LIHU‘E — Two decades after Hurricane ‘Iniki delivered a merciless blow to Coco Palms Resort in Wailua Beach, the iconic hotel — now a visual blight on the island’s busiest corridor — may have a much more difficult time returning
LIHU‘E — Two decades after Hurricane ‘Iniki delivered a merciless blow to Coco Palms Resort in Wailua Beach, the iconic hotel — now a visual blight on the island’s busiest corridor — may have a much more difficult time returning to its former glory, after its permits to re-develop the property expired last week.
County Planning Director Michael Dahilig announced he filed a petition Tuesday asking the Kaua‘i Planning Commission to revoke the hotel’s Special Management Area, Variance, Project Development and Zoning permits. He also issued an order to show cause against the current owner of the decaying property, Coco Palms, LLC Ventures.
Dahilig has scheduled a meeting before the Planning Commission on the issue for Feb. 12 at 9 a.m. to get answers from the property owners on why they have not started construction and why they have not filed an extension request for their permits, which expired Friday.
Patrick Duddy, one of the potential investors in Coco Palms, said yesterday that he is ready to build on the property, that he has been in contact with the county, and that the move to revoke the permits is the county playing “hardball.”
Mayor Bernard Carvalho Jr. and Kaua‘i County Council Chair Jay Furfaro released a joint statement criticizing Coco Palms’ inaction.
“The owners have had ample time to seek solutions and yet we are still at square one,” the statement reads. “It’s time to move forward and look to other options that will address the future of this historic site. Once the permit issue is resolved, we will be in a better position to discuss what those options might be.”
Dahilig said he inspected the property on Saturday, and he saw nothing that resembled construction.
“Twenty years of blight and inaction must stop now,” Dahilig added.
The new resort was supposed to be ready in 2010, in compliance with permits granted in 2005. But when the date was closing in, the developers were granted a three-year extension to allow them to have the site demolished and rebuilt by Jan. 25, 2013.
“The extension was granted with the understanding that the project would be completed by the deadline, however, the property remains in limbo with no foreseeable action in sight,” Dahilig said in the release. “I believe revocation of permits is the proper course of action at this time.”
The expired permits would have allowed the Coco Palms reconstruction to include 200 multi-family dwellings and 48 hotel units.
The permits also included the redevelopment of the Seashell Restaurant north of Wailua Beach, a pedestrian bridge over Kuhio Highway and other traffic improvements.
Coco Palms, LLC bought the property in 2006 for $12.3 million, according to county records. The entire property is subdivided into smaller condominium property regime units.
County Real Property Division staff said Tuesday that the property is worth roughly $13 million in today’s market.
The county charges $7.14 per $1,000 of assessed value from lands zoned hotel and resort, which means the landowners were paying approximately $1.8 million in annual property taxes from the land alone.
The county also charges $8.20 per $1,000 of assessed value of buildings on lands zoned hotel and resort, but the decaying structures have no value.
County staff said there is no way to know how much the county will collect in taxes in 2014 until the property is a re-assessed at market value later this year.
‘Failure to perform’
At a public meeting a year ago, the commission received a letter from the developers transmitting the annual progress and status of the project and its compliance with a set of conditions.
Commissioners were particularly upset that no representative from the landowners was present at the meeting.
“It’s a little inconsiderate on their part … for them not to even show up to this meeting, it’s kind of disrespectful,” Commissioner Jan Kimura said at the meeting Jan. 17, 2012.
Commissioner Hartwell Blake’s premonition that the commission would be faced with yet another extension request in 2013, however, didn’t materialize.
Based on his investigation, Dahilig said he believes there is a “failure to perform” according to the conditions, and asked the commission to appoint Richard Nakamura as a hearings officer and set a hearing date with him for March 28.
‘We’ve got everything ready’
Former Mayor Maryanne Kusaka said she was “very sad” after hearing that the county had moved to revoke the permits.
“I worked very hard since I was mayor to bring this property back, even working pro bono,” said Kusaka, adding she wanted to see the property return to its “full glory.”
Lately, Kusaka had been working with a real estate company, trying to close a deal between current owners and investors.
Patrick Duddy was one of the interested parties, and had spent several months looking for investors, according to Kusaka.
“I think he was close to consummating something really wonderful,” she said.
Duddy said Tuesday that he had secured investors and capital, and was ready to build. He had been in communication with Carvalho and department heads, and they were aware he was ready to move on.
“There is nothing more in the world that I want to do than rebuild the Coco Palms,” Duddy said. “We’ve got the money, we’ve got the investors, we’ve got everything ready to go.”
Kusaka said that with the permits revoked, the developers will have to go through an entire permitting process, which could take five to six years.
She said the revocation of permits would not change the value of the land.
“It will just cost more money to whoever the developer is,” she said. “It doesn’t mean the property will be sold for any less.”
