LIHU‘E — After nearly six hours of discussion and public testimony, the Kaua‘i Planning Commission’s three-member Subdivision Committee on Tuesday deferred a decision on whether to recommend an 8-year extension on subdivision permits for a proposed development of more than
LIHU‘E — After nearly six hours of discussion and public testimony, the Kaua‘i Planning Commission’s three-member Subdivision Committee on Tuesday deferred a decision on whether to recommend an 8-year extension on subdivision permits for a proposed development of more than 2,000 acres of prime agricultural land across Kealia Beach, at the north end of Kapa‘a Town.
Approximately 60 people, many of them key community leaders, crammed the meeting room at Mo‘ikeha Building in Lihu‘e, including Mayor Bernard Carvalho Jr. who stopped by for a few moments.
The request for the permits’ extension for the Kealiakealanani Agriculture Subdivision raised eyebrows — and opposition — among some prominent public officials, including Kaua‘i County Council Vice Chair JoAnn Yukimura and Councilman Tim Bynum, and organizations such as the Sierra Club and the Wailua-Kapa‘a Neighborhood Association.
However, the developers have been successful in gaining trust and support from many in the Kealia community by offering up to $1.35 million in area improvements before any infrastructure for the project is laid out.
Kealia Properties LLC is offering up to $500,000 to renovate the rodeo parcel, and then donate it to a nonprofit corporation; up to $500,000 to build a poi mill on the property and up to $350,000 to improve the Kealia Kountry Store building. Additionally, depending on the outcome of a Real Property Tax appeal, the developer could also donate a 14.7-acre community sports park.
Two dozen people testified at the meeting. The first few public testimonies seemed to indicate it would be an anti-development day at the commission’s bi-weekly meeting. But soon supporters toppled the opposition, and at the end of the day, two-thirds of testimony sided with the developers.
“I do believe that this project will help benefit the Kealia Community, the community of our island, Kaua‘i, and yes, the visitor industry, which brings in people to our island,” singer Ilima Rivera said.
Lihu‘e Kinimaka-Lopez, owner of Kealia Country Store, said Kealia has become a hub for the community. She and her husband, Joe Lopez, have initiated a market adjacent to their store, attracting vendors, locals and visitors.
“It’s really important … to the community of Kaua‘i that this extension goes through,” said Kinimaka-Lopez, adding that restoration plans for the 88-year-old building will include the attached Kealia Post Office building, a “historical mark.”
Others who testified on behalf of the project includes taro farmer Adam Asquith, Realtor Paul Kyno, pastor Tom Ianucci, cultural practitioner Phil Villatora, rancher Bruce Laymon and farm veterinarian Scott Sims.
While among the audience the scale tipped to the developers’ side, the county Planning Department wanted commissioners to deny any extension and stick to the deadline for the permits, which were set to expire Tuesday.
Besides Yukimura, others testifying against the project included Maka‘ala Ka‘aumoana, Carl Imparato, on behalf of Kaua‘i’s Sierra Club, Syd Jackson, on behalf of Wailua-Kapa‘a Neighborhood Association, Marge Freeman, Ken Taylor and Wendy Raybeck. Bynum was present earlier and left without testifying, but he provided written testimony against the project.
Kealiakealanani Subdivision
The project is divided in two parcels, which together measure 2,029 acres. The subdivision of both properties would create a total of 76 lots, which would be further divided into 188 Condominium Property Regime units, each one with a “farm dwelling” allowed on it.
The original permit was granted Sept. 11, 2007. Since then, the project changed ownership twice — once due to foreclosure, county planner Dale Cua said.
The permits were to expire Tuesday, and developers asked the commission to renew the permits for an additional 8-year period, during which the developers would be exempted from complying with any changes in the law, dating back to when the original permit dates were granted five years ago.
If the developers are eventually denied the extension, they would have to reapply, and would no longer be grandfathered, having to comply with laws passed after September 2007. For the developers, a reduction of 73 units could mean a substantial loss of opportunity for revenues — potentially tens of millions of dollars.
In 2010, the Kaua‘i County Council passed Ordinance 896, capping open zoned lands at the same density limits as agricultural lands once a certain parcel acreage threshold is met. The Kealia project is a mix of open and agricultural lands.
If Ordinance 896 is to be applied to the Kealia project, the developers would be allowed a reduced density of 115 “farm dwellings” rather than the 188 allowed by the original permit.
Additionally, the council passed Ordinance 860 in November 2007, three months after the project secured the initial permits. If this ordinance is to be applied to the project, the developers would have to build 56 affordable homes, creating an additional expense of millions of dollars for developers.
When the permits were granted, the then-current law exempted the project from the affordable housing component. But the developer set aside two lots to donate for the county to build affordable housing units.
Under the proposal presented to the commission Tuesday, one of those lots previously slated for affordable housing would be donated as a parcel for a community sports park, to be developed by the county.
First mortgage vs. surety bonds
After receiving a tentative subdivision approval, an applicant required to construct improvements — such as the case with Kealia Properties LLC — may receive final subdivision approval by completing construction or executing a subdivision agreement and posting bond and/or guarantees.
The applicant is required a surety bond equal to the cost of all work to be done, according to the Kaua‘i County Code. Such surety bond is to make sure that if the applicant fails to complete construction of improvements as required within a certain time frame specified by the commission, the county would take over and complete the work, and recover the full cost of its expenses from the surety bond.
In the case of the Kealiakealanani Subdivision, the developers are asking the county to execute a first mortgage as a substitute for the surety-bond requirement. Going to the county for a first mortgage rather than securing a surety bond would save the developers between $1.5 million and $6 million.
But according to county Planning Director Michael Dahilig, the first-mortgage proposal does not provide high liquidity. If the project were to go into foreclosure and eventual liquidation, it would cost the county substantial amounts of time and money, he said.
Dahilig said he doesn’t believe a first-mortgage would legally replace the requirement for the surety bonds. But in case it does, the appropriate evaluation of the property in case of liquidity is its market value rather than its potential for development. Given past defaults and the unprecedented high length of extension requested, the risk on the project is high, he said.
Lack of assurances
As far as “community improvements,” Dahilig said there is a lack of assurances that capital improvements would be made to the rodeo, the store and the proposed poi mill. The proposed community sports park is the only improvement offered that would not require capital improvements, but it would still not warrant an 8-year extension for the permits, Dahilig said.
There was also a problem with the construction plans. Dahilig said the request for permit extension should have been accompanied with re-certified construction plans, which did not happen.
Lauren Sharkey, representing Kealia Properties LLC, said the Kaua‘i County Code does not require re-certified construction plans prior to extension request. Such requirement, by law, is supposed to be fulfilled within a year after the extension is granted, she said.
Dahilig said certain changes in the project proposal trigger re-certification of construction plans.
He wanted the committee to deny the application outright, saying a deferral would not have bearing, given that the applicant had made no effort to meet requirements that would justify an extension.
A few of those who testified said the unresolved issues could still be worked out and fixed.
The committee unanimously deferred the issue to Oct. 9. Before doing that, warned Sharkey and Andy Friend, who was also representing Kealia Properties, that they should resolve all issues before showing up at the next meeting.
“We want to make sure you get your ducks lined up,” Committee Chair Herman Texeira said.
Committee member Hartwell Blake was somewhat more direct.
“All these things we discussed today, I want an answer,” he said.
Camilla Matsumoto is the third committee member. The decision taken Oct. 9, whether in favor or against the permit extension, will go before the Planning Commission for acceptance.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.
