LIHU‘E — Amid state investigations into alleged land use violations, the developers of the Coco Palms Resort maintain they are on track with plans to restore the once-renowned hotel over the next three years.
Representatives for developer Reef Capital Partners, also known as RP 21 Coco Palms LLC, told The Garden Island earlier this week of plans to complete demolition by the end of this year, commence construction in early 2024, and fully complete the project by the end of 2026.
“Since many in the community may not have always known or trusted the prior owners of Coco Palms, I’m personally taking a lead role to ensure we’re being responsible stewards of this property,” said John Day, chief financial officer for Reef Capital Partners, in an email response to The Garden Island.
“Reef Capital has the resources, experience and expertise to finally fulfill the promise to complete the restoration of this historic landmark after 30 years of failure by previous owners.”
Day estimated the total cost to complete the restoration will be more than $300 million.
Reef Capital Partners, a Utah-based real estate investment firm, is the latest developer to attempt to restore the hotel ruins after its destruction by Hurricane Iniki in 1992.
The company was initially involved in the project as an investor to previous developer Coco Palms Hui LLC, but began foreclosure proceedings in 2019 after Coco Palms Hui LLC allegedly defaulted on more than $11 million in financing on a $22 million mortgage.
Chad Waters and Tyler Greene, the managers of Coco Palms Hui LLC, have filed a lawsuit against Reef Capital appealing the foreclosure. But Day said the litigation “will have no impact” on the project.
RP 21 Coco Palms LLC, a Reef Capital company, officially took ownership of the property in May 2022.
“Since taking ownership roughly 18 months ago, the Coco Palms team has worked tirelessly to correct the decades of missteps and inaction by prior owners that led us to this point where (state Board of Land and Natural Resources) action was required,” Day said.
State terminates revocable permits
In April, the state Department of Land and Natural Resources (DLNR) asked the developer to stop all work at the site, announcing an investigation into allegations of land use violations, including failure to maintain the premises, failure to submit annual reports, failure to pay property taxes and cutting down palm trees without consent.
Those issues were raised during a Board of Land and Natural Resources (BLNR) meeting on Aug. 11, when the board unanimously approved a staff submittal from the Kaua‘i District Land Office to terminate the developer’s revocable permits on three parcels of state-owned land adjacent to the resort, effective December 31, 2023.
The three permits, totaling approximately 0.98 acres, had been assigned to another previous developer and now-defunct entity, Coco Palms Ventures LLC. The parcels have been used for parking, landscaping and other construction operations at the site.
Community group I Ola Wailuanui has filed a civil complaint against the DLNR, alleging the board violated state law by granting annual revocable permits to a defunct company.
According to the staff submittal, the BLNR authorized the issuance of new revocable permits to the previous developer Coco Palms Hui LLC in 2016, but they were never fully prepared because the LLC did not provide tax clearances. The board continued to issue the permits to Coco Palms Ventures, a nonexistent entity, from 2017 through 2023.
During the meeting, both community members against the development and Reef Capital attorneys supported the termination of the permits — for opposing reasons.
The attorneys supported the termination of the revocable permits to Coco Palms Ventures so that they can eventually be reassigned to Reef Capital Partners at the end of the year.
“Since my client took over Hui in 2022, we have made sure that the rent is paid, that the rental property tax is paid, that they’re insured, that they have been maintained, and we intend to continue doing that for the duration of the (revocable permits),” said attorney Calvert Chipchase, who was joined by colleagues Mauna Kea Trask and Keola Whittaker.
“I do support the reasonable termination of those permits at the end of this year giving time to process longer-term interest to whatever entity, obviously hopefully us, the board chooses to steward those lands,” he said.
Meanwhile, community members at the meeting asked that the permits be terminated and reassigned to the community.
“I am asking that you please terminate the revocable permits, but I’m also asking you that no further issues be granted to any of these organizations and to look at community instead,” said I Ola Wailuanui board president Pua Rossi, who is also an assistant professor of Hawaiian Studies at Kaua‘i Community College.
“I have personally seen the lack of kuleana and respect that’s been shown to this sacred place,” she added, noting having witnessed 75 to 100 coconut trees being cut down with “no regard to the historical or cultural significance of the coconut grove.”
A termination letter signed by BLNR chair Dawn Chang states terminating the permits at the end of the calendar year will allow the developer time to comply with any obligations, while also allowing staff time to evaluate competing requests from other applicants.
Mason Chock, the board vice president of I Ola Wailuanui, said the termination was necessary from all sides and perspectives.
“It frees up the opportunity for the state to reevaluate these properties and make a determination if it will put those (revocable permits) back out for a bid,” he said in an interview with The Garden Island.
Chock and other board members at the nonprofit have filed their own application to lease the three parcels through the revocable permits.
“Our hope is that they see value in providing the community some form of leverage to have a voice,” he said.
According to Day, Reef Capital’s construction timeline “is unaffected by the revocable permits,” and the project plan remains on schedule.
‘On track to restart demo’
Communications adviser Shane Peters said the Coco Palms team has suspended activity on state-owned land, but will continue with demolition and construction of the resort itself, which lies on over 31 acres of private property.
“Prior owners originally started demo in 2016 but obviously halted when they ran into financial difficulty and defaulted,” he said in an email response. “We remain on track to restart demo in Q4 this year.”
Peters also sent a document to The Garden Island, highlighting Reef Capital’s plan for the resort to include spas, restaurants, and recreational amenities made using “solar and energy efficient building systems.”
The document also notes Reef Capital will be “implementing best practices” during construction, including establishing an advisory group comprised of Native Hawaiian leaders, hiring cultural and archaeological monitors to work onsite, and “minimizing ground disturbance” by constructing within the footprint left by existing structures.
It states the resort will create multiple benefits for the community, including adding “over 250 direct local jobs” during the construction and demolition phases, as well as hiring “scores of full-time local employees” and generating “millions annually within the local economy” once the resort is up and running.
Day also emphasized measures to ensure “the restoration is done responsibly,” including the decision to reduce the room count from 398 to 350.
He also addressed environmental, flooding and traffic concerns regarding the property’s location, which fronts a major road across the street from Wailua Beach.
Day noted the resort will comply with all shoreline and flood requirements.
“With regard to traffic, studies conducted by traffic experts show almost no impact to traffic from the hotel,” he said.
“Further, RP21 will provide shuttle services for its guests to and from the airport and other popular destination areas on Kaua‘i and has paid $10,000.00 to the County to assist with the construction of a new bus stop.”
In an email to The Garden Island, AJ McWhorter, a communications specialist with the DLNR, said the investigation into land use violations is ongoing by the department’s Office of Conservation and Coastal Lands (OCCL).
“The OCCL will present their findings to the BLNR once it’s complete. That date has not been set,” he said.
According to the DLNR, Reef Capital does not have the necessary permits in place to be able to commence demolition and construction on either state-owned or private property in the district.
“DLNR cannot process permits for work in the conservation district on parcels with unresolved alleged violations,” said Michael Cain, an OCCL administrator.
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Emma Grunwald, reporter, can be reached 808-652-0638 or egrunwald@thegardenisland.com.
