Presley goes: “Elvis has left the building.”

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Allan Parachini is a former journalist and PR executive. He is a Kilauea resident.