LIHU‘E — More than 20 years after Hurricane Iniki blew the life out of the iconic Coco Palms Resort, its property owners are still hopeful of finding the right developers to return the former Wailua beachfront hotel to its former
LIHU‘E — More than 20 years after Hurricane Iniki blew the life out of the iconic Coco Palms Resort, its property owners are still hopeful of finding the right developers to return the former Wailua beachfront hotel to its former glory.
“We have millions of dollars invested in this asset; no one wants to see it redeveloped more than we do,” said Phillip Ross, of Coco Palms Ventures LLC. “It is an anchor around our necks financially, and we would like to get rid of it.”
Ross and business partner Walt Petrie specialize in large enclosed malls on the Mainland. Ross said the priority of Coco Palms Ventures is to find a developer with the finances to redevelop the property.
Coco Palms is the only major hotel that never reopened after Iniki hit Kauai on Sept. 11, 1992. Two years later, Wailua Houselots resident Maryanne Kusaka was elected mayor of Kauai, a position she held until 2002.
“When I was mayor, I really wanted to have all the hotels back in operation, and Coco Palms and Poipu Beach were the last two,” she said.
Poipu Beach Hotel eventually reopened as a Marriott property, completely redone. That leaves Coco Palms.
“I really have nothing to do with it anymore, and it really breaks my heart because I really hoped we could return that property to a true Hawaiian hotel, a hotel that had the reputation it did in its years of glory under Mrs. (Grace) Guslander, but I guess that’s not to be, as nothing had been favorable for the owners,” she said.
Despite damages inflicted by ‘Iniki, insurance records show the hotel was rebuildable. But over the course of nearly 21 years of inaction, a fire, vandalism and theft added to the property’s demise.
The latest set of permits originally granted in 2005 called for demolishing the decaying structures and rebuilding the hotel by Jan. 25, 2010.
“We had a partner early on in the go-go days of 2004, 2005, 2006,” Ross said. “Because of the delays in getting the SMA (permit) and the Planning Commission declining the health center, along with the economy going to hell, starting in 2007, our condo sales were very brisk in the first three months of 2007, and then they dried up.”
With the 2010 deadline for the permits approaching, the Kauai Planning Commission granted developers a three-year extension to Jan. 25, 2013.
County spokeswoman Beth Tokioka said Mayor Bernard Carvalho Jr. at that time agreed with the commission’s decision.
“The mayor viewed this as a last chance to bring Coco Palms back to life as some sort of a resort development,” she said.
But in the following three years, there was virtually no movement on the property, Tokioka said.
When Jan. 25 arrived, the permits expired without an extension request from Coco Palms Ventures.
Then on Feb. 6, Ross sent a letter to Planning Director Michael Dahilig asking for yet another extension, which was eventually denied by the commission on April 30, following a contested case hearing.
‘Ready to go’
Ross said the late request to the commission was solely related to investor Patrick Duddy, who said he had the commitment of other investors ready to move on the project.
“We were ready to go, we had the funds available,” said Duddy, who never disclosed to the media who those investors were, because “they could not afford any negative press.”
Ross said he knows two of the potential investors mentioned by Duddy, and both live in Hawaii.
“We gave them two different business opportunities, to acquire or joint-venture the project,” Ross said. “They didn’t find either one acceptable, one of which was very attractive, or should’ve been very attractive to them, but they could never pull the trigger.”
At some point in the last few months, the relationship between Duddy and Coco Palms Ventures apparently turned sour.
“Patrick Duddy and his group were never able to execute even a letter of intent,” Ross said. “I haven’t spoken to him in two months and don’t intend to, and he’s never been authorized at any time to represent me or Coco Palms Ventures LLC.”
Duddy, who called himself the “mouthpiece” for the landowners, said he spent a considerable amount of money and energy on the Coco Palms project.
“I spent about $500,000 of my own money and two years of my life, so I’m not real happy,” Duddy said.
Ross had different numbers.
“He told me $50,000,” Ross said.
Carvalho and Duddy
Duddy said that in the very beginning, when he started working with Carvalho on the project, there were Korean investors lined up, the property was in escrow and everything was “fantastic.”
“And then that deal fell apart, and the mayor got a little agitated,” Duddy said. “At that point and time I almost took my money and left and went somewhere else. But I sucked it up, because some partners wanted me to.”
Tokioka said that in the fall of 2012, Coco Palms Ventures indicated it had a new investor, and Carvalho was hopeful something might develop.
The administration had no details on the proposed deal, she said, but they heard it involved an investor from Korea. That deal didn’t happen. In December, Carvalho called Ross to find out his intentions regarding the approaching Jan. 25 deadline for his permits.
“Ross did not indicate that he would be asking for an extension, and also indicated there were no other investors on the horizon at that time,” Tokioka said.
Then on Jan. 24 or 25, Duddy contacted Carvalho, who agreed to a meeting, she said. Up to that point, all contact relative to Coco Palms had been with Ross, and Carvalho was unclear how Duddy was involved in the project, Tokioka said.
Duddy said the administration “took a hardline position” at that meeting and that Carvalho said he wasn’t sure if he would honor another permit extension. It would be, he said, “political suicide” to support it.
“It had nothing to do with what was good for the county,” Duddy said. “I know what was good for the island of Kauai was me and my partner building (Coco Palms).”
Tokioka said Carvalho doesn’t recall the exact words used in the discussion at that meeting with Duddy, but he recalls it as a “simple, straightforward” discussion where he told Duddy he could not intervene. He encouraged him to speak to Planning Director Michael Dahilig to find out if there were any options to him and Coco Palms Ventures.
For whatever reasons, Duddy chose not to contact Dahilig, and the deadline passed, Tokioka said.
“The petition for the revocation of the permits was filed by the Planning Department on Jan. 29,” she said. “The mayor fully supported this action.”
‘Little island’
Duddy said Kauai has a reputation of being difficult, and some of his “very good friends” who are building on the island are having similar problems. He said he is going to take his money and build somewhere else.
“I had good intentions, I was going to invest a substantial amount of my inheritance in there,” said Duddy, adding he had $3 million of his own money and $15 million from his partners in the deal.
Duddy said he and Kusaka worked diligently to build a historical cultural center at the new Coco Palms. Duddy said he would have dedicated a park in the back of the property and was going to “take control of the beach” and spend about $800,000 widening it by the Sea Shell Restaurant.
“The people of the island should know, they just lost out on a good deal,” Duddy said. “I will never, ever build on Kauai. I will never. And I’m part of a huge hotel chain that is moving forward right now.”
He said the new Coco Palms was going to be an asset and showpiece, but the property is now going to end up in litigation.
“Prudential is going to sue the county, and the county is going to pay thousands upon thousands of dollars in legal fees,” said Duddy, adding he knows the administration is going to try to take the property through eminent domain.
“Prudential is sitting, waiting for you guys,” Duddy said. “And you know what they told me? That they’re going to own that little island by the time they’re done with you. So you just be careful over there.”
Tokioka said although the county does have legal authority to take private property for public purpose under eminent domain, only the Kauai County Council can authorize such a proceeding. But there no such plans at this time, she said.
Prudential spokesman John Chartier said the money for the loan on the property came from a Prudential-managed fund.
“That loan is now in default,” said Chartier, adding that Prudential is “considering its options” for the property.
“Do we foreclose on the property? Do we try to work with (Coco Palms Ventures) to figure out a resolution?” he said. “We are trying to figure out what the best option is.”
Chartier said Prudential is not in litigation with the county and is cooperating with the administration. He said Prudential has no association with Duddy, and he has no ownership interest in the property.
“Everybody wants to see this positive resolution come out of this,” he said.
Carvalho never mentioned specifically what he envisioned for the property, because he felt it should involve a community discussion if and when the permits were revoked, according to Tokioka.
Now that the permits have been revoked, Carvalho wants eventually to convene a community meeting, she said.
Earlier this year, the state Legislature approved a $270,000 grant in aid to the Hawaiian Islands Land Trust to initiate a process to find out the community’s vision for the property, and ultimately fundraise the money to acquire it.
• Léo Azambuja, staff writer, can be reached at 245-0452 or lazambuja@ thegardenisland.com.
